Britain Is Getting Impatient, But Bvi Must Protect Financial Sector

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By Mellica McPherson-Ganda

Between accusations of being soft on Jurisdictions such as the BVI and Cayman Islands, and the perceived slow response by the said Territories to implement the requested central registries the United Kingdom Government appears pressured and impatient to see a sign of action.

Last year the United Kingdom government and the European Union requested centralized public registries that would disclose the true owners of shell companies and trusts. Since then the British Virgin Islands and Cayman Islands were tasked to meet the requirement by November 2015. Bermuda is not of urgent concern in the matter since it already has a similar system in place.

This leaves the Virgin Islands and Cayman Islands to hash out a means of securing Territorial interest and complying with the mother country’s request. Both jurisdictions have been cautious in their attending to the request, and this seems to be frustrating the United Kingdom as it attempts to lead by example via the move towards the UK central registry.

The stance of the Virgin Islands and Cayman Islands has caused known critic of the sector Tax Justice Network (TJN) to wag its finger at the UK Government for allegedly ‘rolling over’ and letting those two jurisdictions have their way.

On 7 September, TJN said: “… Roll on August 2015, and roll over the UK government. In a recent trip to the Cayman Islands the Foreign Office Minister Grant Shapps appears to have backed down saying that there was “more than one way to skin a cat”, and was confident that the UK could find agreement on a way forward with the Caymans, who until now have resisted any move to have a public register.”

Prior to TJN’s reproach on the matter another critic of the industry, Christian Aid commented on the fact that the two UK financial jurisdictions have not considered the registry proposal. In July this year Laura Taylor, Head of Advocacy at Christian Aid was quoted saying: “Just 18 months ago the Prime Minister instructed the UK’s Overseas Territories to reveal the beneficial owners of companies registered in their jurisdictions. That hasn’t happened…”

 

UK Wants Response

November looms and both members of parliament in the United Kingdom and the Prime Minister Cameron are speaking up about their perception that the Territories are moving slowly.

British Member of Parliament Sir Eric Pickles, who is labelled by the UK press as the anti-corruption champion was quoted in an article stating that the UK Government might have to consider legislation as an option if the territories decline to implement the registry.

In a Guardian, 3 October, article it was reported that Sir Pickles used the term “simply unacceptable” in reference to the situation during a discussion with civil society groups on 1 October.

The Guardian asked the MP if the government would consider legislation as a means to “force territories to implement the registers” and it was stated that, Pickles said “(there were) more ways to get to this than through the legislative route.” Nonetheless the Guardian said that the MP suggested that legislation was one option in delivering reform.

Prime Minister Cameron weighed in on the matter during his recent trip to Jamaica. He announced: “If we’re to beat corruption, we need transparency. I’ve taken the lead by pledging much more transparency over property and company ownership in the UK so that terrorists, tax-avoiders, money launderers and criminals have nowhere to hide their ill-gotten gains.” Yet, the mega companies like Amazon, Google, Apple, eBay etc are getting away with paying little or no taxes to the UK government.

“Some of the British crown dependences and overseas territories are making progress in this direction. Others, frankly, are not moving anywhere near fast enough..I say to them all today, including those in this region, if we want to break the business model of stealing money and hiding it in places where it can’t be seen: transparency is the answer,” the Prime Minister reportedly added. “It goes without saying that the money will go elsewhere much to the loss of Britain and her Territories, what an achievement,” says a pundit.

 

BVI Being Deliberate

Financial services accounts for a large portion of the BVI revenue and Premier, and in 8 October Minister for Finance, Dr. the Hon. D. Orlando Smith told the media that his government is aware of what was said by Sir Pickles and Prime Minister Cameron but he announced that more cannot be done at this time.

“We are looking at the way the BVI needs to position itself where this matter is concerned. We are taking into consideration all the recommendations made by the British government; we are also taking into consideration all the recommendations made by the industry which is important. We are looking at all these factors, and we have to make a decision as to what is in the best interest of the British Virgin Islands. Of course we are an overseas territory of the United Kingdom, so their recommendations of course must be taken into consideration,” Premier Smith said.

In relation to the UK’s perception that the BVI is dragging its feet on the matter Premier Smith admitted to a certain level of apprehension: “In this matter you have to be deliberate. We have to be deliberate because, as everybody here knows, financial services contributes about 60 percent of the GDP (Gross Domestic Product) for this country, and so you cannot just jump and make a snap decision. That is something we are being very deliberate about.” His stance has received widespread public support and approval locally and regionally.

Will the BVI Meet the Deadline? When asked if the Territory will be ready or have a decision by or before November Premier Smith said: “I can’t say at this time; I can say we are actively working on that.”

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