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SECTIONS 12 Opening Remarks . . . . . . . . . . . . . . . . . . . . . . . . 13 Contributors . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Ahead of the Curve . . . . . . . . . . . . . . . . . . . . . . . 18 Masthead. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .







37 70 83 114

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Insight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Business BVI Guides. . . . . . . . . . . . . . . . . . . . . . Over and Out. . . . . . . . . . . . . . . . . . . . . . . . . . .













LEGAL EXPERTISE Top-tier Offshore Legal Expertise and Corporate Services in the British Virgin Islands and around the Globe Conyers’ British Virgin Islands office is globally recognised as Tier 1. We provide legal and corporate services to a long-standing international client base, and are regularly involved in the largest and most high-profile transactions and cases in the jurisdiction. For more information please contact:



ROBERT J.D. BRIANT +1 284 852 1100










38 BVI looks to grow film industr y 48 BVI remains top jurisdiction in offshore class 54 BVI creates global value 62 Doing business in Asia




Financial ser vices for the future: Courage, Candour, Common Sense


Above board

















Business BVI is a bi-annual magazine published by Oyster Publications LTD P.O. Box 3369, Road Town, Tortola, British Virgin Islands Tel: 284-494-8011 Fax: 284-494-3066 Email: Please send comments and address changes to this address.


Business BVI and Oyster Publications LTD are divisions of Oyster Global Marketing Group.

All information in this publication has been carefully collected and prepared, but it still remains subject to change and correction. Use this content for general guidance only and seek extra assistance from a professional adviser with regard to any specific matters. Copyright reserved. None of the contents in this publication may be reproduced or copied in any form without permission in writing from the publisher. These articles do not constitute tax or legal advice, and no action should be taken based on the information in these documents without first consulting suitable tax or legal advisers. No liability for actions taken, or in action, based on the information in these articles, will be accepted.

Opening Remarks

Creating our own lane is all about relevance As a very small territory or as my college friends from the ‘Big

a global financial services leader. Three key developments in our

Islands’ used to tease – “ a tiny dot on the map”, the British Virgin

opinion speak to this direction; the commissioning and completion

Islands always had to struggle to keep its head above water in

of the Capital Economics Report: Creating Value: The BVI Global

the savagely competitive global economic space. In this space, our

Contribution – a first for the jurisdiction, in the area of evidence

small size does not engender any empathy. Circumstances have

based research on the value added of the BVI to the global

always dictated and demanded that we punch far above our weight

economy, the establishment of BVI Finance, a private sector led

if we are to not just survive, but thrive. As a people, we have

agency designed to globally position the financial services sector

internalized this way of thinking which manifests itself in our daily

and the publication of the VISTRA 2020 Report – The Uncertainty

discourse, such as when we are forced to remind someone that we

Principle which reaffirmed that the BVI remains the Top Jurisdiction

did not ‘eat our school fees.’ Simply put, it means that ‘we are up

in the Offshore Class. This is no small feat, given that on many

to the task at hand.’

levels, the last several years have been some of the most trying

If there was ever a time when we must draw deeply on this DNA, it is now. An era when a significant portion of the developed world continues to take great pride in doing whatever it deems necessary to ensure that the sector which has driven the quality

and downright difficult for the jurisdiction. Does this mean that we are heading for calm waters and smooth BVI like sailing with a steady breeze? We would be naïve to engage in such wishful thinking.

of life that we have become accustomed to, is kept on its back

As a territory we must keep striving for excellence, to be top tier

foot as a good friend frequently reminds me. Their strategy is to

and best in class in the services we sell in the global marketplace,

relentlessly question the legitimacy of the role the territory plays in

on both sides of our economy.

facilitating global commerce. A process which has lifted hundreds

advantage if strategically leveraged. We must keep moving in the

of millions of the world’s poor out of poverty and making them part

direction of Creating our Own Lane. Yes, it is an ambitious goal.

of the world’s burgeoning middle class and global consumers. We

An undertaking that will require us; to adopt a collective long-term

are constantly challenged and called upon to explain and justify

perspective, to be disciplined in our implementation of a global

why we have a seat at the global financial services table. This

strategy and being nimble, but always relevant in this era of

notwithstanding, that as a jurisdiction we are far better regulated,

constant disruption in anticipating the needs and demands of our

adhering more closely than most of our inquisitors in word and

target audience. Client centricity must become our North Star.

spirit to the leading global financial standards. But still we rise. We rise because we have no choice. We rise because we are relevant. The world demands and is far better off because of the

Here, our size is definitely an

Enjoy and please let us have your feedback and comments –

cutting edge services we provide to the global business community, developed and developing alike. We at Business BVI believe that future historians will view 2017 as a tipping point, when the jurisdiction upped its game to the next level, in cementing its strategy aimed at defending our wicket as

RUSSELL HARRIGAN Managing Editor & Chief Content Officer









In his first contributions to Business BVI, Conor King Devitt who is currently the Business Editor of the BVI Beacon, pens three pieces for the edition: ‘Waste Helps the Wallet’ p.34, ‘EC Soap Co. hopes to go International’ p.35 and ‘BVI looks to grow Film Industry’ p.38

Our Fast Facts Guide p.98 is intended to provide top of mind data about the BVI, its economy and doing business in the territory. We rely on Patlian Johnson to ensure we are current. Ms. Johnson holds a Masters of Science Degree in Economics and Finance from the University of Bristol.

Freeman is the editor of The BVI Beacon and helps us to navigate our interviews with business personalities. In this edition he has assisted with our interview of Colin Riegels who recently assumed the position of managing partner at Harneys BVI Office: ‘7 Fat Cows and 7 Skinny Cows’ p.42

Claire recently joined the Business BVI team as Senior Staff Writer bringing with her an extensive portfolio in journalism, as well as content creation for corporate clients on business, travel, and lifestyle topics. Her work has appeared in media across the globe, including Cosmopolitan, Town & Country, Jetsetter, Entrepreneur, Inc., Ad Age, the Minneapolis Star Tribune, the Seattle Times, and the Cayman Compass. She holds a Master of Fine Arts in Creative Writing from Sarah Lawrence College in Bronxville, N.Y. In this her first edition of Business BVI she is all in having done three pieces: ‘Summer Fridays’ p.46 ‘BVI Remains Top Jurisdiction in Offshore Class’ p.48 and ‘The BVI Creates Global Value’ p.54,




Ahead of the curve

Rosewood Little Dix Bay

The restoration of a Caribbean legend


ver 50 years ago, Laurance S. Rockefeller

quality time with loved ones and unique cultural

founded Rosewood Little Dix Bay, the

experiences. Inspired by this fundamental shift in

pristine island paradise that helped put

consumer behavior, the restoration will usher in a new

Virgin Gorda on the map. This stunning

era for the resort, complete with updated guestrooms

oasis is considered one of the first eco-resorts,

and suites, an improved arrival experience, new dining

designed in harmony with its picturesque natural

concepts and immersive travel experiences.

surroundings and with a deep appreciation for the

In order to bring this vision to life, Rosewood Little

culture and history of the island.

Dix Bay has enlisted globally-recognized New York

After a half a century as the Caribbean’s premier ultra-

City-based design boutique, Meyer Davis Studio,

luxury resort, Rosewood Little Dix Bay closed its doors

Inc. to oversee the restoration. Armed with 20

in 2016 for a complete renovation. The goal of the

years of experience working with high-profile clients,

restoration, is to maintain Rockefeller’s original vision

Meyer Davis Studio, Inc. is committed to incorporating

for the resort, while raising the bar for luxury travel in

Rockefeller’s core values into the resort’s overall

the Caribbean and addressing the needs of today’s

design while elevating its aesthetic to entice a new

luxury travelers. Over the past few years, travelers have

generation of affluent explorers to the British Virgin

begun placing more value on personalized service,




The resort’s new design will give off an air of sophisticated luxury, while incorporating elements of the island’s stunning, natural surroundings. Meyer Davis’ design of Rosewood Little Dix Bay has an elegant aesthetic, that masterfully mixes luxury and minimalist mid-century design. A classic combination of wooden accents and a light, neutral color scheme retains the atmosphere of a timeless retreat. The design narrative pays homage to the iconic spirit of the legendary Caribbean resort and creates an immersive environment. “With the renovation of Rosewood Little Dix Bay, we hope to shine a spotlight back on this legendary resort, which has so powerfully influenced the hospitality industry overall,” said Andreas Pade, managing director of Rosewood Little Dix Bay. The refurbished resort will feature reimagined guestrooms and suites, including the addition of breathtaking, one-bedroom pool suites and two-bedroom suites that will appeal to all types of guests from couples and honeymooners looking for a romantic respite to families looking for an opportunity to strengthen bonds and create unforgettable memories. The resort will also be refreshing its facilities, including the spa, two swimming pools, fitness center and seven tennis courts. The resort’s three signature dining destinations – Bungalow, Pavilion and The Sugar Mill – will also be infused with new design elements. New food and beverage concepts will feature international and Caribbean flavors and embrace the abundant fresh local ingredients of the British Virgin Islands. Travelers and locals looking to indulge their palates will find a variety of dining styles to



choose from. Whether guests are looking for refined island cuisine, casual beach-side bites, or innovative cocktails, Rosewood Little Dix Bay will have something for everyone and is poised to become the new premier culinary destination in the islands. To complement the renovations, Rosewood Little Dix Bay will expand upon their offerings to provide guests with specialized experiences, including locally-inspired culinary classes, themed beach drops, educational family programming, voluntourism experiences and inspiring wellness activities. These authentic experiences will give affluent travelers the opportunity to engage in the local culture and heritage of the people and partake in special moments which will become treasured memories of their time at the resort. “In anticipation of our re-opening, we look forward to providing our guests with unrivaled luxury accommodations, best-in-class service and authentic, immersive experiences that will reaffirm Rosewood Little Dix Bay’s long-standing reputation as the leading Caribbean resort,” said Pade. A key part of the re-opening process for Pade has been the selection of his new executive team, which he has tasked with reshaping the resort’s operations and guest experiences to cater to today’s modern travelers. The team will also be responsible for engaging and identifying local talent to develop the next generation of luxury hospitality professionals.

INFO: +1 284 495 5555



Ahead of the curve

Cabinet approves work permit exemptions for business visitors PHILOMENA ROBERTSON

Communications Specialist Financial Services Implementation Unit 22



overnment is moving proactively to initiate the changes necessary to facilitate more substance-based economic activity in the Territory, as part of the BVI Forward campaign. Cabinet has approved the exemption for work permits under the Labour Code 2010, which will enable various classes of business visitors, including those for arbitration and mediation to enter the BVI without the requirement of a work permit. The exemption is based on recommendations in the Financial Services Consultancy Report, approved by Cabinet in 2015, which set out a roadmap for repositioning and diversifying the financial services sector. The change allows the BVI to compete with other jurisdictions globally.

Premier and Minister of Finance, Dr. the Honourable D. Orlando Smith, OBE, said Cabinet’s approval illustrates Government’s commitment to fostering economic growth and supporting the creation of more substance-based economic activity in the BVI. Dr. Smith said, “By creating a more business-friendly environment, we will be supporting the work of the BVI International Arbitration Centre, facilitating easier entrance requirements for scores of persons involved in international arbitration. As the demand for the arbitration centre grows and the persons utilising its services similarly increase, there will be a ripple effect in the local economy, as they would require goods and services while here.” The Premier added, “The exemption of work permits for business visitors, is one of several measures to be implemented in the coming months, designed to reposition our economy for future sustainable growth.” The work permit exemption, will also be granted to persons visiting for meetings/ conferences, those receiving training from BVI businesses, persons attending meetings as Directors, those conducting research with the required approval, persons making purchases from BVI businesses, those visiting clients for negotiations and business deals and those who are expert witnesses in dispute resolution cases. Persons participating in amateur sporting activities and students attending the H. Lavity Stoutt Community College, Financial Services Institute or other academic institutions for training will also be eligible for a work permit exemption. Deputy Premier and Minister for Natural Resources and Labour, Dr. the Honourable Kedrick Pickering welcomes Cabinet’s approval of the work permit exemptions, saying it will help to improve the Territory’s competitiveness globally. Dr. Pickering said, “The work permit exemptions for business visitors demonstrate the Labour Department’s commitment to facilitating the Territory’s economic agenda and making the changes required to provide more efficient and transparent processes.” The work permit exemption will be granted for 60 days in the case of arbitration/mediation and seven days for all other business visitors. Extensions to the initial work permit exemption will be considered upon request. Persons requesting waivers under this provision are required to present the Immigration Officer at the port of entry with a letter issued by the management of the registered BVI entity inviting them. The letter should state their work title, date of expected arrival, the duration of stay and purpose of their visit and the fees charged or to be paid to the person requesting a work permit waiver. The inviting business is obligated to collect and pay to Inland Revenue, the tax payable on such fees. In the case of events, conferences or other activities involving large groups of persons to receive exemptions, notification must be given to the Immigration Department of the activity and a list of participants provided in lieu of individual letters. BVI registered entities found to misuse or abuse this exemption provision would be subject to administrative penalties of up to $5,000 at the discretion of the Labour Commissioner. INFO: +1 284 468 4430



Ahead of the curve

What’s trending at OIL NUT BAY • Four more villas were completed this season, bringing our total completed villas to 17 • Another 7 villas are under construction with completion dates scheduled throughout this year ​into 2018​ • The Spa is fully open and operational and had a very successful first season. We are featuring The Organic Pharmacy products, made in small batches out of the UK. We are open and accepting appointments through the summer. • Our double helipad has been completed along with a welcome pavilion. • N​ew lots r​eleased ​in the coveted Peninsula Villa neighborhood that sit directly on the beach in front of Oil Nut Bay. These lots are selling quickly and there are only six left, starting at $7,900,000. • Road paving continues and all roads will be paved by the end of 2017 • Pier two of the Marina is being finished this ​summer.



Cheemaun Beach Villa





Poseidon’s Perch





The Spa



Ahead of the curve

BVI Finance taps Elise Donovan as new CEO


he BVI Finance Board of Directors in July, announced the appointment of Elise Donovan as the company’s new CEO. Donovan currently serves as Director of BVI House Asia, the British Virgin Islands Government’s representative office in the Asia Pacific Region, based in Hong Kong. She will assume the position based in the BVI on October 1, 2017. BVI Finance is responsible for marketing and promoting the BVI’s financial services sector. In her role as CEO, Donovan will lead BVI Finance in continuing to market, promote and manage the reputation of the BVI’s financial services industry. She will be replacing Lorna Smith, OBE, who is returning to her consulting firm, LGS and Associates. Donovan brings a wealth of knowledge and expertise to the position, including having previously served as Director of the BVI International Affairs Secretariat, Executive Director of the BVI International Finance Centre (the forerunner to BVI Finance) and a member of the BVI’s Tax Information Exchange Agreement Negotiating Team, with countries such as China, the United Kingdom, France, Australia, New Zealand and Canada. Donovan also holds Bachelor’s and Master’s degrees from Carleton University and Columbia University.

report. Given her experience and ability, I have no doubt that Elise will further strengthen our efforts in this. “The Board and I would also like to send our most sincere thanks to Lorna Smith for her valuable contribution and service as Interim Executive Director.” Elise Donovan, newly appointed CEO added, “I am very pleased to be joining BVI Finance at such an important time for the BVI’s international business and finance centre. We have a hugely positive story to tell, with unrivalled expertise and services in a number of areas that promote cross border trade and investment, including company incorporations, legal services and investment funds. I look forward to promoting these both locally and internationally, as well as supporting our members to maintain and build new commercial partnerships around the world.”

Commenting on the appointment, Kenneth Morgan, Chairman of BVI Finance said, “BVI Finance is delighted to appoint Elise Donovan as CEO and we are especially excited to have someone of such high calibre leading the voice of the BVI’s financial service sector. “Our international business and finance centre has faced significant attention in the last 18 months, so it’s vital that we continue to promote, educate and inform all audiences about the quality and value of our services, particularly following the release of the Capital Economics AUGUST 2017 EDITION


Getting to know

Miss Janette Brin

Centre Manager at the BVI International Arbitration Centre



Ahead of the curve Although relatively new to the industry, Ms. Janette Brin is quite excited about her new role as Centre Manager at the BVI International Arbitration Centre. Playing a part in this new initiative has allowed her the opportunity to take an educational approach in her endeavors, giving her fresh insight into what the Arbitration Centre would mean to the territory. Business BVI sat down for a chat with Ms. Brin to catch up on her new role.

Business BVI: What are your thoughts, so far, on the future of Arbitration in the BVI?

many ways the Centre is already contributing to the BVI Community.

Janette Brin: It’s definitely new! However, for me personally, I think that the whole ‘newness’ of it is what intrigued me about coming here. That’s a challenge within itself, coupled with the opportunity to be a part of something that carries with it great potential to positively impact the territory.

BB: Summarize what differences you have with your new post here, in comparison with your previous experience in the telecommunications field. How does it differ?

I’m sure the future of Arbitration is going to be rewarding, considering the level of interest we’ve gotten so far from both the non-legal and the legal community. We recently hosted Arbitration Week here at the Centre and representatives from the Caribbean, Europe, and the United States all came to both share and learn. That says something!

I’ve been in telecoms for quite a while, having been with Cable and Wireless for some time and then most recently with the local telecomm CCT for at least 4 years. It’s pretty hyperactive and it’s very “in your face”, as you know in that industry you are dealing primarily with consumers in a highly competitive environment, so it’s a whole different ball game.

