Thursday, May 29, 2008

Robert Mathavious Speaking on the BVI Regulatory Environment During his Visit to the Middle East

On May 22, the Financial Services Commission has published on its site the speeches of BVI FSC managing director and CEO Robert Mathavious when he presented the Regulatory Environment in the British Virgin Islands during his visits to Dubai and Qatar, to the business communities of these countries. The presentations had the purpose to deepen their understanding of BVI's approach to the regulation, and of the benefits this approach brings for offshore jurisdiction's customers.

The presentation included information on the BVI Financial Services Commission in the role of independent regulator, on the FSC's approach to the regulation, and on the other related items. Robert Mathavious specially pointed out that the BVI FSC is not any kind of governmental institution, but an independent regulatory body, the duties of which cover insurance, banking, trustee business, company management and mutual funds sectors, as well as administration of companies registration, limited partnerships and intellectual property, and any kinds of non-banking financial intermediary services.

The head of the Commission named the three building blocks in the regulation approach – pragmatism, consultation and investment. The main objectives within the FSC and within the financial industry in the BVI mentioned by Robert Mathavious were the effective and appropriate training and development of staff and the recognition of the importance of professional qualifications. Programmes and procedures to counter money laundering and terrorism financing were also among the Commission's priorities.

Another item touched upon in the presentation is the good reputation of the British Virgin Islands, which is achieved by the jurisdiction's active engagement in all international initiatives, and by “active and balanced response to meeting international concerns”.

In his speech, Robert Mathavious referred to the last months event that confirmed the status of the BVI as a leading and competitive global finance centre – the inclusion of the offshore jurisdiction in the Global Financial Centres Index published by the City of London. This index is based upon 19,000 assessments from business professionals worldwide, and the BVI was placed in the 27th place among 69 financial centres, just behind Gibraltar, the Cayman Islands and Dubai.

New Intelligence Unit Launched in BVI

In the beginning of May, a joint intelligence unit was launched in the British Virgin Islands, by representatives of BVI law enforcement agencies BVI Police Commissioner Reynell Frazer, Chief Immigration Officer Dennis Jennings and Senior Customs Officer Leslie Lettsome.

The new joint intelligence unit will play an important role for the enforcement of its legislation, collating, evaluating and disseminating intelligence among the three agencies.

Friday, May 23, 2008

Hon. Ralph O'Neal Participating in the 47th OECS Meeting

Premier Honourable Ralph T. O'Neal is attending the 47th Meeting of the Organisation of Eastern Caribbean States (OECS) Authority, which is held on May 23-24 in St. Lucia. Premier officially participated in the previous 46th OECS Meeting which took place on January 16-18 in the Commonwealth of Dominica.

On May 21, 2008, in his speech in the Department of Information and Public Relations, Hon. Ralph O'Neal noted the British Virgin Islands Government is interested in several items of Meeting's agenda, including an update on the establishment of a new OECD Secretariat Headquarters, report on the relationship of the non-independent member states in the context of a draft treaty with the EU, and the impact of the Advanced Passenger Information System (APIS) on the yachting sector in the sub-region. Some other issues to be presented on the OECS Authority Meeting concern the secretarial budget for the 2008-2009 financial year, the report from its budget committee, and the 2008-2009 work programme.

By words of Premier, the Government of the Territory is “keen to maintain positive and mutually beneficial relationship with its associates in the OECS region”, and will follow this strategy in all the discussions of the Meeting.

The 47th meeting of the organisation will be run by the new OECS Chairman, Prime Minister Dr. Keith Mitchell of Grenada. The member states of the organisation are the British Virgin Islands, Anguilla, Montserrat, Antigua and Barbuda, the Commonwealth of Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines. BVI obtained the status of an associate member of the OECS in 1984.

Tuesday, May 13, 2008

Dispute in the House of Assembly - the Delay of Stamp Duty Avoidance Inquiry

This week, there is one year that passed from the moment when Governor David Pearey announced the establishment of the institution of a commission of inquiry, for purposes of investigation of the cases of apparent stamp duty avoidance. However, the commission has not been named until now, and last week Julian Fraser, minister of communications and works, accused the BVI Governor Pearey of “finding all excuses” to avoid it.

Speaking at the session of the House of Assembly, Julian Fraser said that when the public accounts committee asked the governor to launch the investigation, he refused to do it, having found many excuses. Also, according to Mr. Fraser, the governor does not focus on everyone who has avoided paying the stamp duty, instead of this directing the investigation at a select group.

