The British Virgin Islands (BVI) has a longstanding reputation as a reliable and efficient offshore financial centre, but the territory is still investing in finding ways to evolve as a global leader in the financial management sector.
With a population of less then 30,000, the BVI has one of the highest GDP per capita rates in the world. Most of the territory’s income derives from a sophisticated and well-oiled financial management service industry that has helped the minute Caribbean islands establish themselves as a leading global financial centre.
Though the financial crisis has rocked BVI’s businesses, the territory’s International Finance Centre (IFC) has sought innovative ways to help cushion the aftershocks of the crash. A new commercial court, established in 2009, has helped secure the jurisdiction’s reputation as one of the safest and most reliable centres in the world. The preferred jurisdiction for Asian business structures, the BVI is striving to grow its operations and continues to provide transparent, cooperative and integrated business solutions. Elise Donovan, Executive Director of the BVI IFC, spoke to World Finance about remaining on the cutting edge of development.
How difficult has it been to attract business to the BVI since the crisis began?
Despite the crisis, BVI’s performance in the most important areas remains strong. In the last year, for example, we have seen growth in some sectors that had shown declines during the crisis. These have now rebounded. There is confidence in the BVI as a leading jurisdiction which provides a rich variety of services that contribute to the management of global wealth and to global markets. Also, it must be remembered that the BVI’s primary market is Asia, a region that was not as severely or negatively impacted by the downturn as others. That was a major factor in our ability to recover and grow.
What makes the BVI so attractive as a modern financial centre?
The BVI has a world-class brand and it offers a very attractive business model. Its services are provided in a secure, safe, well-regulated and business-friendly environment. It has a proven track record of providing excellence in delivery, exemplary regulatory standards, innovative legislation, state-of-the-art technology, and its firms and agencies are run and staffed by experienced and highly qualified professionals. Those are the reasons why top-tier firms are based in and do business with this jurisdiction. The BVI’s advantages also include competitive and cost-efficient fees, highly efficient turnaround times, 24-hour services in some areas and the fact that the BVI’s corporate registry is the largest of its kind in the world.
What different sectors have been enjoying growth recently?
The BVI has maintained its position as the world’s leading corporate domicile, and company incorporation numbers are now back to where they were in 2007, before the crisis landed. In addition, our investment and fiduciary businesses, as well as our captive insurance and shipping registration services, all continue to make gains.
How robust are BVI’s regulatory bodies?
We recognise and appreciate the importance of compliance with established international standards of regulation and supervision. The territory has a good track record of international cooperation. It currently adheres to all international standards and supports efforts to combat money laundering activities, and the financing of terrorism. This is evident in our 2008 Mutual Evaluation Report, and, since then, in the follow-up report to the Caribbean Financial Action Task Force, about our implementation of the recommendations made in 2008.
The BVI has a good compliance culture in the areas of information exchange, financial services and international cooperation, and is committed to meeting established international standards. The BVI also complies with the principles and standards outlined in the Basel Convention, as well as those determined by the International Association of Insurance Supervisors and the International Organisation of Securities Commission.
In addition, the BVI supports and implements the statement of best practice on trust and corporate service providers issued by the Offshore Group of Banking Supervisors. Our adoption of these compliance measures was noted in the International Monetary Fund’s 2010 report on the jurisdiction.
The BVI is entered into a number of Tax Information Exchange Agreements (TIEAs). What kind of benefits do they provide?
In 2002, the territory entered into a formal written commitment with the Organisation of Economic Cooperation and Development (OECD) regarding principles of transparency and exchange of information. Our TIEAs resulted from this commitment and signify that we actively participate in the organisation’s Global Forum on Taxation and its peer review processes. The main benefit of entering into TIEAs is primarily ‘reputational’. It sends the message that the BVI is compliant with international standards of regulation and cooperation. It also communicates that the BVI is a transparent jurisdiction and that we have a globally recognised reputation. It is important that we are white-listed by standard-setting bodies such as the OECD. The BVI is pleased to participate in efforts to enhance international cooperation and heightened global standards.
Are there any more TIEAs on the horizon?
We have signed 22 TIEAs to date and we are currently in negotiations with a number of other countries. Certainly, we will be entering into more of these agreements in the near future. The BVI signed the first TIEA with the US shortly after we made the commitment to the OECD principles. Our signing of that TIEA, in particular, sent out the message that we were willing to cooperate, and that the exchange of information is available in our jurisdiction. It showed that we have mechanisms in place for this exchange and that they are working. We have been successful in terms of responding to any information requests made and, once the request is in accordance with an existing agreement, we are able to reply and provide the required information through the relevant, competent authority.
In 2009, a regional commercial court was established in the BVI. How has this improved the jurisdiction?
The presence of an internationally respected commercial court has been a huge asset to the BVI. The court operates as part of the Eastern Caribbean Supreme Court so there is a final right of appeal to the Privy Council in London. This specialist court places the BVI far ahead of other jurisdictions in expediting the cases that come before it, and in the timely passing down of judgements. The success of the court has helped the jurisdiction to establish and maintain its position as one of the most sought after in terms of commercial litigation.
In which regions has the IFC been promoting the BVI recently?
The BVI promotes itself globally. We have a sophisticated array of quality products and services in financial management for discerning, high-net-worth clientele so, of course, we market ourselves worldwide. We also continue to promote ourselves in the Asian market where we are the jurisdiction of choice for business structures. More recently, we have been targeting North America, Asia, Latin America, Europe, Africa and all emerging markets. The BVI endeavours to present its innovative services and products in every country in which we can identify the existence of business opportunities.