BB: How do you think this new state of the art centre will benefit the BVI? JB: Everyone that comes in is always like “wow” or “whoa” and they’re just so impressed. From the interior design to it’s technical capabilities the Centre is definitely world class. As a result, the environment is one that persons can’t help but want to be a part of. When you’re in a place like this, it makes you feel like you want to do something here. You want to be involved. So I think in some ways it motivates people to be entrepreneurial in a sense. Since I’ve been on board, we’ve had events such as the Minority Chefs Conference come in which is obviously different from Arbitration, but they are about business. So the Centre will also lend itself as a motivating space. So whether it is the Minority Chefs or the Branson Centre, it’s a creative space for creative minds, trying to pursue their respective businesses or business interest. As an entrepreneur myself, I definitely welcome that type of energy. This is just one of

JB: It is very different.

Here, we’re dealing with a different target audience – if you will. Its more detail oriented in the sense that we are talking to high-end clients, you have to be a little bit more on your p’s and q’s. We aren’t just marketing the Centre but the territory as a whole as a place to do business. It’s definitely a challenge, but it’s still fun! The fun hasn’t gone. A contributing factor to me wanting to take on the challenge, is that I personally believe in career growth and you can’t have that unless you’re willing to challenge yourself. I went to school and got my academics, but you really learn when you get the hands-on, so this was a new opportunity for me to really test my skills and abilities and it’s always welcoming to meet new people – that’s always a plus. I’m excited about all of this!

BB: What are some of your responsibilities and what does your post entail? JB: As the Centre Manager, I am pretty much responsible for all the day-to-day running of

the centre; ensuring that we are maintaining a standard that equates to world class. When people come to the centre it must be a welcoming experience. The centre’s maintenance and continued development are relative to a brand. So, in some respect, it’s actually very similar to what I’ve been doing (working with brand development) and brand development is highly improved by the experiences that people have, when they’re engaged with it. I’m currently working on a new marketing plan for the centre. So I’m looking at all the tactics we may wish to use in reaching our target audience and producing ROI for the centre. I’m involved in the conferences, assisting our team with the logistics of all conferences held, providing quotes to business persons interested in hosting conferences or seminars, just about a little bit of everything.

BB: What do you enjoy most about your post so far? JB: So far, for the past weeks I think I’m just enjoying the opening of new horizons. Being able to contribute to the marketing of the centre is pretty huge for me. I’ve also enjoyed being able to meet new people, especially my new boss, Francois, who comes with a wealth of knowledge. The opportunity to learn from him and the opportunity to interact with FSC is also a rewarding opportunity for me. To learn from the legal and financial persons, getting to know more about their world. I think that’s pretty exciting. You can probably ask this question again next month! But it’s been good and the people are fun too.

BB: Do you have any words of encouragement, for BVIslanders looking to get into the legal or financial sectors, without necessarily having to



go through the standard training like law school?

Waste helps the wallet

JB: I would say, make an effort to learn more about the industry. Don’t feel as if because you didn’t go to school for law, you can’t work in a law firm or in Arbitration specifically. Take time to learn about the industry and learn about the different roles that are involved (whether a law firm or an arbitration centre) and see how you can contribute your talent to it. I’ve often said to people before when asked similar questions; go to different events, network with people and try to make connections. Don’t be afraid to ask questions or to give them a call, it won’t hurt to just learn and ask questions. You have to have a plan in how you see yourself growing year after year in both your personal and career life and how you can make them work together. So you have to take the initiative to just find out more.

BB: Apart from Caribbean Posh Magazine, are there any other passionate projects that you work on or are involved with?

VG residents see money in recycling CONOR KING DEVITT

and I wanted to put it all in one thing. Then I remembered my uncle would always use the word “Posh” when he saw that you were dressed nice. I want people to remember that the Caribbean, it’s people and it’s culture are beautiful in their own way and that we too are Posh.

JB: Yes, my brand! It’s actually Caribbean Posh but people call it Posh for short.

BB: What or whom would you say is your inspiration and your drive to do what you do?

I started it in 2005 and it’s very big on my plate, being that it’s more than a publication; it’s actually a movement and I’m very involved in trying to connect us as Caribbean women. Making sure that we’re learning proper networking and are more supportive of each other in developing our careers, learning how to better manage our personal lives – especially when we’re so passionate about career.

JB: My inspiration, and my whole entire life, is my son. I have a 19-year-old son in his first year of college (Morgan State University) and he’s my only son; so he means a lot to me. I want to be a good example for him, so I would say he inspires me a lot.

I’ve been fortunate enough to learn good networking skills over the last couple years and I’ve been able to meet some amazing women, all of Caribbean descent. In trying to develop my brand I have learned to cultivate these relationships and get them to come back to the Caribbean and engage with other Caribbean women. It’s all about enrichment and encouragement. So apart from Caribbean POSH Magazine, there is my annual POSHgirl POWER Brunch. It’s an empowerment event for Caribbean women. We have to help each other stay positive. So any and everything I’m involved in, that has to be the basis.

BB: How did you come up with the name Posh? JB: I remember when I was in the U.S and I was thinking to myself, “What do I want to do with my life?” I knew I wanted to do something entrepreneurial, but that would also help other people. I also love fashion, music and culture




n Virgin Gorda, garbage is rapidly becoming an outdated word.

Next to him, would be my mom and my twin sister – who I can’t go a day without speaking to. I guess I’m very family oriented. Even when this opportunity came about I had to ask them first, I even spoke to my son about it and he said, “I think you should mom, sounds like a good opportunity for you”. He’s so wise beyond his years.

BB: What are some of the things you enjoy doing in your downtime? JB: (Laughing) I don’t have much downtime, but when I do have downtime I enjoy relaxing at home and watching Netflix – for some strange reason. I could Netflix binge if it’s a good series! Outside of that, I love having opportunities to travel so I can see different places and meet new people. I love to learn more about the Caribbean, its culture, its people and how we can impact the world. Those kinds of things intrigue me. I also love spending time with my family. I visit my grandparents almost everyday after work. That’s me in a nutshell.

The sister island is home to a blossoming eco-industry that recycling professionals hope will offer a slew of new jobs in the next few years. Where others see glass shards, they see concrete. While others may abandon junk cars, they want to slice them for scrap metal. And while some dump food waste in the trash, they envision gardens. Julie Swartz, founder of Green and Clean VI, runs one of the epicentres of this movement. Her waste processing plant takes discarded glass and puts it through an imploder, a machine that can process 2.5 tonnes of scrap glass an hour into a mix suitable for making concrete. “The whole concept is waste is a resource,” she said. Ms Swartz envisions a consortium of different enterprises devoted to processing and recycling garbage: imploding glass for concrete; baling scrap metal for export; repurposing construction debris and asphalt for sale; and converting organic waste – which she notes is 40 percent of the territory’s waste – into soil or energy. The plan is well on its way to being a reality. In addition to Ms. Swartz’s glass process, a company called Green Acres plans to compost and grow food with organic waste, and a company called Green Electric wants to use recycled vegetable oil for biofuel. And that’s not all: Ms. Swartz said she’s been in talks with students at the vocational school about starting a business centred around recycling construction waste, and she’s working with another who wants to turn derelict automobiles into scrap metal. “It’s a great opportunity for people who don’t want to wear shiny black shoes and ride the ferry to go work for government,” she said. “There are niches and jobs through all of this stuff because most of it makes an end-product.” And Ms. Swartz is not the only one attacking glass waste: Ramona Van Steinberg, an interior designer by trade, regularly collects glass from

business around VG to turn into sculptural pieces, bowls and jewellery. “As far as the art world goes, [recycling] is just a given,” she said. “You can take anything and make art from it.” Ms. Steinberg also proposed a program to Rosewood Little Dix Bay Resort for when it reopens that could create even more jobs. The resort could send its glass off to her and a few people she employs, and they could turn it into tableware and souvenirs that Little Dix could repurpose, she explained. “There’s so much waste in the world,” Ms. Steinberg said. “We really need to be making the most of the garbage.

EC Soap Co. hopes to go international CONOR KING DEVITT


lexandra Durante hopes to help legitimise a long-ignored opportunity for business owners in the British Virgin Islands.

The executive director of the Eastern Caribbean Soap Company believes cooperation will make it financially possible for local companies to export BVI-specialty products to buyers in the mainland United States.

The method: establish a working partnership with up-and-coming entrepreneurs in the territory that reduces shipping costs for everyone involved. To that end, Ms. Durante, other local business owners and government officials have had discussions about accessing a fulfilment centre in Florida. Such a centre could serve as the US hub for BVI products, acting as the middleman between Tortola producers and American consumers and driving down shipping prices for buyers, Ms. Durante explained. “We just need to pave the way forward as business owners and tap into something,” she said. Helping get such a venture off the ground would be the latest in a series of business-savvy steps for Ms. Durante, whose sales career started when she took over a Crafts Alive Village stand from her aunt in 2012.

While there, she sold homemade jewellery and crafts, as well as her signature product: Tahitian oysters, each with a guaranteed pearl inside that she promised to polish. Later that year, Ms. Durante took her business – then named Pearls VI – to Bamboushay Pottery on Main Street. Three years in, she expanded into local hot sauces, soaps and bath/body products. “After awhile, the soap started paying rent over the jewellery and it was a lot less hassle and a lot easier to make,” Ms. Durante explained. She rebranded her business as the EC Soap Company and took it to its current facility in Wickhams Cay II, where she specialises in a variety of products that utilise local raw materials – like a bundle of salt harvested directly from Salt Island. From there, her operation expanded into wholesale markets like villas, hotels and charter/ bareboat vessels. As the company grew, it strove to emphasise waste reduction by utilising reusable product bottles for wholesale customers, according to Josh Davies, director of wholesale and retail operations. The next step came this May, when EC Soap Company began selling its products online. Foreign purchases, however, have remained at a trickle due to the high cost of shipping, Ms. Durante explained. She noted, for example, that sending a pound of their product just to St. Thomas costs the buyer more than $30 in shipping fees. “We have the international demand, we have the local supply, we just can’t export it,” Ms. Durante said. She hopes, however, that local cooperation will change that by the summer of 2018. AUGUST 2017 EDITION


Ahead of the curve

The BVI supports two million jobs globally The much highly anticipated Capital Economics report titled: Creating Value: The BVI’s Global Contribution was released by BVI Finance in June and is a must read, by anyone wishing to understand the key role that the BVI plays in facilitating the global economy. The report is available for download on The report’s findings show, among other things, how the BVI enables global investment and trade, which support more than two million jobs worldwide. Undertaken by Capital Economics, an independent economics consultancy firm, the report analyses the significant global economic contribution of the BVI. It finds that the BVI mediates over US$1.5 trillion of cross-border investment flows, the equivalent to two percent of global GDP. The first of its kind report also finds that over US$15 billion of tax revenues are generated annually for governments around the world, via investment mediated by the BVI and the resulting economic activity. The UK (US$3.9 billion), the EU excluding UK (US$4.2 billion) and China and Hong Kong (US$2.1 billion) are the largest beneficiaries of this tax generation. Coupled with the jobs it supports, the tax generation marks the BVI as a substantial net benefit to governments worldwide.



Commenting, Lorna Smith, OBE, Interim Executive Director of BVI Finance said: “The results of this study clearly demonstrate the significant contribution the BVI makes to the global economy. Not only does the BVI enable cross border trade and investment, it also supports millions of jobs and generates substantial tax receipts for governments globally. This brings tangible benefits to the lives of employees, voters, families and businesspeople around the world. The report is unequivocal: contrary to some accusations, the BVI is a sound and reliable centre, which has worked harder than many bigger nations to meet international standards, and is not a tax haven. This independent and authoritative report is equally clear in stating that the BVI is not a centre for corporate profit shifting. This helps clarify once and for all some of the inaccuracies and misunderstanding about what the BVI is and the valuable role it plays in the global economy.” Commenting, Mark Pragnell, Head of Commissioned Projects at Capital Economics and the report’s author said: “The BVI provides the legal structures that allow companies, institutions and individuals to safely and efficiently carry out their business and make investments across international borders. The “BVI Business Company” is a widely used and dependable vehicle to facilitate cross-border trade, investment and business. Over 140 major businesses listed on the London, New York or Hong Kong main stock exchanges use BVI vehicles to support their international investment activities. Similarly, major international development banks, such as the World Bank’s International Finance Corporation, use BVI Business Companies to help fund vital projects. “Our report shows that the BVI is a global powerhouse for cross-border investment, equating to a conservatively estimated $1.5 trillion across its 417,000 active BVI Business Companies.”

Please see our detailed article on the report on page 50.






Business BVI Business

It started with a family vacation. Philip Richards Jr. wanted to document his family trip, so he bought a little Panasonic Handycam to record the moments. “I took it on my family vacation, and I was like, ‘Hey, this seems like something fun, let me dabble with it a little bit,” Mr. Richards said. “And then I came back home and I really enjoyed editing the piece.” Not long after, he decided to pair his blossoming interest in film with his love for music, and recorded numerous local artists in studios and during live performances. Now, a decade later, the McWelling Todman & Co. paralegal operates a full-fledged production company that has shot music videos, corporate commercials and local tourism footage.



Modern equipment brings BVI filmmakers into the fold.


r. Richards said he’s lucky. His dive into the world of filmmaking coincided with an ongoing, unprecedented era for aspiring directors, an era that allows Hollywood hopefuls to purchase professional-quality production equipment and editing programs for little more than a summer job’s savings. “With the advent of [improved] technology, it has allowed people like me, as a guerrilla filmmaker, to create amazing works with respect to cinematography, because they have given us these tools for next to nothing,” Mr. Richards explained. The accessibility of these new options, he argued, presents the territory with an opportunity to stake its claim as a respectable filmmaking locality, a place where foreign production companies could hire local professionals for skilled work on a regular basis. “The main reason I got into filmmaking, is because with every production from here, there was this stigma where as we accept this low quality, this low budget thing because it’s from the Virgin Islands,” Mr. Richards said, adding, “I felt that stigma had to change. There’s no excuse why we can’t be [producing] close to, if not equal to Hollywoodtype stuff.” So what takes the British Virgin Islands there? What will allow more Virgin Islanders – including Mr. Richards – to quit their day jobs in the future and pursue filmmaking as a full-time career? The answer, industry stakeholders argue, starts both with nurturing the populace’s interest and improving the territory’s cinematic portfolio. BVI Film Commissioner Clive McCoy is pragmatic about the territory’s foreign film prospects. He knows the BVI as a location is unlikely to draw the massivescale projects. The infrastructure, the accommodations, the existing pool of specialists, the potential for tax incentives – none of these are currently lined up in the territory for it to snag Hollywood-style blockbusters, he explained. “Say $250,000 spent in the BVI gets you a quarter of the film done, in the Bahamas – where they have the same beautiful beaches and things of that nature – they can probably do the entire film for that cost,” he said. What the territory can do, however, is take a specialised approach. “The projects that we get, that we can incentivise and get something out of, are the smaller projects,” he said. “I noticed that those guys don’t usually look for incentives, like TV commercials, fashion shoot spreads, music videos.



When those guys come, it’s because they want the locations in the British Virgin Islands.” Meanwhile, a number of people inside the territory are working to create film products that rival the quality of any of those abroad. In addition to Mr. Richards, local photographer John Black manages a growing video business that focuses largely on weddings, promotions and events. Mr. Black recently acquired new video production equipment and is confident his shoots are on par with those of international professionals. “My work will speak for itself,” he said. Earlier this year, Mr. Black was hired to document the Philadelphia Flyers hockey team while they were on an offseason vacation to Peter Island. Over time, Mr. McCoy hopes to grow the pool of talented professionals like Messrs. Black and Richards to the point where both local and international film projects benefit. To that end, the film commissioner has repeatedly promised to help try and secure funding for young people in the BVI interested in producing something. “I’ve said, ‘Listen, you guys come to me with a script, you guys come to me with a plan, you want to film something – tell me what your budget is and, as the film commissioner, I will go to bat for you to get you some funding to help you do it,” he said. Mr. McCoy also wants to bring people down for training seminars in production and screenwriting, and has set up shadowing opportunities for local filmmakers when foreign productions come to town. Mr. Richards was the beneficiary of one of those opportunities. He interned with the reality television program Below Deck, which spent three months filming a season in the BVI. In classic reality show fashion, Below Deck documents the trials, tribulations and personal drama surrounding a group of megayacht co-workers during charter season. The show’s production here serves as a reminder of how much money one show can pump into a jurisdiction. In 2015, film projects shot in the territory are estimated to have spent more than $424,000 in the BVI, according to the film commissioner. In 2016, due largely to Below Deck, that number ballooned to more than $1,750,000, Mr. McCoy explained. For Mr. Richards, however, the show had value outside of money.

production costs, materials, catering and accommodation.


For example, an Oxford Economics report funded by the United Kingdom Film Council and the Pinewood Group estimates that the UK’s GDP would decrease by £1.3 billion a year should the country remove its film tax relief policy. Proponents also argue, films have the potential to generate additional tourism dollars by showing off natural and man-made landmarks. They cite New Mexico, a state with an aggressive film incentive policy, which saw record tourism numbers in the wake of the popular television show Breaking Bad.

