The United Kingdom has said it is still not convinced there will be any major economic fallouts associated with implementing public registers of company beneficial ownership in the British Virgin Islands.
Local financial services professionals listed some of their feared fallouts when they met this week with the UK minister responsible for Overseas Territories, Lord Tariq Ahmad.
They cited fears of public registers causing businesses to flee to other less-regulated jurisdictions that do not have public register laws.
While commenting on his discussions with the local industry, Lord Ahmad invited them to present evidence of these fallouts.
“I have not yet seen some anecdotal evidence or there hasn’t been this suggested major flight of assets, for example, from the BVI. Indeed, when you look at some of the statistics, you’ve actually seen jurisdictions such as Cayman and the British Virgin Islands actually attract a greater number of accounts,” said Lord Ahmad.
He continued: “This isn’t a level playing field, I accept that principle. But from an international perspective, what I can talk about is what the UK government will be doing. It is our view that public registers should be an international standard and we’ll be using international fora wherever we may be to ensure that objective is also pursued.”
Lord Ahmad’s invitation for the BVI to present evidence of the fallouts of public registers comes on the heels of a study that projected the BVI will experience more than $2,000 job loses because of these registers.
British research company Capital Economics said these job losses in the local financial services sector would happen over the next 10 years.
Findings of the study also predict that implementing public registers would shrink the fiscal value of the sector by roughly $250 million.
About public registers:
Public registers are an amendment to the UK’s Sanctions and Anti-Money Laundering Act. The Act is forcing the BVI and other British Overseas Territories to implement what are known as public registers of company beneficial ownership. These registers mean the BVI is required to publicise the names of beneficial owners of offshore companies registered in the territory.
Effectively, beneficial ownership is a legal term where specific property rights belong to a person even though the legal title of the property is in another person’s name.
Publicising the names of these beneficial owners could discourage them from doing business with the BVI as it relates to financial services.
Notably, the UK is imposing the law to tackle financial crimes such as tax evasion. A number of international authorities have claimed the BVI is one of the breeding grounds for financial crimes. The territory has been described as a tax haven which has been associated with financial scandals such as the Panama Papers leak back in 2016.
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