Up to 2,300 jobs could be lost in the British Virgin Islands if public registers of company beneficial ownership are implemented, a government-commissioned study has revealed.
British research company Capital Economics said these job losses would happen over the next 10 years. The February 2018 report said the jobs would have been from the local financial services sector.
Implementing public registers would also shrink the fiscal value the sector contributes to the BVI economy by roughly $250 million, the study showed. This decline would also happen over the next decade.
According to the Capital Economics report, job losses would happen partly because of an evitable exodus of BVI-based offshore companies to less regulated financial services jurisdictions.
The study said public registers would further cause the BVI’s already growing debt burden to “spiral dangerously”.
“It would increase the territory’s cumulative debt even further, potentially adding another roughly US$1 billion to the BVI’s debt burden.”
Government would be unable to viably support its residents, the study added.
Public registers may increase cybercrime, kidnapping,
The study was done after the UK passed a bill forcing the BVI 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 BVI.
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.
The UK claims it is imposing the law to tackle financial crimes such as tax evasion. But, according to the aforementioned study, public registers may lead to an increase in crimes such as identity theft, cybercrime, or kidnapping for ransom because the personal information of company owners would be made ‘open’.
“Evidence has shown that company directors are twice as likely as other members of the public to be victims of identity theft due to … public registers,” the study said.
The BVI is required to implement public registers by the year 2020. However, the BVI government maintains it will not impose public registers until it becomes a global standard which will not put the BVI at a disadvantage to other financial services jurisdictions.
The BVI has hired local and international attorneys to challenge the UK’s public registers mandate. But, for now, Premier Dr D Orlando Smith — the Minister of Finance — said the BVI continues to hold talks with the UK on the matter.