“Organisation, crew management, all of that stuff – I definitely learned that stuff,” he said. “That was an eye-opener for me.” A higher number of film production professionals could make it easier for more productions to utilise the BVI, according to Mr. McCoy. In turn, a higher number of productions will increase the opportunities young people in the territory have to learn the skills necessary to work in film. “If there is a thriving film industry in the British Virgin Islands, it opens it up for us to have bigger projects to come [from abroad], because now they won’t have to fly everybody in, because we have people here with the skills. They don’t have to send all the gaffers and grips and people like that,” the film commissioner said. “We’re a ways away from that right now.” Locally, both Messrs. Black and Richards have ambitious filmmaking plans for the future: Mr. Black would like to document the mating season of frigate birds by Jost Van Dyke, and Mr. Richards is laying the groundwork for a sci-fi action-comedy narrative film. Getting the industry’s ball rolling may require some additional help from lawmakers. In the last two Speeches from the Throne, in 2014 and 2016, government promised to bring forward a film incentive bill in attempt to lure foreign investment. There are numerous types of film incentives, including production grants, tax breaks, and cash rebates. International film industry stakeholders often argue passionately in support of the subsidies, which have exploded in the United States in the last 15 years. Incentivising film, they say, creates jobs and brings in bundles of money from local

Some academic researchers, however, have cast doubt on the true financial benefits of incentivising film. Adrian McDonald, a film and television industry researcher, published a 2011 article in the University of Pennsylvania Journal of Business Law blasting the film incentive competition between different states in the United States. “Credible analyses of wave after wave of state-level data regarding various filmincentive programs lead to the harsh reality that, for almost every state offering film incentives, benefits do not outweigh costs,” he wrote, adding, “Film incentives do not provide a positive economic return for the state treasuries from which they are funded.” For many states, he traced data that showed only small-fraction returns on big incentives. Mr. McDonald acknowledged that the only possible exceptions were subsidy policies like the ones offered in New York and California. The Caribbean is already a crowded market place for film incentives: the Dominican Republic, Puerto Rico, Trinidad and Tobago, Jamaica and the USVI all offer them, according the Miami Herald. In the face of this competition, Mr. McCoy again appeared to offer a pragmatic outlook for the BVI. “I’m not 100 percent sure if cashback [film] incentives would work here, because it wouldn’t stretch as far as another country,” the film commissioner said, adding, “I think the incentives we should aim for are tourism-based incentives.” An example, he explained, would be subsidising ferry transportation for a production team that wanted to shoot on Anegada. Mr. McCoy – who noted part of his role was to lobby for funding from government – said a smaller, well-directed incentive system like that could really help expand the territory’s film industry. Such a system, he explained, could continue to grow the market for speciality commercials and photo shoots that want to take advantage of one of the many beautiful filming locations the BVI has to offer. B



Below is a breakdown of some the location-driven photo and video projects in the territory over the last six years. Film Commissioner Clive McCoy, who provided Business BVI with the list, defined location-driven projects as these that either “parallel or are a direct result of the Film Commission’s sales and marketing efforts.” Mr. McCoy noted the listed projects chose the BVI specifically for its locations. They do not include travel magazines, published work by commissioned journalists, or marketing material for locally based companies like charter yachts.


Location-driven projects: 14 Notable projects: Bulova Watches, Sports Week fashion shoot


Location-driven projects: 7 Notable projects: Vogue, Cabrinha


Location-driven projects: 9 Notable projects: Sports Illustrated Swimsuit Issue, Aveda Skin Care, Ebony fashion shoot


Location-driven projects: 16 Notable projects: Jacksonville Jaguars Cheerleader Calendar, Johnny Walker commercial, Bloomingdales photo shoot


Location-driven projects: 13 Notable projects: Billabong; Little Big Town Painkiller music video


Location-driven projects: 12 Notable projects: Vineyard Vines, Below Deck, HK Intimates, Mare TV British Virgin Islands (German Production)



Business BVI Business

This spring Colin Riegels was named managing partner of Harneys’ BVI office. He brings plenty of experience to the table: Mr. Riegels, who is also the firm’s global head of banking and finance, joined Harneys in 1999 and became a partner in 2006. He helped set up the firm’s London and Singapore offices, and he recently returned from a stint in the Cayman Islands. In June, Mr. Riegels sat with Business BVI to discuss how the territory’s financial services industry might map a way forward in turbulent times.

7 fat cows and the

7 skinny cows Interview conducted, condensed and edited by RUSSELL HARRIGAN and FREEMAN ROGERS



We’d like to start by speaking a little bit about your new role as managing partner, about the offshore sector in general, and about what’s going on in the headlines.


aking over as managing partner was something that happened in March of this year. It actually took me a little bit by surprise. I hadn’t appreciated Sheila [George] had served a full five years, and she for some time had been very keen to refocus on the private wealth sector in the BVI, which is something she’s always had a responsibility for in the firm. She sees this as an area of increasing opportunity and wanted to take a much more dedicated full-time role in that. So when I was asked if I would take over as the MP now that I was back, I couldn’t think fast enough to say no. It’s been about three months now, and it’s been interesting — but as someone who is passionate about both the BVI and about Harneys, it’s a role I am both humbled and excited to have. In terms of the offshore world generally, I think obviously the big buzzword has been the new beneficial ownership registers, which are coming in across the different British overseas territories. By the time this is published, it will have happened. But where we’re seeing now, it’s still two weeks away. That’s a very interesting and busy time for everybody. There’s a little bit of a leap into the unknown. We’re all going to find out how well the market responds to that change. I think it’s going to be particularly interesting in BVI because it happens at the same time as a number of other changes. For example, for the first time in a very long period of time, government is going to be pushing up registration fees for companies quite significantly — not offthe-charts significantly, but there’s going to be an increased layer of cost. They pushed [the timing] back, so it’s going to come into effect at the start of next year. Hypothetically, if we see a significant contraction in the number of BVI companies, it’s going to be hard to separate out the effects. The other thing obviously on people’s minds is there has been a contraction — or what some people call a rationalisation — in the book of offshore business. Just yesterday, I believe, the FSC published the Q1 statistics, and those were actually the lowest on record since they started

publishing those statistics. So definitely signs of a smaller book of business but perhaps a more concentrated book of business. What was interesting is the total number of BVI companies has now started to progress upward again. So even though the rate that we’re forming them is smaller, the rate that they’re being liquidated and dissolved is also contracting. So I think we’ve maybe reached some kind of new equilibrium and we can start slowly building up again. Difficult to say, but in a way that fits with the government strategy of increasing the licence fees, because I think we now have fewer companies but they’re doing more interesting things. And time will tell how that pans out. I think the other thing that’s going to be increasingly happening in the offshore space in the BVI is that we’re going to see a lot more consolidation of trust companies. At the moment, we have a large number of very small trust companies. The world we operate in nowadays has much higher compliance and transactional costs, [so it is] very difficult for small operators to survive. So I think a lot of them are exiting the business, and if you ask me to guess in two years’ time we [will] see a much smaller portfolio of trust companies but with much larger books of business. That’s going to be potentially a difficult change, because I suspect it probably means a drop in overall employment in the sector, which is never welcome. On the other side, it would probably be good for regulators because it would mean a smaller group of people to liaise with and keep an eye on. But I feel change is likely whether we like it or not.

If you were to look in your crystal ball, what does the sector look like in five years? In BVI and globally? Gosh, that’s a challenge. Where I would like to see us is a much more integrated offshore product where we evolve a much closer and more direct role with the users of offshore structures that involves both greater transparency in terms of the relationship we have with them and a greater level of service and value that we’re able to provide from this side.

What drives that, though? Is it you or the customer? I think it’s a combination of things. Ultimately, what offshore provides is services for people who have transnational business and transnational assets. The whole origin of offshore came through the 80s and 90s through governments in larger countries being sort of fixated on national boundaries, and perhaps not appreciating the rising trend of globalisation. Now the world is adjusting to that. More and more laws and regulations are passed recognising that the world is interlinked and joined up. What that has created is a world where what people need from offshore is going to be different from what it was before. It’s always very difficult to predict how these things are going to evolve, but I suspect it is going to involve a world with a smaller client base, but clients who have greater demands on us. Funny enough, just yesterday I was conversing with a couple of colleagues about Bitcoin and crypto currencies. I was saying two or three years ago we’d all heard of these things, and we were thinking maybe they’ll take off, maybe they won’t. I think now we finally started appreciating these as something that we probably have to take quite seriously. And the more I think about it, the more I wonder is this going to be something that completely revolutionises the way finance operates? If so, what does that mean? The more you realise that the world is changing, the more you realise, “Gosh, I’m really not sure [exactly] where we’re going.” The older I get, the less certain I am about [these] things.

You’d mentioned the wealth management area that Ms. George wants to focus more on. Do you see new areas like that taking on an emerging role? I think so. One of the areas that I think is going to be increasingly prevalent is what are currently called family offices. I suspect we’ll probably adopt a new label, but this role of family offices/ trustees/life managers is something that I suspect we are going to see more of going forward. And I think we need to make sure that we tool up to meet those challenges as they evolve.

Let’s switch to some of the events that are going on at the moment. Let’s talk a little bit about what I’m calling the political mess in Britain and its implications for Brexit. Do you see any light at the end of that tunnel? That’s a very good question. I completely agree right now it is a very, very messy situation, and speaking as someone who’s a dual citizen — I’ve got my British passport tucked away at home — I think it’s a very disturbing time for the United Kingdom. They have some real issues at the moment. They lack political direction at a time when they really need strong leadership. Realistically, everybody knows that within a year we are either going to have a new prime minister or a new general election, or both. That makes it almost impossible for anyone to conduct negotiations on behalf of the UK at a time when they’re going into the most difficult negotiations they’ve had for 50 years. So if you’re someone living in the UK right now, you have every right to be very worried. What I think is much harder is when you flip and say, “Okay, what does that mean for us here in BVI?” [People hold] lots of different opinions. To be blunt, I think the UK is going to be paying us a lot less heed. In a way, that’s a good thing and a bad thing. I like to think the relationship between the BVI and the UK is a bit like having a much older brother: You like to know your big brother is out there to have your back if you’re in trouble, but you don’t want him telling you what to do the whole time. And so I think in this case our big brother has got some big college exams coming up. He’s not going to be paying us too much heed. So in a way I think that the UK being heavily focussed on other issues probably is something that for the BVI is not necessarily a bad thing. We are a country that likes to forge our own way without people telling us too much what to do. I think we will probably have a period where that’s going to be the de facto case whether we like it or not. So long as no serious crisis comes along, I’m perfectly happy with that arrangement. People who are worried in Road Town about what all this means are people who tend to think the UK’s problems are sufficiently big that it’s going to have to hand out some [negotiating] chips.



And one of the chips it might hand out, is bad things for the BVI, for someone in France or Germany who wants bad things to happen to us. I don’t think that’s especially likely, but politics is politics. Who really knows?

The part of that which creates additional uncertainty in Road Town is that one doesn’t have a sense as to what a postBrexit Britain looks like, and by extension where do the overseas territories fit in to that picture. I think that’s right. So in a sense some of the uncertainty and worries that Britain has naturally spill over to us. Every Belonger in the BVI is entitled to a British passport. In the old days, that meant you could work anywhere in the entire European Union. Will that be true after Brexit? The truth is we don’t know. We don’t know what kind of rights to work in the rest of the EU are going to be preserved. Everybody has an opinion on what Brexit’s going to mean, but my personal opinion is that even if Theresa May had won a majority of 150 in the last election — the greatest victory ever seen — I still don’t think she would have been able to manage a smooth Brexit within the two-year time period. It’s just an impossible job. So my gut feeling is that we’re probably in for a bumpy Brexit if not a hard Brexit. To the extent that this limits opportunities for British people, there’s going to be a natural spill over that limits opportunities here. If London investment funds don’t have passporting rights in [the EU], you can bet your life they’re not going to be extending them to [the British] overseas territories. So there’s going to be some spill over damage to us.

The other part of it that certainly makes Theresa May’s life even more complicated is the shifting political landscape in Europe. There is a repositioning being led by France and Germany that, given what’s happening in the US, is clearly saying, “Look: We, Europe, are going to go our way together.” But here’s Britain on the outside not really settled as to where they are going. I think when you look at the European Union, the trend of the last few months, as you say, has been towards much greater political stability after a period when frankly there wasn’t any. I don’t 44


think that diminishes the number of fundamental economic challenges that they still face. However, it does mean that they’re better equipped to deal with them. It is interesting — and I think this makes the point that you just made — it was either yesterday or the day before that they agreed the terms of the further Greek bailout. A few years ago, that was headline news. Nowadays, it’s much more: “You know what? The fire’s no longer burning; we’re getting this under control.” People are much less concerned that the European currency is going to collapse. So I think there is a better sense of purpose. I do think people can sometimes exaggerate the effect of Britain’s departure from the European Union, because there are obviously a number of other European and non-European countries — you look at Switzerland; you look at Norway — that are not in the EU. Obviously, they’re still involved: They have close trading relations and very friendly economic terms with the EU. So things would have to go really, really wrong for the UK to be some kind of pariah state. I suspect the EU is its largest trading partner before, and it’ll be its largest trading partner after. It’s the mess between now and then that creates the uncertainty.

Can you remember a time when there was a comparable period of uncertainty? I can’t think of a similar event in the past. I think there is a danger of seeing the glass as half empty, though. What the world has increasingly done is stitch things together in terms of economic partnerships — sometimes through formal treaties, sometimes not — that generally make it a lot easier to do business with each other. People do see any slight fraying of those relationships and perhaps overreact to them in a way that is maybe not proportionate. If you look back in history — [although] I was very young at the time — there were actually currency controls in the UK. You were only allowed to take a certain number of pounds out of the UK if you went on holiday. They actually wrote down on your passport how many you took, so you had to account for them. We’re still a million miles away from that, and that’s not so very long ago. So the world is still a much friendlier place to try and do business. For all our challenges, it is important not to lose sight of how far we’ve come.

Conversations with Colin Riegels, November 2016, BVI

Switching back a little bit to Harneys, as you said yourself, you’re taking over at a time when there are many challenges occurring on a global level. Are there three dominant issues facing Harneys that will affect its future success?

Well, as law firms we’re very fortunate. Some of my colleagues sometimes say law firms make hay when the sun shines and when it rains. Sometimes things that are bad for other people are good for law firms. For example, we’ve obviously had a lot of inquiries from clients asking for advice on the new beneficial ownership registers. I’m sure [local trust companies aren’t] looking forward to it, but it creates advisory opportunities for lawyers. So I’m sure we’ll somehow manage to come through the challenging times. But I think the things that most concern us are things that threaten the jurisdiction as a whole. There are a couple of big items on at the moment. One of the big issues is the difficulty with correspondent banking in the Caribbean region, and that flared up alarmingly recently when FirstCaribbean announced that they were basically imposing requirements that realistically nobody could meet in relation to trust companies.

Technology is obviously an ever-present challenge, but at the same time I think it gives us opportunities to meet existing challenges. If we go back to the last thing we talked about — the banking challenge — 10, 20 years ago, if the bank said that they didn’t want to do business with trust companies, that probably would have killed the industry stone dead. But we live in an era now where the banks can operate outside of the BVI. There’s nothing to stop somebody running a bank [account] out of Miami. If FirstCaribbean doesn’t want to do it because the correspondent banks don’t do it, we can find other people in other jurisdictions.

Again, with technology.

I think a lot of people took that as a coded message that “We don’t want your business anymore,” which is a major stress point. I think unless those sort of issues can be resolved, that’s going to be a major impediment that’s going to have a negative impact on the economy as a whole. That’s something that is concerning, and I think everyone in the BVI has a duty to try and resolve issues like that for the collective good. Every year brings its own challenges. Obviously, [the BVI] re-announced the increases in work permit fees. For the larger organisations, it’s a big increase, but people will be able to absorb it. What it will do is, I think, create a lot of stress and pressure on smaller players — probably greater pressure outside of the offshore space than within it. But it’s another challenge that we all need to work out how we’re going to address. But, as I like to say, if this job was easy [then] anyone could do it.

In terms of the banking challenge, is there a way that the Bank of Asia will be able to help the situation? I haven’t been closely involved in the Bank of Asia, but my understanding is that it is a much more client-focussed solution. What I think we’ve got is what I would call a retail-banking problem,

[meaning the ability of local businesses to utilise banking facilities rather than their underlying clients]. It’s not an insoluble stress point, and people are already starting to work out the best way around it, but it’s certainly going to be disruptive for a period of time.

Are there other disruptors out there that we should be looking out for in terms of the offshore space? What about technology, for one? Technology is an ever-present challenge. One of the things about disruption in a particular market is that those who are able to cope with disruption survive better. People talk about bad news more than they talk about good news, but I think one of the things that’s been quietly good news this year, is a lot of people who two or three years ago, we saw as competitors or threats to the BVI have basically collapsed. They have not been able to keep up in a way that we in the BVI, because of our established pedigree and our larger market share, have been able to do. So disruption is a natural part of life. The smaller people tend to die off, whereas the stronger, more established players tend to carry on. The challenges are consistent, but as long as we continue to meet them it’s no bad thing.

Exactly. Technology provides solutions as well as presenting challenges. My gut feeling is in the BVI we should be better able to take advantage of technological innovation than perhaps we have been as a jurisdiction. Our strength is obviously that we are an independent jurisdiction outside the network, but the reality is that technology gives us the ability to do everything almost as if we were in Beijing alongside our clients. And I think to some extent we have as a country been a little bit slow to embrace some of the technological changes that would allow us to maximise those advantages. I guess that’s part of the pressures of being a small market, but it’s still a little bit of a source of frustration to me that we haven’t developed our telecommunications infrastructure more strongly than we have.

The BVI is grappling with a lot of challenges, some of which seem to have caught us flatfooted. I’ve been a partner at Harneys now for 11 years, and I say — jokingly, but there’s a bit of truth to it — that we manage ourselves much better in the bad times than we do in the good times. When things are going well, nobody wants to change anything, whilst in bad times people are managing the business much more aggressively trying to improve things. My favourite Bible story is the story of Moses and the Pharaoh’s dream of the seven fat cows and the seven skinny cows. And he said when you have the seven fat cows, [meaning the seven years of good harvests,] that’s when you store up your grain, because seven years of famine are coming. Unfortunately, it’s sometimes hard to plan that way. B AUGUST 2017 EDITION


When 4PM rolls around on a Friday afternoon in summer, you’ll find many employees around the British Virgin Islands flipping paper clips, surfing Facebook, and watching the clock tick by, minute by minute. Whether they’re dreaming of the beach, an evening out, or mentally preparing a laundry list of errands to run, their minds are likely on anything but work.