In a report on the deliberations of the Standing Finance Committee 2008, Mr. Fraser said that “approval would not be given by the SFC committee for the $100,000 requested for the commission of inquiry on the collection of stamp duty, as the information brought forward was not explicit enough.”

For the first time the commission establishment was recommended in March 2006, in the report made by the Public Accounts Committee. According to the March statement by Governor Pearey, after a 14-month investigation by the attorney general and the director of public prosecutions into the transactions highlighted in the report, these “were found to have given rise to an underpayment of stamp duty in excess of $500,000”. By his words, full payment of these sums is being secured, but evidence showed that this practice had been continuing over many years. The commission would examine evidence of underpayment starting from 2000.

In last week interviews, Governor Pearey said he had examined the issue carefully before making a decision on the necessity of the commission of inquiry. Gov. Pearey said the “financing aspect” of the inquiry was not part of the delay, and the investigation is moving forward. He noted that the key need is to find a suitable commissioner.

Friday, May 09, 2008

UK Authorities Report on Financial Services Regulation in BVI and other offshore centres

The Committee of Public Accounts of the House of Commons issued a report concerning managing risk in the overseas territories of the UK, undertaken by the Foreign and Commonwealth Office. The report came after the Common Treasury Committee announced its own inquiry into offshore centres, to decide whether they have contributed to international financial instability. It was specially noted that the UK's reputation in the financial services industry is linked to how well its Territories perform against international standards.

Among 14 Overseas Territories in the UK, seven have offshore financial centres, which vary in their size and significance to their economies. Major financial operations are made in the British Virgin Islands, Bermuda and Cayman Islands, smaller centres are in the Turks and Caicos Islands, Montserrat, Anguilla and Gibraltar. Having estimated the level of risk in these jurisdictions, the Committee warned that especially those minor offshore centres lack regulatory and investigative capacity fully to solve problems like money laundering, thus somehow damaging UK's position in the global financial system. At the same time it was noted that regulators in Bermuda, the Cayman Islands and the British Virgin Islands, which have the ability to levy fees on their rapidly developing financial sectors, achieved major capacity improvements since 2000.

It should be said that the data on BVI used in the report are not so new. Since the year 2004 when they were gathered many changes occurred in BVI financial legislation and real measures undertaken during that time against money laundering in BVI.

Committee's report also included the analysis of the disasters other than connected with financial crimes, frauds and money laundering. It was said that the standard of disaster management in the UK's offshore territories is improving, but Territories are at very different stages, some of them, such as the British Virgin Islands and the Cayman Islands, having more advanced systems.

PAC chairman Edward Leigh concluded that the Foreign and Commonwealth Office is not doing enough to manage risks arising from the UK's liability for the 14 Overseas Territories remaining under British sovereignty, especially in the smaller jurisdictions like the Turks and Caicos Islands, Montserrat and Anguilla, which have weaker regulation standards in banking, money laundering, insurance and securities sectors.

The Committee recommended the Foreign Office and UK crime-fighting agencies to bring in these offshore financial centres more UK investigators and prosecutors, to increase its ability to monitor financial service industries in the territories.

Sunday, May 04, 2008

BVI 3rd in India's Outward FDI

The Reserve Bank of India has reported the latest data concerning the outward foreign direct investments (FDI) made by Indian corporations. In general, Indian corporations are investing either through low tax jurisdictions, or through countries allowing tax-free remittance of income.
The actual outward FDI in India in the period between April and December 2007 increased 13% and reached US$10.11 billion, compared to US$8.97 billion in April-December 2006.

According to the information published by the Bank, British Virgin Islands were among the three jurisdictions through which major part of outward FDI was directed in April - December of the last year. The other top countries which were invested by Indian companies were Singapore and the Netherlands.

BVI, together with other top jurisdictions, is an intermediate country before Indian investments will reach its final destination. The first place was with Singapore, - the Asia-Pacific business and financial centre had 37% share in FDI approvals ($5 million and above), followed by the Netherlands with 26% and 8% for British Virgin Islands.

Executive Director of PricewaterhouseCoopers in India pointed out the priority for redeploying money for business and commercial reasons, and said that many direct investments were organized in such a way that income from them faced lower tax, or did not attract tax at all. These are the benefits that may be provided by offshore jurisdictions, including British Virgin Islands.

Other factors that may influence the growth of overseas investments through international financial centres are access to new markets, new technologies, risk diversification. Indian corporations are already receiving dividends from all this.