Johnson: British Virgin Islands must innovate to remain competitive
The BVI is reshaping itself as a one-stop shop for offshore financial services, beyond its original incorporations focus
The British Virgin Islands has long been considered a leading financial centre, with its business-friendly government. But stronger competition in the incorporations space is forcing the BVI to innovate its offering. Julien Johnson, Executive Director of BVI Finance, explains how the British Virgin Islands has changed, and introduces two innovative new funds.
World Finance: The British Virgin Islands has long been considered a leading financial centre, with its business-friendly government. With me to discuss the opportunities the region represents is Julien Johnson, from BVI Finance.
Well Julien, the British Virgin Islands of course is one of the leading financial hubs, but what sort of opportunities does it represent?
Julien Johnson: Well, the BVI has been an important part of the global economy for a very long time.
The main BVI advantage really is a robust regulatory framework that meets, and in many instances, exceeds, regulatory standards.
We have an entrepreneurial business community, we have a government that is committed to coming up with new legislation that meets the needs of the industries.
We’re also a price-competitive jurisdiction, in terms of our fees: our legal fees and corporate services fees are very competitive, making the BVI a cost-effective place to do business.
We also have an independent legal and judiciary system based on English common law, with highest appeal to Privy Council in London, which is attractive to investors.
Beyond that, we have a very good cadre of professionals working in the industry, resident in the BVI, who can provide services in every sector, whether it be trust funds, the captive insurance business, incorporations business. We also have most of the leading firms with a presence in the BVI. So it’s really a one-stop shop for all of your offshore financial services needs.
World Finance: Well when people do think of offshore jurisdictions, they often think of money laundering; so how do you ensure that business is above board?
Julien Johnson: Well, the global fight against money laundering is an evolving process. The BVI has long been a part of this process; in fact, the BVI was one of the very first jurisdictions to institute anti-money-laundering laws, going as far back as 1999.
We have a very robust anti-money laundering framework; we take very seriously our role in combatting money laundering globally. And as I said before, we meet and in most cases exceed international standards.
World Finance: The BVI prides itself on setting the highest standards when it comes to regulations and transparency; so, how advanced is this?
Julien Johnson: Setting the highest standards for transparency has really been a part of the BVI’s strategy in maintaining its competitive advantage. The BVI has signed 27 tax information exchange agreements with various countries around the world. Most recently the OECD has upgraded our rating to largely compliant in its latest peer review, which is a huge endorsement of the work that we have done as it relates to transparency and international cooperation on tax matters.
It’s a fundamental part of our business model, and one that we’re very proud of our achievements in this area of cooperation and transparency.
World Finance: You do face growing competition in the low-cost, high-volume offshore incorporations business; how do you approach this?
Julien Johnson: Well, there certainly is growing competition. The BVI’s approach now is really to look beyond incorporations. Obviously incorporations is our core business, and a very fundamental part of what we do. And really what provided the growth in the industry, and where we started from. But we’re looking beyond that.
We’re a one-stop jurisdiction that offers many other products and services. As an example, the BVI recently launched two new funds products: the approved fund, and the incubator fund, which are geared towards start-up managers, and also managers who are focusing on a very small group of connected people. So these are examples of very new and innovative products that we have launched in response to growing competition in the market, and a need to diversify ourselves.
Beyond that, the BVI has recently launched a campaign called BVI forward, which is the result of a report done by the global consultancy firm McKinsey and Company, which is really an overview of the financial services industry in the BVI, and to develop a plan to move it to the next level.
So, parts of that report are actually a key focus on value-added services, and developing additional value in the industry for its growth. So we’re very excited about that, and certainly there will be a lot more coming out of that very soon as we move financial services to the next level in the BVI.
World Finance: Finally, how does a company go about setting up in the BVI, and what do they need to be aware of?
Julien Johnson: As the world’s leading domicile for offshore companies, the BVI has established a BVI Business Company that is the core of many businesses globally.
The success of the BVI Business Company has really been the foundation of the financial services industry in the BVI. Over a million companies incorporated to date – half of which are active.
The BVI has developed a very efficient company registry. So the process of establishing a business company in the BVI is fairly easy, once the proper due diligence is performed, and customs and things have been satisfied.
The actual set-up of a business company is done through a local registered agent; a list of those are available at bvifs.vg. And the agent is responsible for setting up the company and administering it, as well as ensuring that the business behind the company is one that is legitimate, and will not bring disrepute to the industry.