But at Oyster Global Marketing Group, things look a little different. Employees are taking the dog for a run, picking up groceries, or even heading to the beach, or putting the finishing touces on plans for a relaxed weekend. They’ve embraced the concept of Summer Fridays, which has swept workplaces in the U.S. and U.K. and may soon be poised to catch on in the BVI. CLAIRE SHEFCHIK



Business BVI Business “Flexible scheduling has been growing over the last couple of decades, and Summer Fridays is really an offshoot of that. The employee can have more flexibility, which makes life a bit less stressful and more reasonable, with hours that integrate more with the rest of their life,” Carol Sladek, Partner and Work-Life Consulting Leader at global professional services firm Aon Hewitt, told Business BVI. “You can empower your workforce when you let them work when and where they are most productive.” In a spring 2017 poll of more than 220 HR leaders worldwide, business advisory firm Gartner, found that 42 percent plan to offer Summer Fridays in some form. That means that more than 20 percent more organisations than last year will be giving employees some part of Friday off during the summer months to relax and recharge. Companies across industries, from L’Oreal and Nike in the U.S. to Pan Macmillan and Penguin Random House in the U.K., have found success with the Summer Fridays concept. Many are catching onto the open secret that little work gets done on Friday afternoons in summer, anyway. But more importantly, the concept is part of a larger trend that illustrates what companies are doing to attract and retain younger workers, offering them what they value most: flexibility. “Giving employees the gift of time via Summer Fridays is one low-cost way to improve employee engagement, which in turn can increase employee productivity and drive business results,” said Brian Kropp, Practice Leader at Gartner. According to a 2015 survey from Aon Hewitt, 60 percent of Millennials cited a more flexible schedule as one of the benefits their employers aren’t offering enough of. “Employers are just now recognizing that Millennials have different professional norms,” said Ms. Sladek. “Younger entrants to the workforce are tethered to their laptops and phones all the time, so [to them], there’s no hard line between working and not working.” At Oyster, employees take off at 4 p.m., but there’s no one “right way” to do Summer Fridays, and Business BVI talked to employees at companies in the U.S. who follow different formulas. For example, at Portland athletic apparel giant Nike, most of the campus shuts down at 1 p.m. Friday. And at Minneapolis tech firm Lakana, management has named 12 eligible Fridays each summer, with employees choosing which ones they’ll take off based on preference and seniority. “The rest of us are left picking up the slack [on those days],” explained one Lakana employee. “But I don’t hear any complaints. We don’t want to ruin it.” She added that the measure really helped boost morale after a recent reorganisation. According to the Gartner Global Talent Monitor, employer confidence rose for the fourth consecutive quarter in the first quarter of 2017 in the U.S., China and Germany. That means many employees are eagerly seeking new opportunities even as they look for companies deserving of their long-term loyalty. Thus, employers offering Summer Fridays may reap benefits long-term. According to the 2016 Deloitte Survey of Millennials, those employed in highly flexible environments are twice as likely to cite improved organisational performance and loyalty. The media may portray them as fickle, but

Millennials’ loyalty is actually increasing by double percentage points, as employers get a stronger grasp on what it takes to attract and retain them. “At my last company, we were a small tech startup, but our CEO was very rigid about our hours. It wasn’t common practice for people to ever really leave before six. There wasn’t any idea of flex time,” said one Nike employee who recently changed companies. Of course, Summer Fridays also works because in many industries, summers are slow. The season marks the end of many companies’ fiscal years, and warmer weather means more extended holidays and more clients out of the office. That’s the case at Lakana, where the market for Internet ads dips in the summer months. There, employees have largely used their free time for day trips and errands, since they can still be called into work. But just because they aren’t taking exotic holidays doesn’t mean that workers aren’t getting their fill of R&R. When fall rolls around, staff members are more likely to be reenergised and productive. “People are always in much better moods during the summer and work hard to take care of things earlier in the week,” said the employee at Nike. “It boosts efficiency because everyone’s like, ‘we have only 4 days, so let’s do it.’ You work harder, but you work less.” In 2008, New York accounting firm Friedman demonstrated this firsthand, when it piloted its own extreme version--from June through August, employees don’t work at all on Friday. Surprisingly, in 2014, the company found that output from the new schedule outpaced a five-day workweek. Of course, BVI employers, even as they recognise the need for more flexibility, may still be sceptical that the concept can work for them. According to the 2015 BVI Labour Survey, 16 percent of BVI workers are in the accommodation and food service, where Fridays are always busy and employees aren’t as free to take off. Plus, will employees accustomed to Summer Fridays mentally check out other days? “Some employers might feel it’s dangerous to open the floodgates,” said Ms. Sladek. But, she pointed out, “The great thing about summer hours is that they are a good way to test the waters--the programme ends in September, but if you want to offer it on an ongoing basis, you can.” In fact, employees at Oyster are now going home early on Fridays year-round. Still, what if a workplace is not yet ready to roll out a complete Summer Fridays programme? “More often than not, employers are more comfortable dipping their toe in the water by starting with an ad hoc group of employees, and asking for their feedback,” said Ms. Sladek. Other options might include more telecommuting options during the summer, flexible hours, or giving them more leeway to use PTO during the summer. Like any initiative, “it requires communication in order to work very well,” said Ms. Sladek. “But overall, employees tell us that they very highly value it.” Gradually, the success that Oyster has seen with this one small change will likely inspire other local companies. So when you roll out of the office at 4 p.m. next year, brace yourself for a longer line of cars trying to beat the crowds to the beach. B



Business Global



hese days, the future of international finance can often look like one big question mark. In 2017, we in the British Virgin Islands watched Donald Trump’s brand of populism and anti-globalism swell in the United States and Brexit triumph in the United Kingdom, only to witness the same movements fall flat in France and the Netherlands. Flip the coin, and you throw in the lengthening reach of China, a soup of tightening regulations, and technology evolving so fast it’s giving us whiplash. And in the wake of the Panama Papers, an ever-increasing drumbeat for transparency often leaves international financial centres (IFCs) feeling like collateral damage. It’s no surprise, then, that global corporate service provider Vistra, chose to dub its 2020 report, released in April in Hong Kong and Singapore, “The Uncertainty Principle: The State of the Trust, Fund and Corporate Services Industry 2017.” Despite a vaguely ominous-sounding title, the annual document, which culls responses from 600 C-suite industry executives from around the globe, gives us plenty to be optimistic about. In the eyes of our international peers, the BVI remains on top in many of the ways that will matter most in the future for financial centres. That’s not to say we won’t face serious challenges as we look toward the turn of the decade. However, by making preparations to meet them head-on, we can prepare for even the most remote eventuality.



ANTI-GLOBALISATION Pervasive in the report, is the overwhelming sense of globalisation under fire, with Brexit and President Trump at the forefront of the movement. Most respondents to the survey--a full 71 percent--agreed that globalisation is at least “slightly under threat.” In fact, the percentage of respondents predicting the end of offshore by 2020 nearly quadrupled to 18 percent. So are we wise to worry?

YES – very much under threat 21% YES – slightly under threat 50% NO – not under threat 29%

Figure 1 Threat to globalisation

Source: Vistra

“BVI ENJOYS A Ray Wearmouth, BVI-based partner at Ogier, favours a tempered view. “I think Brexit has raised a valid question mark, and it will probably bring more political regulation to globalisation,” he told Business BVI. “Companies will stop and think before they trade, and ensure that home states are better looked after than trade partners. We are going to see a move toward some nationalisation.” However, while Mr. Trump and the Brexiteers sound the clarion call for anti-globalisation attitudes, the triumph of French establishment candidate Emmanuel Macron signals a different shift entirely--toward stability and “known quantities.” For decades, BVI has offered both, which is perhaps why it’s not surprising that we remain the top jurisdiction in the world in the offshore class. And yet at the same time, this year’s respondents predicted that a shift away from traditional offshore centres, with 40 percent predicting business will shift onshore or midshore. Simon Filmer, Deputy Group Managing Director of Company Formation at VISTRA and coauthor of the report, points a finger at ever-tightening reporting standards. “Historically, to incorporate a company, offshore required less due diligence and [fewer] filing requirements,” he told Business BVI. “As all of those burdens have increased in the offshore jurisdictions, [clients think] ‘I might as well establish an onshore company.’” Looking to the data, the United Kingdom came out on top over all jurisdictions, followed by Hong Kong (a midshore jurisdiction), the BVI, and the United States. That means that although BVI has remained stable, onshore and midshore jurisdictions overtook it this year. In fact, between 2013 and 2016, the combined market new incorporation (NI) volume of the BVI, Cayman Islands, and five other jurisdictions dropped from 97,272 to 71,834, with the biggest decline occurring between 2015 and 2016. Mr. Filmer and the other authors attributed this to geopolitical instability. “You have a climate of political uncertainty and change and populism; globalization under pressure,” he said. In remarking how the UK jumped from eighth in 2015 to first, Greg Boyd, BVI-based corporate partner at Harneys, told Business BVI, “Perhaps because of Brexit, [there is a feeling that] UK companies are going to be less regulated or less encumbered by EU legislation.” “A lot of it is timing,” agreed Mr. Filmer. “Everyone thought that the UK would be number one, not just people in the UK by any means.”


Likewise, as dozens of countries prep for implementation of the Common Reporting Standard (CRS) this September, in which they will be required, for the first time, to exchange information with other countries, the US decision not to participate may have helped them shoot up the ranks from seventh to fourth. Significantly, although unique circumstances helped onshore jurisdictions like the UK and US rise in importance, it’s important to note that BVI remained stable in its own sector, perhaps emphasising its continued position as a relative oasis of calm in the stormy landscape of international finance. “BVI enjoys a position in the world where it’s not a threat to anybody. Neutrality is an appealing reason for it to be a trade partner and a counterpart in international transactions,” said Mr. Wearmouth. Meanwhile, the anti-globalisation movement rocking Europe is making much smaller ripples in Asia, where BVI has remained the go-to jurisdiction for many years--and yet that doesn’t mean there haven’t been changes. Indeed, every year, clients seem to get savvier and demand more. Tellingly, Asian respondents to the survey pinpoint

client sophistication as their driving factor, edging out asset protection; cross border trade / foreign direct investment; wealth planning; privacy and client anonymity; and higher tax in developed markets. As much of the West turns inward, the East is looking toward the horizon. “Look at cities like Shanghai and Beijing,” said Mr. Boyd. “The sophistication of businesspeople in that region has been prolific. They dominate the global economy. For instance, when a gentleman like Jack Ma [founder and executive chairman of Hong Kong-based Alibaba Group] opens his mouth and starts talking, people pay attention to him. Gone are the days when you’re operating in a little backwater.” As Asian clients make more complicated demands, the report suggests, it may mean, in order to maintain their superior positions, IFCs need to start going above and beyond simple incorporation and offering “solutions packages.” “[IFCs] have had a model of simply incorporating companies, but they need to expand their business lines because that is not going to generate as much revenue in the future,” said Mr. Filmer. More specifically, in the next few years, the report suggests that clients will demand two things above all: technology and privacy. Lorna Smith, Interim Executive Director at BVI Finance, believes that BVI is well-positioned to serve these clients. “The BVI offers a range of services, not only incorporations,” she told Business BVI, adding, “We have some of the best legal minds [as well], since all of the major offshore firms are represented here now. It’s really a go-to jurisdiction.” For instance, BVI offers initiatives such as the Virgin Islands Special Trust Act (VISTA) trusts and Private Trust Companies (PTCs), which continue to remain attractive to Asian investors to develop succession planning and secure their assets. The assets are held in the trustee’s name, allowing the beneficiaries to remain confidential. The BVI’s commitment to confidentiality also comes into play as more and more emergingmarket clients are beginning to feel that, in the age of Big Data, their confidential information may not really be safe anywhere. “In our personal lives, many of us have effectively given up privacy for the sake of convenience. --Google, Facebook, Instagram, etc. There’s information and data flying all over the place. How do we strike a balance?” wondered Mr. Filmer. We’ll explore this further below. AUGUST 2017 EDITION


HONG KONG VS. BVI As Europe struggles with the rise of anti-globalisation movements, China continues to open up toward the west--a movement that VISTRA expects to continue unabated in the next several years. However, as China cracks down on IFCs and tax efficiency, the report notes that increasingly, Chinese clients who know they are going to be on the hook for taxes, may be beginning to look to their nearer neighbours, including Hong Kong, whose ranking stayed steady at No. 2 this year. Tax treaties between China and Hong Kong, or China and Singapore, require it to gain access to Chinese companies. “Because China is getting more restrictive on capital flights and tax revenues, some investors looking to invest in China are going through Hong Kong to get the benefit,” explained Mr. Boyd. Nevertheless, Hong Kong is struggling with its own challenges. For example, domiciled funds, particularly institutionalised ones, are still expensive to set up. And as Hong Kong’s courts and free trade systems come under fire from the Chinese government, the BVI will continue to offer what it always has--a stable legal system based upon English common law. This is one of the reasons BVI continues to lead the world in corporate registration and outbound investment for Chinese companies. Even as the Chinese turn more toward Hong Kong, the BVI offers benefits that Hong Kong doesn’t, continuing to structure Chinese outbound investment in energy, infrastructure, technology and agriculture, amongst other sectors. As always, the BVI also boasts regulations that are compliant with international law, and a neutral tax code and a neutral venue for international business--as well as a stable legal code, which will prove especially valuable as Beijing cracks down on Hong Kong’s court and free trade systems. Mrs. Smith cited flexibility and efficiency. “We can incorporate in 24 hours,” she said. “Asia is very cost-conscious and we are a cost-effective jurisdiction.” She noted that the strong legal system has been further bolstered by the 2009 addition of the Commercial Court and the brand-new International Arbitration Centre. As Mr. Filmer observed, “Lots of other jurisdictions have tried to challenge the BVI in Hong Kong and China, and there have been ups and downs.”

Rankings 2016

Jurisdictions by importance





Hong Kong



3.3 3.7













Cayman Islands




8 5


9 6




But should we rest on our laurels? No, said Mr. Boyd. “The legacy of the BVI’s success is that it doesn’t have to do anything. Now we actively have to search out ways to show that we can provide top tier service, and also relevant products. If we don’t stay relevant to our audience, that will be a big challenge.”

REPORTING STANDARDS In recent years, very public scandals involving IFCs--the Panama Papers being the most prominent--have fanned the flames of the already-fomenting anti-globalism movement and given rise to very public outrage. We’ve seen an acronym soup of data collection--FATCA, UK FATCA, CRS, KYC, BEPS-continue to tighten demands on jurisdictions. And it may very well be only the beginning. Nearly 50 percent of VISTRA respondents agree that by 2020, a network of Tax Information Exchange Agreements (TIEA) will unite all major offshore financial centres into a global tax data sharing agreement. Of course, no one argues against the importance of stamping out fraud, money laundering, and tax evasion. However, Vistra points out that IFCs still too often are made unfair scapegoats, noting that an American company in Colorado investing in marijuana--still illegal at a federal level--will not be held to the same reporting standards as a company making perfectly legal products in Cambodia, who happens to choose to use a BVI legal structure. And the U.S. state of Delaware--arguably the world’s biggest tax haven--often gets off scot-free.



2.6 3.0





38% 3.7

2.8 2.8 2.4



2.3 Strongly disagree

Figure 2 Jurisdictions by importance




Given that, Mr. Wearmouth predicts this change to be only a blip and that the impact on BVI in the next three years will be fairly limited. He expects BVI “will continue to enjoy a strong trading relationship with China. We’re thirty years into that position, and the BVI is a well-known counterparty for Hong Kong and [China], with a very established track record.”

The report casts the most uncertainty on the possible impact of complying with the CRS, to be implemented this September. Tellingly, respondents finger it as possibly being even ‘more dangerous’ to the industry than the Foreign


Yet BVI has been an “embedded brand” in China for 30 years, far too long to easily lose ground, and is expected to remain the go-to for most structuring conduits. Chinese clients, especially when they want a conduit jurisdiction, are still saying “give me a BVI.” When something is integrated that fully, it’s a confidence not easily eroded.

Source: Vistra





Figure 3 By 2020, the globe will be a network of TIEA



Strongly agree Source: Vistra

AS ASIAN CLIENTS MAKE Account Tax Compliance Act (FATCA), which took effect in 2014. As bureaucrats have not been shy to make known their ambitions for combating the global tax gap, respondents tend to feel that CRS is yet one more step towards a consolidated authority meant to eliminate low-tax regimes. Just as in 2015, the report found that new regulations headed up the list as the top obstacle to business. Of course, we in the BVI have become accustomed to viewing regulations with apprehension, and it’s not without reason. It’s been clear in the past that when regulations are ratcheted up, traditional offshore centres like the BVI tend to suffer more acutely. In fact, a full 63 percent of respondents named BVI as the jurisdiction likely to suffer adverse effects from the avalanche of regulations--above even other IFCs such as the Cayman Islands and Bermuda. But why? BVI simply does more business, observed Mr. Boyd. “Cayman is a funds capital; its incorporations number maybe in the 10,000s. Bermuda [has become the jurisdiction of choice for] reinsurance companies. Fund managers and insurance companies are licensed entities and already regulated. BVI is a corporate jurisdiction--1.2 million companies incorporated. If there’s a single change in how you verify identity, that’s a million people you’re dealing with. Regulation does impact us more, as it is more costly [for us] to get infrastructure in place,” he said. Mrs. Smith noted that some compliance costs have risen as much as 60 percent in just two years, though she remains optimistic. The BVI Financial Services Commission statistical bulletin for December 2016 reported a staggering 30,000 new companies had been incorporated last year. However, that’s down from over 60,000 in 2011. “While the numbers of incorporations might be lower [this year], we are proud of the fact that the BVI remains the top offshore jurisdiction in the [VISTRA] report,” said Mrs. Smith. And BVI, even as it celebrates its success and becomes something of a victim of it, continues to adapt to pressure from overseas. Notably, January 2015 saw legislation implemented intended to ensure that BVI registered agents store identities of ultimate beneficial ownership (BO) within the BVI, so that they can be easily ascertained. And as we follow the road of transparency to its natural outcome, even greater changes may be


1 2 3 Fully private





8 9 10 Fully transparent Today

Figure 4 Client privacy level

In 5 years

Source: Vistra

afoot. Sixty percent of respondents (an increase from 2015), anticipated a central (non-public) registry of BO by 2020. However, they ranked its business impact a 3 out of 5, a drop from 4.1 in 2015--suggesting a certain resignation to the inevitable. “People are getting to grips with it a little bit,” said Mr. Filmer. “We’ve seen that with FATCA over the last couple years: there was this great big uncertainty, then people incorporated it into their practices. It actually makes the industry more resilient,” he added. Mrs. Smith said BVI, meanwhile, is prepared to roll with the punches. “In terms of transparency and good governance we are in a good place and are very happy with that--and yet we are prepared to constantly change as required,” she said.

