BVI drives forward with financial services diversification programme
Lorna Smith, Interim Director of BVI Finance, discusses the value-adding services being developed in the renowned international financial centre
The new rules around beneficial ownership are just the latest in a number of international initiatives around tax and transparency. How are they changing the landscape for offshore financial centres? Lorna Smith, Interim Director of BVI Finance, explains how the British Virgin Islands is engaging with the latest demands for transparency and staying in touch with international industry. She also explains the BVI Forward campaign: designed to strengthen and expand the financial centre’s services, both by engaging with and educating British Virgin Islanders, and developing the islands’ capacity as a data centre and arbitration hub.
World Finance: The new rules around beneficial ownership are just the latest in a number of international initiatives around tax and transparency. How are they changing the landscape for offshore financial centres? Joining me is Lorna Smith, Interim Director of BVI Finance.
Lorna, tell me how these different initiatives might impact international financial centres like the BVI.
Lorna Smith: All international finance centres are evolving, and it is very important that the British Virgin Islands stays in step with the new developments.
The new standards are all about transparency, and the British Virgin Islands therefore is adhering to these very high standards of transparency.
We have been an early adopter for the common reporting standards, we have signed on to the Foreign Accounts Tax Compliance Act. We are a member – one of about 90 members – of the Multilateral Convention on Taxation.
World Finance: As you say, you’re very involved in all these conversations, so how are you engaging with the different stakeholders around these programmes?
Lorna Smith: The OECD Global Forum really gained momentum in 2009, and the British Virgin Islands was at the table at that time.
We have been a member of the steering committee, and that is very important for us. I’ve been attending a Commonwealth Secretariat meeting, because the Commonwealth Secretariat is very concerned about IFCs, and making sure that they are treated fairly. And at the Commonwealth Ministers of Finance meeting that is supposed to take place in October, the subject of IFCs will be on the agenda. So that is a part of our engagement.
World Finance: So that’s part of your outreach, how you’re engaging internationally. But back home, how are you reviewing your legislation to make sure that the BVI is keeping up – and indeed, keeping in front of – the changing international landscape?
Lorna Smith: The British Virgin Islands prides itself on being always ahead of the curve; especially in terms of our legislation, in terms of our regulations.
We stay in touch with the international standards setters, and as a result of that, our legislation is amended as required.
We have recently made it a requirement that the ultimate beneficial ownership of companies be brought onshore. And in terms of the industry there is such a thing as product legislation, to make you competitive, to make you attractive. And we stay in touch with the industry – because as I always say, without an industry, you don’t have financial services.
World Finance: So, part of the way that you’re evolving is through the campaign BVI Forward: tell me about this, what is it trying to achieve?
Lorna Smith: The BVI Forward campaign is central to the evolution that I mentioned when we started out.
The campaign is intended to strengthen our financial services even more, to make them more sustainable. We for instance have begun to engage the population – I mean, very often, people hear about financial services, and it’s a big mystery. So it’s important that they understand how financial services contribute to their livelihood, and how important it is for the continued prosperity of the British Virgin Islands.
We have to build the capability of British Virgin Islanders, and we have therefore established a financial services institute, to make sure that British Virgin Islanders develop the capability for financial services.
One important tenet of it is the diversification of our financial services. We have about 450,000 active companies; we are the third largest in the world. But we would like to add value to the financial services that we offer.
For instance, establishing the BVI as a leading data centre. We have established BVI as an arbitration centre. We will have to improve our infrastructure. We need state of the art telecommunications. So all these things we are working on, to make the British Virgin Islands – as I said before – more sustainable. And that is what the BVI Forward campaign is about.
World Finance: So overall, how is the BVI growing and building on its position as a renowned international financial centre?
Lorna Smith: We’ve done a number of things. I mentioned the arbitration centre. We have one of the most highly respected commercial courts – opened in 2009 as part of the OECS Supreme Court system.
You would imagine that with 450,000 companies, a lot of litigation would be involved. People want swift justice, and that is what they can get in the British Virgin Islands.
We have engaged a firm to carry out a study of the value, or the contribution, that the British Virgin Islands makes to global financial services. That should be finished by the end of this year. Because I go back to the issue of substance, and proving that there is more to the British Virgin Islands and its offerings, than simply incorporations.
That’s just a couple of areas that we are developing.
World Finance: Lorna, thank you very much.
Lorna Smith: My pleasure.