IS THERE A FUTURE FOR THE BVI FINANCIAL SERVICES INDUSTRY?
Managing Director/Chief Executive Officer of the Financial Services Commission (FSC) Mr. Robert Mathavious believes there is a future for the BVI financial services industry if we can all work seriously together.
However, he sees a number of challenges facing the industry, which he said could be overcome through close collaboration between the BVI government, industry practitioners and the
“This means as a first step gaining a realistic perception of the new global economic landscape that is emerging,” Mr. Mathavious declared. He said as a result of globalization, offshore financial centres have become highly successful and this, coupled with the recent serious corporate scandals, has created its own problems.
The FSC Managing Director pointed out that offshore financial centres are under intense scrutiny and attack, aimed at polarizing onshore opinions and trying to make the “offshore bad” view prevail.
“The one ray of sunshine in the midst of all this antagonism is that sufficient numbers of important opinion-formers and policy makers still understand there is a useful role to be performed by well regulated OFCs who operate in accordance with internationally accepted standards,” Mr. Mathavious stated.
He said markets everywhere are on the verge of change and we cannot continue doing things in the same way. He said the challenge of globalization is to discover new opportunities.
“How we live in the future therefore depends on how much effort we make today to take on the odds in the globalized economy; the future can be bright if we continue to work together to our mutual advantage,” he declared.
Over the last few years, no less than 13 initiatives have targeted OFCs, including the BVI. Mr. Mathavious said the territory has emerged relatively well from these taxing and daunting evaluations and has escaped being put on any negative and non-cooperating lists.
Some of the specific and pressing initiatives that have confronted and will be confronting the BVI include the OECD Harmful Tax Practices Project, which the BVI is committed to. Mr. Mathavious said the battle is not already won however and the territory has to watch carefully to ensure that both non-OECD and OECD members alike agree to a level playing field.
The BVI recently singed a Tax Information Exchange Agreement with the USA, which will facilitate the exchange of information in tax matters on request once the US satisfies the BVI authorities that there is a bona fide reason to share the relevant information, assuming it exists in the BVI.
“I need not reassure you that the BVI authorities will do everything to avoid making these islands unattractive to legitimate business entities that prize privacy, confidentiality and efficiency,” the FSC Executive Director stated. He said to do otherwise runs the risk of forcing good business to move to other competing jurisdictions.
Referring to the Misuse of Corporate Vehicles for Illicit Purposes report issued by the OECD in 2001, Mr. Mathavious said it unfairly attacks offshore structures while being silent on similar onshore structures. He said it lumps trusts, foundations and limited partnerships together with companies as corporate vehicles and presents a number of options to eliminate abuse by making such vehicles more transparent.
He pointed out that the OECD report followed one issued in 2000 entitled “Protecting the EU Financial System from the Exploitation of Financial Centres and Offshore Facilities by Organized Crime”. He also spoke of the 40 Recommendations of the FATF to extend anti-money laundering measures to counter the financing of terrorism and the 2001 Basel Committee on Banking Supervision paper on “Customer Due Diligence for Banks and Fiduciaries”.
Mr. Mathavious said none of these initiatives should be ignored. He said taken together, they represent a sea change as to what will be tolerated and what will be pursued on a concerted international basis.
In terms of what the BVI must do to safeguard the industry, the FSC Chief Executive Officer said the territory has to keep demonstrating to the international community that it is a well-regulated jurisdiction. He said this means showing that we apply international standards of regulatory and supervisory oversight to the affairs of the industry, have zero tolerance for anything not compatible with being a well respected and well regulated jurisdiction and that we will continue to do all we can to prevent abuse of our industry and its products.
“All this is epitomized in the motto of the Financial Services Commission: ‘Vigilance, Integrity and Accountability’,” he continued.
He said an immediate opportunity and challenge to demonstrate that the BVI is a well-regulated jurisdiction would be when the IMF visits from November 11th-22nd to assess the territory’s financial services sector programmes, practices, policies and regulatory regimes.
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