AIFs AND BREXIT Of course, the anti-globalisation movement has seen its most prominent proponent via Brexit. BVI probably will not suffer any direct effects as the UK prepares to negotiate its official exit over the next few years, but this absence of known quantities merely ratchets up the uncertainty, leaving us vulnerable to wild conjecture and speculation. The uncertain global environment also is affecting Alternative Investment Funds (AIFs), both in terms of enabling smooth transactions across Europe and from a tax perspective. Discussing this area for the first time in the report, the VISTRA authors noted the complexity of obtaining access to the EU single market through either passporting or equivalence. As it stands, non-EU fund managers are generally precluded from marketing non-EU funds into the EU other than under the national private placement regimes. In October, BVI issued regulations to supplement existing legislation, regulating BVI funds and fund managers in preparation for the European Securities and Markets Authority (ESMA) to advise the European Commission on whether the EU Alternative Investment Fund Managers’ Directive (AIFMD) passport should be extended to BVI entities. These regulations will permit BVI funds and fund managers to opt-in to be regulated to an EU equivalent standard and obtain an AIFMD passport, which will in turn allow a BVI fund manager to market and manage funds in the EU. What remains to be seen, is what effect Brexit will have on the process. As the AIFMD passport is not yet available to any third country, we wonder whether this passport will be relegated to the back burner for ESMA during the Brexit negotiations, or whether the national private placement regimes will be simply left in place. “The feeling in the industry is that there’s likely to be some kind of fudging of this at an EU level,” said Mr. Filmer. Furthermore, the report questions how effective the passporting has been in practice, and whether EU regulations could become even more burdensome without the UK’s influence on them-a situation that could also make an attack on low tax rates imminent. “If the UK is not at the European table, there’s no one there to defend our case to not be on a blacklist,” said Mr. Boyd, as indeed, the EU is in the process of revising its blacklist for problematic tax jurisdictions, creating a situation ripe for more angst. On the other hand, VISTRA notes, pre-Brexit, British leaders were careful to fall into line with AUGUST 2017 EDITION


their European cohorts in taking a rigid stance toward offshore financial services--in public, at least. Could a softening from the direction of the UK occur? Either way, the BVI will be caught in the middle, leaving even experts flummoxed as we face circumstances for which there is no blueprint. “We’re kids caught in a nasty divorce, and that is a bit of a problem. I don’t think anyone fully understands what the implications of Brexit are at this point. They’re still trying to figure out how it’s going to work,” said Mr. Boyd.

TECHNOLOGY In any case, hand in hand with an increasingly complex regulatory environment comes a ramping-up of technology, which VISTRA found to be the dominant driver across all sectors. Almost 60 percent of respondents said they believe that by 2020, advancements like FinTech, Big Data, and robotics will disrupt the industry, lower costs and change business models fundamentally. BVI is putting initiatives in place to greet those changes. Even as Asian customers become more sophisticated, they face difficulty opening and maintaining a bank account--in fact, the report noted that this was the number one challenge



Asian respondents face. However, Mrs. Smith pointed out that the online, cloud-based Bank of Asia will help drive down costs while increasing the accessibility of BVI bank accounts to customers overseas. “One of the setbacks for us has been the difficulty in opening bank accounts, [and one of the reasons for the falloff in new company incorporations]. The Bank of Asia has now been licensed, which will solve a huge problem for us,” she said. Naturally, near-instantaneous exchanges of information facilitate everything from business opportunities to regulation. But all this data sharing also erodes privacy, which presents a particular danger in emerging markets. From positions of privilege, prosperous Westerners tend to suffer from myopia when it comes to risks elsewhere. As Mr. Boyd noted, the average customer in the US or UK needn’t worry about his children being kidnapped on their way to school if his personal financial information is made public. Nor is he likely to consider that there are governments who are less hesitant than his own to violate the rule of law for their own purposes. “From where we sit, we may not mind exchanging information with the tax authority,” said Mr. Filmer. “But many people around the world don’t

trust their tax authority. There are real problems in potentially exchanging information. [And even though] a lot of these rules are getting made up and created within a Western environment, the impact and implications are felt globally. There is a great deal of concern and fear as to [what] the impact of this might be.” Thus, as always with technology, the BVI will need to walk a delicate balance in order to both drive business and protect the personal information of our most vulnerable clients. One major step along this path, as detailed by Mrs. Smith, is the unveiling of the Beneficial Ownership Secure Search System (BOSSs). The new platform, which went live in June 2017, consists of a searchable portal that provides BVI law enforcement authorities with direct and immediate access to verified BO on any BVI company. “This will still allow for a degree of privacy that clients require while allowing for transparency that authorities require, especially while they don’t have direct access to the system,” said Mrs. Smith. “They will be able to get the information that they need in 24 hours, if necessary, through our own government authorities.” As technology and regulations creep in hand-andhand, lurching toward a possible public register, BVI has found ways to keep privacy a major

priority. “We are very proud of the fact that we negotiated successfully for an arrangement that is an alternative to a federal public register,” she said. “We strive to see technology as a positive.”

PUBLIC RELATIONS Lastly, the report calls for IFCs to play more of a role in shaping their own image--or risk the media doing it for them. For too long, in the wake of scandal, it’s been customary for IFCs to lay low in the face of tax cheats and money laundering, allowing the media to write our narrative for us. For instance, VISTRA respondents expressed concern that the discussion in the media surrounding the Organisation for Economic Cooperation and Development’s (OECD) Base Erosion and Profit Sharing (BEPS) action plan, all too often leaves out the potential for the average pensioner to be double-taxed. As Mr. Boyd explained, “The average person has (a) no clue about the workings of the offshore world and the value it provides economically, and (b) no interest or appetite to learn about the subject – it is easier to simply accept the headline media rhetoric that describes the offshore world as a crime tainted world for tax dodgers and money launderers that causes lower social

welfare benefits to the reader of that headline,” said Mr. Boyd. Ironically, in the year of the Panama Papers, respondents rated negative press as a less significant constraint on business than last year (3.3 in 2015 versus 3.1 in 2016). “People have now factored in that if you’re an IFC, your reputation is going to be [shaped] by the tabloid media, by tax evasion stories,” said Mr. Filmer. “Associations and companies can do more to talk about the positive benefits that they bring.” Some aren’t waiting. After Prime Minister David Cameron ignited a row by admitting he owned shares in an offshore fund set up by his late father, which he sold for £30,000 in 2010, James Quarmby, a specialist in tax planning and wealth structuring at Stephenson Harwood, went on BBC radio to offer a passionate defence. He maintained that if Mr. Cameron was guilty, so was the average Briton. “There are millions of people in the UK who have invested in similar funds,” he said. BVI, by nature of its position on the OECD’s whitelist of jurisdictions, using internationally recognised tax standards, is uniquely situated to serve as a sterling example of a scrupulously well-behaved “good IFC.” However, without equally excellent PR, that can only take us so far.

“We need to explain BVI’s position in the global arena and the value of the work it does,” said Mr. Wearmouth. “It’s the sort of data that will enable bodies like the OECD and the EU to properly examine the role of those various centres based on facts, rather than rhetoric and incorrect assumptions.” However, said Mr. Filmer, “In the current political environment, there’s unlikely to be much impact on the general public. Where there needs to be focus, is on policy makers and regulators and on our clients, so they remember and understand why they’re using our structures,” he said. “Policy makers [need to] understand that if they take punitory steps that there are consequences in the real economy.” As we drive toward 2020 and uncertainty that Vistra has identified continues to swirl, that raison d’etre must be clear. BVI Financial Services by necessity and by design, will continue to play a vital role on the global stage by facilitating exchange, providing a neutral venue, and cutting down on layers of taxation that hamper business. Although certainly, the ongoing volatility presents enormous challenges, we’ve heard a resounding call for us to accept our role, not only as good workers, but also as passionate advocates. B





Business Global




round the world, political and economic uncertainty reigns, and the British Virgin Islands finds itself under a microscope as it facilitates and benefits from the cross-border transactions that drive global trade. The global financial crisis has sent countries scrambling to make up their tax gaps, globalisation has come under attack in Europe and the United States, and fallout from the Panama Papers remains potent. Up till now, though, the evidence proving much of the media narrative surrounding BVI financial services industry is flawed has been largely anecdotal. However, for the first time, with the new report Creating Value: BVI’s Global Contribution, commissioned by BVI Finance and undertaken by international economic consultancy Capital Economics, facts and figures demonstrate the real, lasting value the BVI does produce--and some of the results are staggering. “The global investment and trade, supported by the BVI has created 2.2 million jobs worldwide. BVI mediates over US$1½ trillion cross-border investment flows across 430,000 active BVI Business Companies, amounting to 2 percent of global GDP,” Elise Donovan, Director of BVI House Asia, told Business BVI. “The report is a game-changing narrative that tells the real story ,reported by quantitative analysis of the BVI’s contribution to the global economy and debunks myths that are perpetuated by our critics.” In fact, the report shows, the BVI is not only not a drain on tax revenues, it actually contributes an estimated $15 billion to government coffers worldwide. Are there opportunities for tax avoidance in the BVI? Yes, and the report is transparent about those. But it’s clear that the world would be poorer, in more ways than one, without the BVI. “With great power comes great responsibility” is more than just a comic-book slogan. The BVI flexes to adapt to ever-evolving regulatory standards that seem to tighten each year. Likewise, the report also calls attention to the millions of dollars of investments facilitated through the BVI used by the World Bank and other entities to invest in infrastructure in developing nations in danger of being left behind by globalisation. Thus, the value created by the BVI, as detailed in the report, is far from only monetary. “Now there is documented evidence of the BVI’s global contribution; evidence that the jurisdiction’s financial services industry creates a net benefit globally and drives economic growth,” Rachael McDonald, Mourant Ozannes BVI Managing Partner and BVI Finance Board Member, and Paul Christopher, Hong Kong Managing Partner, told Business BVI.



Looking at the BVI, it’s difficult to imagine how a 152-square km Caribbean island with a population of just over 33,000, no larger than an English market town, could have so much impact on the world. Compounding that is the tendency to alienate those whose faces we cannot see, and whose products we cannot touch. Ironic, points out Robert Briant, Partner and Head of the BVI office of Conyers Dill & Pearman, since BVI’s financial services are uniquely centred on connecting people. “BVI Business Companies do not sell products,” he told Business BVI. “They are not brick and mortar entities. They structure relationships in the form of a corporate vehicle. They allow people from different jurisdictions to work together.” Minds don’t change overnight. Shedding light on mysteries and dismantling misconceptions surrounding the BVI will be an ongoing challenge, but this report is an important step in helping to put a human face on the work done here.

THE BVI BUSINESS COMPANY At the heart of the financial services industry BVI Business Company. With over 430,000 and growing registered corporations, the report reiterates that BVI is one of the largest jurisdictions worldwide for the incorporation of companies, particularly those designed for cross-border trade. Around 40 percent of these companies originate from Asia; use by clients in G7 countries accounts for around 20 percent, with around 18 percent originating in Latin America and the Caribbean. Of major businesses listed on the London, New York or Hong Kong main stock exchanges, the BVI is home to part of the group structure of over 140 of them. Overall, assets held amount to $1½ trillion. Significantly, the report for the first time presents hard data on the role of BVI Business Companies in the flow of international investment. According to the United Nations, the BVI was the ninthlargest recipient of foreign direct investment, and the seventh largest source of outward flows in 2015. Hong Kong is the source of the lion’s share of foreign direct investment, with 58 percent of the territory’s total outward stock, and 40 percent of its total outward flows. “The Chinese and Hong Kong have used BVI companies in a symbiotic relationship. For 25 years, BVI has been the jurisdiction of choice for trade and investments in and out of China,” said Ms. Donovan, adding that as the Chinese continue to implement their Go Global strategy and extend their reach throughout Eurasia via the Belt and Road initiative, “they seek out a neutral

jurisdiction that has risk mitigation, is backed by British common law, and that has the UK Privy Council as the highest court of appeal.” “For Chinese companies looking to invest in markets like Africa or the Middle East, the BVI can provide an English common law system and a neutral platform that is attractive for all parties involved in the investment proposition,” said Ms. McDonald and Mr. Christopher, adding that the BVI also offers “a well-developed and professional corporate infrastructure, including a raft of experienced service providers.” The success of the BVI Business company didn’t happen by accident. Neutrality and the opportunity to avoid double taxation is the obvious advantage the BVI offers to a global investor base, but a stable government, effective financial regulation, as well as remarkable costeffectiveness, particularly compared to similar jurisdictions in Europe, set it apart. “The BVI is not the cheapest or the most expensive, but we are the the most cost-effective in that we offer the most value for money,” said Ms. Donovan. And private individuals, particularly in Asia, seek neutral jurisdictions to incorporate where they don’t have to worry about unstable governments and unpredictable courts in their own countries. This is a bigger factor than many people realise in the success of the BVI Business Company. “If Asian law was better and more reliable, they would go there, but it’s not, and they need to know they can deal with their companies without confiscation, expropriation, or other questionable activities,” said Mr. Briant. “In so many places, there’s a lack of trust in one’s own legal system,” added Peter Tarn, Chairman at Harneys. “So the ability to use a predictable system of laws is highly attractive. A company is not the same thing as a business; it is a risk allocation mechanism. You want to box up risk. You don’t want to add an additional layer of expense or more tax while doing that. You want predictability. That’s what drives you toward using offshore vehicles like the BVI.” Even when the purpose of a BVI Business Company isn’t obvious on paper, it still exists, holding assets that help oil the wheels of global trade. “The BVI provides the legal structures that allow companies, institutions, and individuals to safely and efficiently carry out their business and make investments across international borders,” said Mark Pragnell, Head of Commissioned Projects at Capital Economics and the report’s author. Some of these purposes, the report notes, may include trust and succession planning; real estate; investments; joint ventures; corporate

group structuring; and registering ships and aircraft. The report found that BVI Business Companies are split evenly between commercial and private purposes, with 45 percent of total active incorporations used to facilitate corporate and investment business transactions, around two-fifths for structuring personal wealth or assets, and another one-fifth to hold real estate assets, which might range from private homes to large commercial developments.


Worldwide, investors regard real estate as a safe choice to preserve wealth and hold assets, and may turn to BVI Business Companies because a company is more easily transferrable than a deed. The report notes that most BVI-held property originates from Asia, but a quarter of properties are located in the UK. BVI was the largest offshore owner of property purchased between 1999 and 2014 in England and Wales, accounting for 23 per cent of that total. The majority of those were large commercial properties in central London.



“[Incorporating in the BVI] enables investors to become shareholders in the vehicle holding the real estate...which is particularly significant for high value real estate such as office blocks and hotels,” explained Simon Schilder, Partner at Ogier, to Business BVI. Perhaps one of the report’s insights most worth stressing is that BVI Business Companies are used to fund projects around the world through major international development banks. Mr. Tarn points out that although this is no secret to those working in the financial sector, it might surprise the layperson. Naysayers have scrambled to blame the BVI and other international financial centres for stripping developing countries of their assets. But in fact, the World Bank’s International Finance Corporation and the European Bank for Reconstruction and Development, in countries as diverse as Panama, Indonesia, and Senegal, are helping to deliver energy and infrastructure to places that need it most, in amounts ranging from US$7.5 million all the way to US$550 million. “Those institutions are regularly funded in offshore vehicles in the same way commercial banks choose to,” said Mr. Tarn, adding that these banks choose to go through the BVI for the same reasons anyone would--to take advantage of a neutral jurisdiction with access to a stable legal system, “without interference from the local judiciary that [they] don’t trust.” There are plenty of half-baked notions about the BVI’s effect on developing economies, but this report adds mathematical fuel to the arguments that we have an important role to play. “You can see with this quantitative information the net contributions that the BVI makes to developing countries,” said Ms. Donovan.




