Lorna Smith to Baroness Hodge: We are fully transparent!

Junior Minister for Financial Services Lorna Smith has defended the Virgin Islands’ financial services industry against claims of secrecy, insisting the territory operates with full transparency.

Smith’s comments come ahead of a planned visit by Baroness Margaret Hodge, the United Kingdom’s anti-corruption czar, who has long criticised offshore centres as “secrecy jurisdictions.”

“We are totally transparent and we cooperate with all of these,” Smith stated, pointing to the BVI’s record of compliance with international standards. “We’ve signed, what, 30-plus tax information exchange agreements. We were an early adopter to the common reporting standards. We are fully transparent. We engage regularly with the Organisation for Economic Co-operation and Development.”

Baroness Hodge is expected to spend two days in the territory, meeting with government officials and regulators. Smith said the BVI welcomes the visit.

“She is sadly of the view that overseas territories, including the British Virgin Islands, are what she calls secrecy jurisdictions, which is quite the opposite to who we are in terms of our transparency,” Smith said. “We expect to show her how the British Virgin Islands, how our jurisdiction works… and we expect that when she leaves, she will also have a good story to tell about the British Virgin Islands.”

FATF Grey List

The Virgin Islands was placed on the Financial Action Task Force (FATF) grey list earlier this year, a move that raised questions over its regulatory framework. Smith stressed that the listing does not mean the BVI’s systems are unsound.

Meanwhile, Executive Director of International Business Regulations, Ayanna Glasgow, added that the government and private sector have committed to a two-year plan to address FATF’s concerns. “We are focused on that two-year execution because it is our view that we can do it,” Glasgow said.

“Being on a grey list, as Ayanna inferred, does not mean that your frameworks are not sound. There are just some targeted areas that need to be strengthened,” Smith explained. She said the jurisdiction has strengthened its suspicious activity reporting and ensured beneficial ownership information is lodged with regulators.

Registers and transparency debate

Smith also addressed ongoing pressure from the UK over public registers of beneficial ownership, which campaigners such as Baroness Hodge have championed. She said there is no global standard requiring open access and argued the BVI’s “legitimate interest” approach strikes the right balance.

“The BVI has come up with a policy that is based on what we call legitimate interest access. It’s a policy that we are very pleased with,” Smith explained. “It satisfies the needs of our clients as well as satisfying the needs of persons who have an interest in pursuing illicit activities.”