FUNDS The BVI has begun to hop into the driver’s seat on global investment and trade. As of December 2016, the BVI had 1,614 registered and recognised funds, with the estimated total net asset value of US$250 billion. The BVI Financial Services Commission, as of the end of 2016, had granted 457 licences. Many of the ingredients that have made the BVI attractive as a corporate jurisdiction also make it desirable for investment funds. According to Mr. Briant, “The BVI’s investment funds industry is thriving thanks to a number of advantages, including a wide range of funds available, flexibility of structuring, and robust regulation.” The Securities and Investment Business Regulations Act of 2010 modernised the regulation of funds to be in line with regulatory standards and global best practices. “The BVI has a regulatory platform that is the right level for products for sophisticated investors. Another reason is that the BVI has a number of people who do these kinds of things all the time; it’s their job,” said Mr. Schilder. “You need specialists on the ground, and some other jurisdictions don’t have the same history of offering that.” In the BVI, there are six categories of regulated investment funds: professional, private, public, foreign, incubator, and approved funds. The last two categories, introduced in June 2015, continue to allow BVI to provide quick, economical methods for managers seeking to start open-ended funds, said Mr. Schilder. “Incubator funds offer a platform for startup managers struggling to get into business,” he explained. “It’s a cost effective point for someone who doesn’t have a large seed investor. Approved funds are designed for very small investors, such as a high net worth family who wants a fund to pool their money. They choose the BVI because it provides a good platform to do that.” In addition, the Approved Manager Regime, introduced in December 2012, has played a role in paving the way for investment funds by striking a balance between regulation and flexibility. Under the AMR, eligible investment managers can get on the fast track to start a business just seven days after filing an application. The new regime has upped the BVI’s large market base of startup and existing mid-sized managers. “We are the second largest investment fund jurisdiction, not just in Asia but worldwide,” said Ms. Donovan. “BVI funds are cost-effective structures that have been proven successful and useful to individual companies to structure their investments.”



LEGAL SECTOR When international clients choose to use the BVI to carry-out cross-border trade and investment, they turn to the concentration of corporate service providers in Road Town. “These professional services firms include legal, insolvency and accountancy practices, banks, insurers, and specialist government and regulatory authorities,” said Ms. Donovan. Together, they make up the BVI’s international financial centre, which employs 2,200 people directly and supporting another 3,000 jobs in the BVI. Over two-thirds of these jobs are held by BVIslanders and Belongers. Unlike offshore banking centres like Switzerland or Jersey, the BVI’s banking sector is small and focused on largely domestic customers, with assets of only US$2.4 billion. That means most of what makes up the IFC is corporate services and law firms. In fact, an undoubtedly large factor driving the BVI’s position as a leader in crossborder trade and investment are its strong legal services and framework. In fact, not only is the legal sector the second biggest employer in the BVI’s financial centre at 535 people, it’s the largest gross value-added contributor at US$129 million. As Ms. Donovan pointed out, incorporating vehicles for cross-border business and creating BVI Business Companies, although they generate funds, have a light footprint, not necessarily requiring large numbers of employees. However, the more specialised services provided by lawyers to their clients is responsible for employing not just hundreds of lawyers but numerous support employees around the world, discussed below. “The law firms have a bigger footprint so we need people--lawyers, secretaries, administration,” said Ms. Donovan. “When we incorporate a company, it’s $350 every time, but we also add value through the rent [paid by] people living here and such, as well as creating more sophisticated companies.” “More than insurance or banking, this is a lawyer-driven business,” said Mr. Tarn. “Anywhere where you have this industry, the local demand it produces for housing, goods, and services, the general expenditure, does give rise to jobs that are not in the industry.” In addition to the number of firms specialising in litigation, dispute resolution, and support to cross-border transactions, clients choose the BVI because of the network of professionals working to provide its services--a framework of English Common Law and the Commercial Court, as well as the brand-new International Arbitration Centre. Despite the BVI’s small size, its international

financial sector has a huge reach. When BVI Business Companies are incorporated, it’s generally carried out by local subsidiaries of international corporate service providers. “We have virtually all the reputable offshore firms here, so when we’re working on a transaction, it’s the big global players, and that contributes value in a different way,” said Mr. Briant. These firms have a combined around 200 offices outside the territory, employing around 5,000 people worldwide. The case is similar for the legal, accounting, and insolvency practices located in Road Town, which are also part of larger multinational groups with 1,000 offices outside the territory, employing over 30,000 people globally. Overall, the cluster of firms, both public and private, accounts for about one-third of the islands’ economic output and over three-fifths of government revenues. The report shows the centre boosts tax revenues by far more than it increases public spending--in fact, public spending on the centre is only $20 million per year. But without it, foreign employees would leave, robbing the island of proceeds from rent, food, entertainment, and other necessities they pay for, and the government would no longer receive fees that are charged to clients of the centre, causing government revenues to drop 68 percent, from $330 million to $105 million. Yet it would be BVIslanders feeling the pinch, since the decrease in revenue would not be accompanied by a decrease in costs for public services--ultimately leading to a shortfall of $210 million. That figure is enough to ensure that the BVI must, as Mr. Briant pointed out, take the long view to ensure its own survival. “The BVI is committed to transparency,” he said. “If we were being used for secrecy and dodgy activity, we would not have a future. We have 33,000 plus people who rely on financial services to pave the roads and fund the schools, so we have to take a long-term approach. It’s not ‘Hey, let’s make hay while the sun is shining.’ It’s the opposite--to make sure it’s sunny all the time.”

A NET BENEFIT When capital is globalised, it provides the funds that provide a leg up to investors, firms and economies spanning the globe, especially as people and goods become less dependent on national boundaries. Jurisdictions like the BVI provide the tools that secure and facilitate transactions that span borders. However, as the report acknowledges, not everyone has benefited from globalisation, and as Western governments scramble, in the

wake of 2008, to make up their increasing debt burdens, it’s easy to point the finger at IFCs, with watchdog organisations making accusations of tax evasion and financial crime. With the paucity of much evidence to the contrary, the BVI makes an ideal target. “There is a massive absence of hard data in this area and that has allowed NGOs and pressure groups to make vast assumptions, which for a long time have gone unchallenged, about the role of the BVI and the offshore world in general,” said Mr. Tarn. “You see figures getting repeated ad infinitum that have been plucked out of the air.”. However, this report now demonstrates definitively that the world gets more from the BVI than the BVI takes from the world. “The report explains the very important role of BVI companies in facilitating international capital flows, ultimately bringing a net benefit to government coffers worldwide with USD15 billion of tax paid annually,” said Ms. McDonald and Mr. Christopher, via both investments themselves and the resulting economic activity. The biggest beneficiaries of this revenue are the UK (US$3.9 billion), the EU excluding UK (US$4.2 billion), followed by China and Hong Kong (US$2.1 billion). Obviously, global investors flock to the BVI because of its neutral tax rate, which allows them to avoid the possibility of double taxation on cross-border transactions. And although the BVI is tax neutral with a zero percent rate of tax on corporate profits, that doesn’t mean that it is a jurisdiction without taxes. Residents, visitors, and companies that operate locally are subject to tax in order to fund public services. “We have no additional layer of tax,” explained Ms. Donovan. “That does not in any way negate anybody’s responsibility to pay taxes in another jurisdiction.” The report suggests that the BVI’s tax neutrality, by not shifting tax offshore, may actually increase tax take onshore. Nor can the BVI be reliably implicated in the kind of profit shifting sometimes engaged in by multinational companies, where profits are booked into jurisdictions that have signed double taxation agreements with other nations. “We only have double taxation agreements with three countries [the UK, Japan, and Switzerland]. The report clearly outlines that the profit-shifting jurisdictions are Ireland, Luxembourg and other similar places, not the BVI,” said Ms. Donovan. The report also notes that of the 114,000 BVI Business Companies listed in the Panama Papers, “only 30,000 of them are even active companies anymore, and those that remain active are compliant with international standards,” said Ms. Donovan. AUGUST 2017 EDITION


“People do not set up BVI companies to evade tax,” added Mr. Briant. “Anyone who tries that is foolish. TIEA [Tax Information Exchange Agreements] ensure that we do not take tax revenue from other countries. BVI companies contribute value in the world. That creation of value generates tax, due to the greater GDP that can be taxed. Yes, we are tax neutral, but we have transparency.” Lorna Smith, Interim Executive Director of BVI Finance, discusses that transparency during her preamble to the report noting that the OECD Global Forum on Tax Transparency and Exchange of Information lists the BVI as “largely compliant,” and the BVI has actually strived harder than many G20 countries to meet ever-more-stringent international regulations. “The BVI appreciates the need to be compliant, because of its reputation as a secure international business and finance centre,” said Ms. McDonald and Mr. Christopher. The jurisdiction was an early adopter of the OECD’s Common Reporting Standard (CRS), a system for the automatic exchange of tax information, and “know your customer” anti-terrorism, anti-money laundering measures put in place by the The Financial Action Task Force. This year, the BVI joined the UK in making a commitment to support development of a new global system for the exchange of secure, confidential information on beneficial ownership (BO). In February, they unveiled the Beneficial Ownership Secure Search System (BOSSs), which allows BVI law enforcement to access verified BO information on any BVI company and to share it with their counterparts in the UK within 24 hours. “The image of the offshore world has forced us to be early adopters of many things. The UK and Europe have only discovered the recording of BO in the last two years, but it’s something that’s been going on in the BVI for more than a decade,” said Mr. Tarn.

$100 million per year in earnings to their home countries. Naturally, when it comes to the BVI’s economy, there’s one major piece missing from the puzzle--tangible goods. With no agricultural or manufacturing sectors to speak of, the BVI imports nearly everything, amounting to US$750 million in 2014. And yet the strength of the financial services and tourism sectors resulted in a US$45 million trade surplus. This number alone proves that what BVI produces--though it may be largely invisible--amounts to quite a lot.

GLOBAL IMPACT To really gauge the global impact of the BVI’s financial centre, it’s important to look at what the net benefit is to people around the globe--not just in abstract terms, but concrete ones. Of course, as the report points out, it’s impossible to pinpoint, dollar-for-dollar, how many jobs the BVI is directly responsible for creating or how much impact BVI-facilitated cross-border investments have had on people. But a conservative estimate from the report indicates that BVI Business Companies hold US$1½ trillion of cross-border investment that is equivalent to six percent of all sectors’ total cross-border liabilities, 2 percent of global gross domestic product, and 2 percent of global portfolio and direct investment. This includes a vast array of physical, corporate and financial assets, including entities that the average person uses every day, like homes, hospitals, factories, machinery, and broadband technology, to name a few. Not only that, but these assets also provide liquidity for secondary markets underpinning the primary investments.

“We have always been an active participant in global forums that set the standards. The goalpost keeps shifting, but the BVI has also responded quickly and amended and done whatever is necessary to ensure our compliance,” said Ms. Donovan. “The BVI contributes to the economy rather than takes away.”

More importantly, the report estimates that the BVI supports around 2.2 million jobs worldwide. Two-fifths of these jobs are in China, including Hong Kong, and and one-fifth are in Europe.


“International business may go on without the BVI, but it would not be conducted so efficiently, “said Ms. McDonald and Mr. Christopher. The other jurisdictions that may adopt the BVI’s business, while they resemble BVI on the surface, differ in key ways. For instance, the Crown Dependencies of Guernsey, Jersey, and the Isle of Man offer access to the British legal system with the right to appeal to the Judicial Committee of the Privy Council. However, costs in these European jurisdictions are higher than in the Caribbean. Nor do all alternative jurisdictions--including the United States-share BVI’s scrupulous dedication to tax information exchange, combating money laundering and terrorist financing. Uses of these jurisdictions may actually backfire by prompting corporate profit shifting due to networks of double taxation agreements. In fact, these statistics show that BVI-less world is likely to only compound problems of tax avoidance and money laundering that governments are so keen to solve.

With a GDP per capita at roughly US$32,000, even amongst its neighbours in the Caribbean and Latin America, where international finance and tourism often sustain economies, BVI’s levels of prosperity come out on top. Though the popular imagination may look askance at the world of international finance, even the biggest skeptic understands the appeal of a swim, snorkel, or sail in paradise. Thus, it’s no surprise that the lively tourism sector of the BVI, often called the yacht charter capital of the Caribbean, lures nearly 1 million visitors a year. “The BVI economy is built on two pillars, tourism and financial services,” said Ms. Donovan., “And although tourism has a wider spread, accounting for one in every four jobs, financial services account for 65 percent of government revenues.” Half of all economic output derives from these two sectors. “There’s also a wider contribution financial services makes toward the BVI’s economy--the money they spend on food and rent, domestic help, whatever the case may be. It’s a large benefit to the economy overall. Compared to larger economies, the BVI does relatively well with the balancing act.” By necessity, these twin industries demand an international workforce. Twofifths of BVI employees are expatriates holding work permits, choosing to work in the BVI to enjoy a different pace of life while playing a vital role on the world stage. Furthermore, many of the surrounding countries suffer from high unemployment, and so export workers to the BVI who then send back



Few critics call for the complete abolishment of international financial centres, even as they call for tightened regulations. Nevertheless, it can again be a helpful exercise to look through the lens of a BVI-less world in order to assess its true value.

“Look at it this way,” said Mr. Briant. “What if China did not exist? What if Apple made all its phones in the U.S.? They’d cost $5,000 each. [But since they’re made in China], the cost is lower, thereby more people have them, and the world’s a better place.” Of course, there are lower-cost jurisdictions as well, such as Panama, the Seychelles, and Mauritius. But they present their own drawbacks. “There are cheaper centres, but they may not offer investors access to the British legal system, highly-skilled local service providers, strong

financial regulation or reliable company law,” said Ms. McDonald and Mr. Christopher. “That’s all we mean when we say the BVI is the most cost-effective, most efficient, highly reputable jurisdiction,” said Mr. Briant. “[Without the BVI], you’d have to go to the second best and you’re guessing at what the value would be.” Of course, there are opportunities for tax avoidance in the BVI. These include deferment of taxes on interest income, and the UK’s stamp duty, levied on the transfer of registered ownership of an asset. This can be avoided by placing the asset in a BVI Business Company and selling shares in the vehicles. But as Mr. Tarn points out, this can be accomplished by using any company--not just one in the BVI. “The solution is a UK problem and issue--don’t make it the BVI’s issue,” he said. “It’s about transparency and record keeping and regulation. If you want to stop a specific form of tax avoidance (i.e. doing something which is legal in your own country but takes advantage of what you see as gaps in your tax law), then change the law in your country.”


The report estimates that the theoretical maximum amount of tax that could be avoided globally each year through the BVI is US$750 million. This is only a small fraction of the actual tax gap, which in the UK is estimated at $59 billion. “Even if you estimate the maximum tax leakage allowable, you will still see a net benefit rather than an net takeaway worldwide,” said Ms. Donovan. “There is little to be gained by those seeking to evade or avoid taxes through the use of BVI Business Companies,” said Mrs. Smith. “The jurisdiction is not some supposed tax haven, but it is a sound and reliable centre which has worked harder than many bigger nations to meet international standards.” One of the key revelations of the report is that those estimated trillions of dollars in transactions facilitated through the BVI, rather than simply sitting on the beach getting a tan, are, in fact, working overtime. “The fact that money flows through the BVI doesn’t equate with it being lost to the economy,” said Mr. Tarn. “It’s doing real things. It’s never been true that money gets stuffed into a mattress. We’re part of the wiring of the international financial system. There’s stuff happening all around the world as a result [of the BVI international financial centre], and that’s really the fundamental message that is usually lost because it doesn’t suit people’s purposes.” With any luck, these new data-driven insights will provide empirical evidence of accomplishments of the BVI. One thing is certain: the BVI can’t lurk in the shadows any longer and allow others to write the narrative. Being secure of the value we add will be a crucial ingredient as we continue to chart our evolving role in the global financial system. Minds aren’t changed overnight, though, and the conversation will be ongoing. “One report does not change the narrative,” said Mr. Tarn. “As long as we continue to refer to it, eventually it will begin to seep through to a mainstream consciousness. The analysis that suggests the global world tax take from activity in zero-tax jurisdictions is worth having.” Added Mr. Briant, “[The report is] great for highlighting the financial services sector globally as well as the local jobs and benefits that are created, and how the BVI has gone from strength to strength, faced the challenges, and done so well. I think it marks a new chapter where we now go on the offensive to say, leave us alone, because we are an important player. We are the most effective jurisdiction and we create value.” B AUGUST 2017 EDITION


Business Global

A TEAM BVI ROUNDTABLE DISCUSSION BVI House Asia convened a panel of Team BVI Asia practitioners late spring at its offices in Hong Kong for a roundtable discussion on the regional issues and trends impacting the BVI in 2017 under the theme “Doing Business in Asia.� The panellists discussed trends driving the markets, which jurisdictions hold the most promise, business opportunities afforded by Belt and Road, and forces shaping personal finance in Asia in 2017.



Left to right Aisling Dwyer || Partner, Maples and Calder || I practice in the area of litigation, insolvency and restructuring. I’ve been in Hong Kong for six years, having spent about three and a half years in the BVI prior to moving here. Claire Fulton || Partner, Mourant Ozannes || I practice in the finance and restructuring team. I’ve been in Hong Kong for ten years, and worked half of that time onshore and the rest of the time at Mourants. Ellie Crespi || Partner, Harneys || I’m a partner in the corporate finance team here at Harneys in Hong Kong. I’ve been in Asia for seven years now, roughly half of that time with Harneys, prior to which I was with A & O. Robert Grieves (moderator) || Chairman, Hamilton Advisors Limited Frances Woo || Former Group Chairman / Managing Partner, Appleby || I’ve been in the offshore financial industry for about 25 years out of Hong Kong and working out of Asia. I was previously with Appleby during that period of time, retired two months ago. My previous position with them was Office Managing Partner and Group Chairman. Joanne Collett || Partner, Walkers || I’m on the insolvency and disputes resolution team. I’ve been in Hong Kong for about five years and was in another offshore jurisdiction for two and a half years before that. Marianne Rajic || Partner, Campbells || I head up the corporate department. We cover funds, corporate and finance. I was in the BVI for nine years before moving to Hong Kong a year and a half ago Fiona Chan || Partner, Appleby || I’m in the corporate group, specializing in general corporate, banking and finance, insurance and private clients. AUGUST 2017 EDITION


Market Drivers are the factors and trends driving the Q What Asian financial services industry today?

Aisling Dwyer: I suppose the important things to look at, at the moment, would include a weakening renminbi, particularly from my perspective on the restructuring and insolvency front, the nonperforming loans coming out of China and the effect of that on the market, the Belt and Road initiative - there is a lot of talk in the industry on how that is going to shape the Asian financial industry going forward, the rise of ASEAN and the amount of trade that can be done out of that, the growth of Singapore as a financial hub for Southeast Asia. Ellie Crespi: I guess there are two main trends from my perspective in the corporate finance space. One is the defaults coming out of China, and, given that institutions are strengthening their distressed debt teams, what that’s going to mean for opportunities in the restructuring space, and the other is the rise of the Chinese banks, and how different that’s made the corporate finance landscape over the last 18 to 24 months for our traditional client base, Hong Kong banks included, and how they have had to deploy their resources to make money. Frances Woo: I think more on the macro level, over the past five years we’ve seen a lot of outbound investment by Chinese businesses as well as private organizations, and we anticipate that that’s going to continue. I think you’re going to see China rise more on the political stage, particularly given political events You’ve seen the US ceding its role on the international stage, and also events in the UK and the EU. So, I think that although China historically has been going softly, softly, you’re going to see them rise more prominently and therefore Asia as well, and that’s going to drive the Asian financial services industry from here, in terms of their outbound investments and the use of their clout on the world stage. Claire Fulton: To Frances’ point, I think that’s right. The economies in the region are at a crossroads, as it were, moving away from what historically were export-driven to more domestic consumption driven economies. China inevitably will be a large factor in that, with the growth of SME (Small Medium Enterprise) businesses and



trade, whether internationally or inter-regionally. It will undoubtedly drive financial services, and built into that, a large factor that will form the crux of those growth areas being successful, will be infrastructure. In the financing space, which I focus on, we’re seeing a lot of investment from banks and other investors and financiers in that infrastructure space. Joanne Collett: Our experience echoes those of some of my colleagues here. We’re looking at things like the currency controls in China, for example, so where is the financing coming from? We’re seeing an increase in Chinese domestic banks really getting out onto the world stage, but the issue is, can they really get their money out of China to do the deals? We’re seeing a lot of domestic investors, so domestic Chinese funds using domestic money, and the potential for those domestic funds looking to be doing US dollar funds offshore. So funds already offshore, but with Chinese managers using those funds is quite interesting. Aisling mentioned Singapore, and we do tend to focus in Hong Kong on China, but we should also focus on Indonesia, Vietnam and other places in the region. Fiona Chan: One of the biggest factors is China. Chinese policies are having a huge impact on Asian financial services, for instance the Belt and Road policy and the impact on outgoing investments and infrastructure developments in other Asian countries. On capital control, everyone is analysing the effect and the policy, and how it will affect outbound investment and the impact on other non-related industries. The delay in approval from Chinese authorities on an industry they have supposedly banned – there is still a huge impact on how everyone is working. Our experience is that the deal cycles tend to be a lot shorter because banks, companies and SMEs are making sure they get the approval they need before they go into legal documentation. So, our deal cycle tends to be a lot shorter now for that particular reason. Marianne Rajic: I would have to echo that. It’s a welcome change for me that our deal cycle is significantly shorter, and when we do get the instructions and approvals already in place and a clear plan as to what’s going to be done, that’s very positive for us and for the onshore counsel as well. A couple of other observations that may perhaps be signs of the times: I’m seeing a repatriation of VC (Venture Capital) managers and experience from the US back into China for the purpose of bringing inbound investment into

China and developing the venture capital product in China. I think there is a huge demand for that. Everyone is looking for the next Alibaba. There is a lot of money being put into that. Another sign of the times is that China is focusing on green energy now. There is a lot of outbound investment into green energy projects, and listings of green energy projects on the US market, which seems to be the complete opposite of the intention of the recent US elections. I think the Chinese are really good at seeing an opportunity in the market and taking advantage of that. Singapore does play a big part in the rest of the Asian market. But China is such a huge powerhouse, and from the perspective of the BVI, if you’re going to be focusing on something, that’s a focus in the region. would like to drill down on the excellent Q Itopics you have brought up. Ellie, as Marianne was just saying, how does the BVI figure into our thinking as we answer these questions. You talked about banking in China. There’s shadow banking, there are other banks emerging, there are still the Big Four state banks, which banks are emerging? Which are the BVI dealing with, or will be dealing with in the near future? Ellie Crespi: The BVI deals with all of the big state banks, a raft of shadow banks, and we’re seeing a lot of fund finance being done. The general trend we’ve seen is the banks we usually used have moved away from leveraged finance. China Minsheng Bank, for example, are writing leveraged debt for the first time. Exim Bank are very active, CCB (China Construction Bank), Citic, so we’re seeing a very, very different constituency of banks coming to us on BVI transactions. They seem to be pretty comfortable with these other companies already. That’s the thing we’ve found – we’re not receiving unsophisticated queries on boilerplate issues. The banks know what they are doing. Their in-house teams are already familiar with BVI entities. So, I think it’s good news and a good story for the BVI. Aisling Dwyer: There’s still a lot of comfort with the BVI and less of a tendency to feel they need to use Hong Kong companies, although the benefits of using Hong Kong companies are increasing. For wealth succession, we need to get more sophisticated structures in the BVI to ensure that our trust companies are used for succession planning.

Ellie Crespi: On the account opening front, the irony is that we have found Singapore banks to be much more helpful than Hong Kong banks. I just spent three days in Singapore and people said they still need the BVI to structure funds. On the one hand Singapore is a competitor and on the other hand it’s friendlier to BVI companies than Hong Kong. Marianne Rajic: I think the reason the banks are so comfortable with the BVI is that the regulation on account openings has been in place since 2007 and has been tested, so I don’t know if in reality that means it’s easier to enforce, it probably is. It allows the banks to tick the boxes, and I think there is increasingly more ticking of the boxes.


Claire, you brought up infrastructure before, and I want to shift into the Belt and Road initiative, and how real is all of that and how real is the infrastructure play in Asia and what role can the BVI play in that going forward?

Claire Fulton: To answer the first question, I think it’s very real. We were involved in the first initiative of the Belt and Road project, so yes, it’s real, it’s a focus from an Asian financial services perspective. I read something a couple of weeks

ago that suggested trillions of dollars need to be invested in infrastructure and will be invested, not just by the Chinese banks – I agree with Ellie’s point that we are seeing the rise of Chinese banks being the leaders and spearheading their involvement in that campaign – but indeed some of the international banks such as HSBC came out in the press last week pledging their support, because we’re dealing with a massive region here, which has a fairly underdeveloped or immature infrastructure set up. Each of these regions wants to keep pace with global development and globalization, which I think is the primary focus, so there needs to be huge expenditure in that space. Yes, it seems very real and from our involvement in projects it’s happening and there are deals being done and there are many more in the pipeline.

Q Does the BVI have a role to play? Claire Fulton: Absolutely, that’s been our role predominantly throughout these transactions, and it’s exactly that. A lot of projects in that initiative have been driven from China and they do appear to be very comfortable with the BVI structures. So that is, from my experience, the jurisdiction we’ve seen used the most.

Frances Woo: Other than China and the Belt and Road, there are very few new frontiers in infrastructure, particularly if you are looking at the developed markets, and to the extent that the US wants to invest in infrastructure, that could be bogged down for quite a while, depending on how political discussions progress. For a lot of these countries that are looking to expand their infrastructure, we’re going to see quite a few partnerships, between China and the UK, China and the EU, China and the US, China and Australia, because they are all going to try to pile in to get a piece of the action. That goes to Marianne’s point, when we’re dealing with the BVI, with structures that are fairly ubiquitous, and there’s a high comfort level with that, it’s a vehicle that can be used for, and pool together, a lot of the international investment in a way that permits comfort in that investment, particularly in permitting for exits. And so, this is what investors need and what the international community is getting so excited about. the BVI fully engaged in this effort, or are Q Isthere more things the BVI should be doing?

Frances Woo: Certainly, there are more things that the BVI can and should be doing. I think to a certain extent a lot of the initiatives and



policy were driven by the central government in Beijing, and they’ve earmarked trillions of dollars in funds attached to that, but in tandem with that, you’ve got private industry and the private sector in any number of different fronts that I think the BVI could be aligning themselves with and engaging in dialogue with, because to an extent on a policy level it’s been set, and to an extent the SOEs (Stated-owned Enterprises) and the banks are aligned with that. But there are a lot of ancillary businesses that are going to be part and parcel of this journey, and so there are various associations that the BVI could be talking to. At the SOE level they might know about it, but how do you get to the end-user level, and I think more work can be done there. Ellie Crespi: That’s a good point. In Hong Kong, the BVI could work with private wealth individuals from China. Aisling Dwyer: I was just looking up, in connection with the AIIB (Asia Infrastructure and Investment Bank) that Jersey has managed to make an application to be a member of that through the UK. I wonder if the BVI, as an Overseas Territory, might be able to do something else. Marianne Rajic: The BVI Roadshow in China last year was well received. I was really surprised by one of the seminars, where we expected 200 and there were 400, 500 people. It was a huge room and there were people standing around, and they



were mostly from the private sector. There were some government events involving government agencies. But I think engaging people would be helpful, because people are already open to it. Fiona Chan: Our experience with the seminars and conferences in China is that they are not only for investment but also for wealth transfer and succession planning. They are well-educated in the BVI structures and VISTA (Virgin Islands Special Trusts Act) trusts structures that we can offer. So, I think there’s huge potential to continue to do that because trust is an area of rapid growth in China. ASEAN (Association of Southeast Asian Q IsNations) coming together as an economic bloc? Or is it still lagging? And if it is coming together, what are the current business opportunities?

Joanne Collett: I don’t want to be the negative person at the table but I don’t think so, at least not at the moment. The general feeling on ASEAN at the moment is no, everyone seems to be doing their own thing. Whether that will change I don’t know, but that seems to be the feedback at the moment. Frances Woo: TPP (Trans-Pacific Partnership) is now dissolved, and then you had a number

of initiatives with the ASEAN bloc but it seems they’re in a bit of disarray, and they’re trying to figure what is the best way or organization to move forward, to get a lot more traction. Right now, the individual members of ASEAN have their own issues they are trying to resolve. Indonesia present opportunities for Q Does the BVI?

Marianne Rajic: I think they did, and there is a tendency to use Singapore. It looked really promising a few years ago, but I haven’t seen Indonesia or the other members of ASEAN working together.

Q Is there an opportunity with Thailand? Ellie Crespi: Thailand is in the same category as Indonesia. We are still servicing those jurisdictions, but we are not seeing a lot of growth.

Q Where are we seeing growth? All: China.

Connecting China’s Belt and Road Frances Woo: Along the Belt and Road there are 65 countries, so there’s a lot to be done and a lot to focus on. China is the catalyst, but equally, start to focus on what are the big-hit countries within Belt and Road, start focusing and developing those, and creating a demand in those countries, because essentially China is very, very large in a way, but even the third tier and fourth tier cities are so huge it becomes a question of which one to address. It might be easier to go into some of these smaller countries to get first mover advantage. Fiona Chan: For the Belt and Road as you mentioned, there are so many countries. What we found is that the countries that stand out have a government talking to the Chinese government. There is a government plus delegation that visits the country and a contract is signed for a huge infrastructure project, a railway or a canal. Those are the countries that benefit a lot from Belt and Road. I don’t know how long it would take to move around 65 countries, but the political factor is important in determining which countries stand out from the 65.

Shaping Wealth what forces are shaping asset Q Marianne, protection, wealth succession, tax planning in Asia this year? What are the drivers?

Marianne Rajic: I think the currency, the weakening RMB, is important. Also, currency control. At a private level, it’s a really big driving factor. At the international corporate level, the forces behind it are the fact that China is US$33 trillion in debt, which is a huge amount of debt that hasn’t been called in, and restructuring will have to happen, but there’s still a lot of money to be invested out of China and into China in a lot of underdeveloped areas. There’s a lot of demand, a rising median wage in China and a growing middle class with a lot of demand for international products and that leads to a lot of opportunities. I was at a seminar recently and there was an Indian fund selling bathing suits into China. They were using a Cayman structure,

but they had a bunch of BVI companies in the holding group. There are certain areas that are no-go zones such as real estate. There are other areas that can be invested in, such as biotech, healthcare, infrastructure, things like that, so for the outbound work it’s still possible to get approval. Banks set up in the free economic zones can now lend directly overseas, which is new in the last couple of years. It’s a huge advantage for those banks allowed to operate in those zones. They’ve been very successful with that and I think the sheer size of the Chinese market and Chinese demand is really important for inbound investment. China Morning Post, there Q Inwasthea South story focused on the Lo family [“One of Hong Kong’s most prominent and wealthiest real estate clans”] and the struggle over Great Eagle Group, the lack of planning for wealth succession. I thought that was a great advertisement for the BVI.

Joanne Collett: I don’t think what people want from the BVI has changed. They want security, they want certainty, they want privacy, they want low cost, which the BVI generally offers. From a litigation perspective, we can offer the BVI court system as protection. Frances Woo: China is different from North America and Europe because there is a lot of demand for investment diversification, and investors are looking for value. Real estate is becoming more expensive in Asia and they are looking to diversify their investments, outbound. Other than that, I think in Asia how it’s different is because you have generations, people within less than one generation that have generated such phenomenal wealth, so they’re both, they’re not only looking at preservation, but they are still generating. That makes things very complex, but it also means there’s a lot more demand, and because in one fell swoop they want to be able to address all of these issues plus they’ve got capital control issues. And that’s not only in China, but you have security issues within Southeast Asia that they have to contend with. So those are the forces that are driving asset protection and wealth succession demand. A lot of times they know it’s there, but it’s latent, you have to capture them at the right moment. Otherwise a lot of their attention is diverted into wealth generation because they’re still moving and shaking. You

need to be able to identify what those moments are, and it could be political or economic issues, and seize on them. It is very time sensitive, otherwise their attention is diverted.

really have to know the client, don’t Q You you?

Fiona Chan: One area where we have to focus is the impact of CRS (OECD’s Common Reporting Standard). How does the BVI compare with other jurisdictions, what are they doing, any clarifications, any ways that the BVI can suggest how clients can comply with it. It’s quite an issue with them. All of the conferences I have been to around private wealth management, this has been a topic. The other one to go along with that is cybersecurity. That’s more international rather than the BVI focused. But on the CRS, point the BVI could do a lot more on that.

a seminar, yesterday on CRS and Q Atchanging your citizenship the statement was made that in 10 years CRS will be universal.

Marianne Rajic: There are already 92, 98 countries that are signatories to it. The US isn’t a signatory to CRS. For the first time ever I have had Chinese clients who wanted to go directly into a Delaware company for their personal structuring, and completely bypass everything else. Normally the Chinese wouldn’t go into the US directly, but because there is no CRS requirement and you don’t fall under FATCA (Foreign Account Tax Compliant Act) with a US domestic company, they wanted to go in.

wealth succession and CRS do clients Q Innormally think of the BVI?

Marianne Rajic: I can’t see how the BVI can offer a solution to minimise the impact of the CRS, because the BVI hasn’t asked for more than what the CRS is asking for. The BVI has made it easy, one filing is sent to 100 countries, but I don’t think they could do anything less.




Regarding asset protection and wealth succession, is the role of family offices growing?

Fiona Chan: I can offer some insight; Family offices are focusing on China. In the past two years, hundreds of family offices started by one or two individuals, at the invitation of a high net worth individual, have grown larger and now play a more institutional role. We’ve seen several hundred family offices set up in China and they are all focusing on the same group of clients, other than the ones specifically set up for one individual. Our experience is that they are growing too fast, because a lot of them are not doing enough work. People in China still need education on wealth planning and wealth succession. People are warming to the idea, they know it’s a hot topic, but they are still having difficulty finding a professional to advise them. So the BVI coming in is quite a good option for them, because they can receive education on trust or fund structures. They are also looking for wealth generation ideas and investment opportunities in Asia, Europe and the US. So, if we can offer them one package with all of the different aspects, that would be good, because they are all familiar with BVI structures. I think there is a lot of potential in that area. Ellie Crespi: We’re all familiar in Hong Kong with the suite of BVI trust structures and we can translate that to China.



I want to move on to the disruption factors in the market. What are the disruptors in 2017 and how do we deal with them?

Marianne Rajic: Political factors are one disruptor. Frances mentioned TPP is being done away with. We have the world in a bit of limbo at the moment. We have a hung parliament in the UK, we have the UK in the process of Brexit. We don’t know what that would mean for the UK or for the EU. The changes in the US. Every day there seems to be something unexpected. Then the next day there is something really unexpected. It’s a really changing landscape, which I think makes it really difficult for new trade agreements



to be struck, because we don’t really know. I think that’s a huge disruptor. In terms of the deal flow, certainly the bigger deal flow, let’s just wait a little bit to see what’s going to happen.

Marianne Rajic: I think one of the things the framers of the Bank of Asia are absolutely keen on is doing more of that fintech stuff in the BVI.

Frances Woo: There’s a lot of business uncertainty. For what it’s worth I also think technology is a huge disruptor.

me throw out another one – Q Let demographics. Dealing with millennials

us a little Q Tell disruption.

more about technology

Frances Woo: The advent of artificial intelligence and, how that is going to be utilized in everyday business, are key issues. The most advanced country in terms of social media and doing business online is China. That’s because they have been able to leapfrog a lot of the infrastructure, the standards and protocols that had been put in place over hundreds of years and in one fell swoop have been able to leapfrog that. Because they have been able to do that, their development is going to be very, very quick. And now, because of artificial intelligence, the basic way that we do things is going to absolutely change, from blue collar type work to how we process documents or conduct a review or, if the computer is able to learn, analyse how to make decisions. That’s going to have huge implications for the pace at which business is conducted, how it’s being conducted and by whom it’s being conducted. That’s already here. I said to my son a few days ago when we were stuck in traffic, wouldn’t it be great if we could teleport ourselves and yet Google is now selling self-driving cars, so those are going to be huge disruptors and big changers. If you’re not ahead of the curve with that, then you will be left behind.


What is the BVI response to them?

Frances Woo: The BVI response to them, apart from online registration, is what kind of legislation, what kind of changes can we put in place to facilitate the trend that is already occurring. Because the BVI is relatively nimble and small, they are in the absolute best place to be a first mover in that respect. Can you put in bells and whistles that can facilitate that and put the BVI on the map?

Q Is the Bank of Asia a good first response? Frances Woo: Absolutely.

as they come up. We are dealing with wealthier older people now, but do we have to pay attention to younger people coming up the food chain, changing habits, tastes and purchases?

Marianne Rajic: I deal with millennials in venture capital a lot, and it is a different way of doing things. I don’t know how representative it is, but there is certainly no such thing as a weekend. It’s not even doing 12 hour days. They want my FaceTime account, or WhatsApp to contact me at any time of the day. The differences are quite small for now, but if technology is a disruptor, these are the people who are going to be bringing it in. So, I think it will change the landscape. Frances Woo: Virtual Reality is coming, it will not just be a WhatsApp call, right? Marianne Rajic: They are going to pop up on the table! Haha. Frances Woo: They are going to have breakfast with you in your PJs! Ellie Crespi: These millennials like the BVI because the BVI already has the electronic communications, such as acceptance on the PDF (Portable Document Format) format instead of the originals. They love this electronic communication as it is cheaper and more efficient. China going to be a disruptor, in terms Q Isn’t of tastes and what its people will want becoming more and more the norm in the world?

Marianne Rajic: Trying to second guess what the Chinese want without relationships on the ground is a lesson for the offshore market. For the BVI, rather than second guess, keeping in touch, being part of the associations and hearing it first hand is important. Ellie Crespi: A dialogue has to be developed. The Chinese influence is massive already. There are Chinese speaking sales consultants at Harrods (a famous UK department store), for example.

Fiona Chan: It’s interesting to see how the Chinese government is holding back the spread of Chinese preferences and taste through capital controls. They obviously have other concerns such as the renminbi, but if they didn’t have those controls the influence would spread a lot more internationally. Frances Woo: For those of us working in China or Southeast Asia, it’s important to understand where the buck stops, whether for an SOE or a private firm. Going back to capital control and how China is not only holding back investment but cultural influence, a lot of that goes back to ensuring that they are promoting social harmony, because the country is so large, and now there is a growing gulf between those who are wealthy and those who are not, and so it’s very important that they maintain that harmony. And also, in terms of political framework, the Communist Party is still involved and engaged and in control.

What’s Next

Q What keeps you up at night? Joanne Collet: Making sure that offshore stays relevant. Making sure that people are attracted to using JV (Joint Ventures) companies. When we’ve got Singapore biting our heels on restructuring, for example, making sure we stay relevant, marketing the BVI as the place to do business. Fiona Chan: I agree, and for me, because I do a broad range of work, corporate banking, insurance, private wealth trusts, one thing I would consider constantly is, how to connect with opportunities, through underlying sponsors or high net worth individuals so that I can sell the trusts and the private clients aspect. It’s that connectivity that I’m trying to find, a place for the BVI to fit in. Claire Fulton: I would echo what Joanne mentioned, being absolutely relevant in this part of the world, prominent and important and user friendly. As soon as there is any perception issue that starts to penetrate the jurisdiction, the impact on our business would be dramatic.

together and punch above its weight. I think a lot of the developed countries will try to divide and conquer. That aspect is one that will be very important in order to stay relevant, stay at the forefront and continue to flourish. Second and third for me is political and economic stability. Aisling Dwyer: That our court system be adequately staffed. It is obviously being inundated with more and more litigation. We’re very proud of the jurisdiction and the standard of adjudication that has gone on there, and that it continues. We have an excellent commercial court and we have had some great judges sitting. But we do have competitors. We have arbitration, there are lots of solutions for our clients when it comes to disputes, they can go off pick them and do their own thing, but we’ve got to keep it going so we can continue to compete on that front. Ellie Crespi: I feel very positive. I think the BVI is still very relevant. I look out the window, I see that BVI companies run half of the buildings out there, and we still see the BVI as the second source of foreign direct investment into China. We’ve seen our incorporation numbers and they remain quite steady. What keeps me up at night is striking the balance, really. On the one hand the jurisdictions, and it’s not just the BVI, have suffered quite strongly from attack, from being labelled as places of money laundering and dirty business. We have that on one side, and we’re responding to that so well. But there is a balance to be struck between responding to that threat and legislating to avoid corruption, and standing up to it and saying that is not what we stand for anyway. And yes, we will comply with CRS and we will remain OECD white-listed, but at the same time we do not want to make our jurisdictions so difficult to operate in that we will push our client base away. Marianne Rajic: My biggest concern is that we will legislate ourselves out of business unnecessarily. I agree with Frances’ point that rather than competing with each other there might be some room in the changing global market for some of the offshore jurisdictions to actually not compete and weaken each other, but rather to complement each other with the products that they offer. B

Frances Woo: Specific to the BVI and offshore, that it not be allowed to be divided and conquered. It is important that offshore collaborate and work




Financial services for the future:

Courage, Candour, Common Sense Speech by


Managing Director/CEO BVI Financial Services Commission Presented at Barbados Financial Services Commission’s Annual Lecture & Cocktail Reception Thursday, 20 April 2017, 6:30PM Grand Salle, Tom Adams Financial Centre



The courage to think and do what is right. The candour to be honest with oneself, and to speak truth unto power. The common sense to realise that shirking tough decisions is a path to nowhere.

Ladies and gentlemen,


t’s good to be with you here in Barbados. I am delighted and honoured to share in this your 4th Annual Lecture. It is a great honour to speak to you today. I am most grateful to the Barbados Financial Services Commission for the invitation to do so, and to you all for being here. When Sir Frank Alleyne invited me to speak, I readily agreed. After all, one cannot say no to the Economics professor whose influence has shaped and continues to fuel my professional journey, and who challenged me and my classmates to be the difference that makes a difference in the Caribbean. As a fellow regulator, I know the value of celebratory events like this evening’s – the opportunity they afford for reflection and review; looking back on past accomplishments, the road travelled, as well as renewing, planning and charting a way forward for challenges that may lie ahead. I will be speaking to you not just as the MD/CEO of the BVI Financial Services Commission, but as someone who has spent over 30 years in the trenches defending, ensuring and safeguarding the right of Caribbean financial services centres to continue participating in the global financial services industry. What I will be expressing are my personal views, therefore, and not necessarily the Commission’s. My watchwords today will be courage, candour and common sense – • The courage to think and do what is right. • The candour to be honest with oneself – and to speak truth unto power. • And the common sense to realise that shirking tough decisions is a path to nowhere.

My beliefs I’d like to frame my remarks with some of my core beliefs – beliefs based on long experience. 1. First of these is that in today’s increasingly globalised world, money and the management of wealth are the world’s most fungible commodities. Squeeze them too tightly in any one jurisdiction and you cause them immediately to shift to another, where they can better exploit opportunities. Money has no national loyalty. 2. Next, I believe that global clients will come to a jurisdiction only if they expect to receive high-quality, efficient and innovative services, and be treated fairly and honestly. If they don’t expect that, they will go somewhere else. 3. I believe, too, that compliance with international regulatory standards is a sine qua non for reputable financial centres. With compliance comes international respectability, and with respectability come opportunities for the financial sector to trade, source and do good, legal, profitable and sincere business with persons outside the jurisdiction. 4. I firmly believe that in today’s constantly evolving, globalised world, we accomplish more if we work collaboratively, than we do if we work in silos. 5. I believe that regulators cannot and should not attempt to regulate or supervise that which we do not understand – but that regulators should be as smart as, if not smarter than those who they regulate. 6. I strongly believe we must have the courage to do what is right, not what is expedient or what we have always done, even if this means swimming against the tide and taking action that is difficult or may seem counterintuitive.

7. This brings me to my central belief as a regulator. It is that regulators and supervisors have to know how to get the balancing act right. On one hand, they have to respond to financial institutions of integrity, who will no longer tolerate regulatory environments that expose them to reputational risks. They also have to accept that too little regulation or weak or inadequate enforcement can lead to avoidable failures and malfeasance and the destruction of confidence and business. On the other hand, regulators and supervisors have to realise that over-regulation can create unnecessary bureaucratic burdens, stifle innovation, hamper success and also destroy businesses. So good regulation requires a balanced and differentiated approach. Supervisory resources must focus on those firms and activities that pose the greatest reputational risk to the jurisdiction. Some call this risk-based, risk-focused or right-touch regulation. I call it common sense, pragmatic regulation. And I believe in it. So in a nutshell, ladies in gentlemen, I believe that: • Money moves quickly • Honest, effective, knowledgeable and balanced, internationally compliant regulation are essential • And cooperation and courage pay off.

Applying the beliefs Everyone here will be familiar with the old Chinese curse, “May you live in interesting times.” We’re living an era of… • BREXIT • President Trump • FATCA • BEPS • CRS • MMOUs • TIEAs and automatic exchange of information for tax, law enforcement and regulatory purposes • Constantly evolving international regulatory standards • Peer evaluation and peer reviews. We’re living in times where the G-7 countries are applying the provisions of their domestic laws extraterritorially – requesting unfettered access to beneficial ownership information through centralised public registries, and times when



G20 countries and the supranational bodies they control, as well as individual states such as Illinois, are naming and shaming, blacklisting and threatening punitive sanctions against offshore financial centres. These are interesting times indeed! They are times of transition and change that are having a profound impact on how cross-border financial services must be conducted today and for the foreseeable future. International standards of regulation and best practice have become the language of jurisdictions, regulators, standard-setting, supranational organisations and the international media. Transparency and compliance with the standards are the yardsticks by which jurisdictions are being judged. Today, regulators need to be aware of their global as well as their domestic responsibilities. They need to: • Implement global standards • Detect and protect against new systemic risks in financial systems • Help each other to enforce the law by gathering evidence from across the globe • Examine licensees and registrants wherever they may be located to ensure that they are abiding with the rules • And raise the bar in worldwide enforcement efforts.

Sound regulation and supervision How do regulators meet these expectations and ensure sound regulation, supervision and enforcement? Like the Barbados Financial Services Commission, we at the BVI FSC have spent many years trying to get it right. We have built up a robust regulatory framework to deliver our statutory mandate, especially in the non-banking financial arena. This might be a good moment to step back and consider what exactly is meant by sound regulation and supervision. The quick answer is that regulation is the rules and supervision is how the rules are applied.

Regulation Regulation is the sum of statute, standards and associated guidance material that determines the rules by which the financial sector must operate.



Or, to take a sporting analogy – whether your favourite game is cricket, baseball, football or basketball, regulation is the laws of the game. These can be complex and very technical, like rules in financial services. Good regulators, like referees and umpires, will always seek to create the best environment to allow competition to take place. They have to ensure that the pitch is in good condition and that the playing field is as level as possible and does not advantage one participant over another. They have to set boundaries that are clear, consistent and predictable, but within which, players – whether footballers or financial services practitioners – can innovate and develop new approaches and – in the case of companies – services. This means that on those rare occasions when intervention is necessary, each intervention must be judged on its impact on the players and be carefully considered and rigorously based on evidence. In financial services, good regulation should act as a catalyst, enabler and facilitator of progress. It can be a spur to growth and investment. In certain circumstances, good regulation allows a regulator to anticipate problems and apply appropriate preventative medicine, focusing on sensitising industry participants and consumers to potential pitfalls through enhanced awareness and mitigation training. But regulation is not some super guarantee that there will never be losses, failures or misconduct. Nor does it obviate the need for investors to exercise responsibility for their investment decisions and to ensure that they understand the products they are investing in and the risks that come with such investments. And, of course, regulation on its own is no substitute for proactive, informed and effective supervision. Regulatory requirements are, by their nature, minimums. It is best for all concerned if entities operate a safe distance from that minimum in their normal course of business.

Supervision Which brings me to supervision. This is the process by which regulators seek to ensure that firms they regulate stay within the rules. Or, to put it another way, supervision promotes the long-term safety and soundness of financial firms, and regulation is the tool that empowers supervision. All the evidence suggests that a risk-based approach to supervision ultimately maximises stakeholders’ interests and helps to create a

resilient, safe and stable system at the lowest cost. Effective supervisory oversight is the kind of attention financial institutions need to receive from supervisors on a regular basis. What makes effective supervision? An ability to figure out whether the risk management controls at an institution could break down and whether the culture of the institution and its appetite for risk will create potential dangers that might lead to problems. Figuring this out means asking the right questions and more. It covers what we say to institutions, how we say it, the type of information we request, the people we ask to meet, how we deal with pushback, what we do when we go on-site or otherwise deal with an institution, and the extent to which we just tick the boxes or think more deeply about core risks and how they are managed. Of course, a company’s board is responsible for financial soundness and prudent risk management. But supervisors can be on the frontline in identifying risk management problems at individual firms, providing an independent checkpoint and at times narrowing down options where there are concerns. To return to our sporting analogy, while rules are important, how individual games are played in practice often depends on how they are supervised. Ultimately, it is referees and umpires who control the flow of the game. Referees and umpires do much more than blow whistles to stop play and call people out during the game. They talk to the players and coaches about what is expected, what is acceptable and not acceptable and what situations they will be watching, given past experience. They know the personalities of the players and their tendencies. They give some players the benefit of the doubt and give others no room at all. If referees are doing a good job – as is generally expected of them – they are not a feature of the game, and spectators can enjoy the efforts of the players and the teams. A good supervisor needs to be like a good umpire or referee – constantly on the pitch, keeping up with what is going on, respected, fair and consistent. Tough when necessary and aware of the need to be at the centre of the action without being the centre of attention. Low key, but effective, alert and ready to take whatever action is appropriate in the interests of the game as a whole.

• Asset and wealth management Being an effective regulator or supervisor means employing a combination of courage, candour and common sense.

• Shipping and aircraft registration • Investment businesses, including mutual funds, hedge funds and other securities

• The courage to challenge and change those rules that are no longer effective or needed.

• Structured finance, securitisation transactional business

• The courage and candour to facilitate debate which reflects on and analyses past performances.

• Risk management and insurance business, including captive insurance

• The candour and common sense to work with industry and other interested stakeholders in an open and transparent manner to find real solutions to old and new problems.

• Estate planning and the management of family offices

• And the common sense to appreciate the need to constantly challenge the industry to do better – pushing them to go further and faster in the necessary quest for improvement.

The future Looking to the future, it is clear that the regulation of financial services will require even more courage, candour and common sense. It will require tenacity and tact, not timidity and tentativeness. This is especially so in the non-banking arena – • Where, thanks to globalisation and information technology, activities are becoming more complex, more sophisticated and more diverse in nature. • Where stricter banking rules have given rise to shadow banking practices with their rapidly growing, attending risks. Practices that often and hitherto occur outside the perimeter of traditional regulation.

In all these fields of endeavour, considerations of market discipline and market conduct are critical for safety and soundness – so too are issues of • AML/CFT • Governance • internal controls and systems • fitness and propriety • beneficial ownership • financial solvency

Considerations such as these are resulting in changing the regulated landscape for non-banking financial services. Regional, regulated non-banking financial services activities now include:


• Money services, credit unions

• The procuring of trust, company management and other fiduciary services. It also encapsulates e-gaming, microfinancing and crowd funding activities, digital currency and mobile money issues – where smartphones and smartcards, which, when coupled with online services and the expansion of social media, facilitate the provision of cross-border goods and services in an environment unencumbered by the rules of traditional banking and where regulators have not caught up. In the securities’ space, we have seen the advent of many products, with regulation struggling to keep pace with Forex, derivatives and securities being sold with “insurance wrappers”. And we are witnessing the development of “regulatorylite”, technology sandbox-type arrangement to facilitate and incubate the development of new market practices, products and services. Financial services have undergone a massive evolution in just the past decade, with the emergence of shadow banking. Looking ahead, there are no signs that this will abate just yet. The evolution has been very challenging at times, for both the regulators and the regulated within nonbanking institutions. While international regulatory requirements for banking, and to some degree, insurance, have existed for decades, the regulation of other nonbanking sectors is pretty much virgin territory and still experiencing growing pains, and where the regulatory contours are still being formed. Also, the activities of Trust and Corporate Service Providers (TCSPs) are coming under hyper-intense scrutiny by the international community, with OFCs and the vanguard of the regulation of TCSPs. Indeed, TCSPs were traditionally viewed as operating as ancillary services to the financial services industry. It took the global financial crisis for the importance of these essential gatekeepers to be widely recognised. A few of us in the region, of course, have long recognised this and have regulated them for decades. Since 2000, the UK Overseas Territories (OTs) and crown dependencies have championed

a statement of best practices for the regulation of TCSPs. This has served us well over the years. Most recently, we have collaborated and worked with other jurisdictions under the aegis of Group of International Financial Centres Supervisors (GIFCS) towards the development of an international standard for TCSPs, which was published in 2014.

But there is more to be done. As others have said in a different context,

“La lucha continua” – the struggle continues!

Changing standards If we are all to survive in the future era of financial services, we need to start by recognising the breakneck speed at which the financial services world is changing. Jurisdictions, governments, regulators and industry practitioners everywhere are constantly having to up their game to keep pace, or be left behind in a more competitive and complex marketplace. They have to stay up to date with all the standards-setters, international organisations, regulators, competitors and jurisdictions, and with constantly shifting goalposts and standards. This can be a particularly daunting task for smallisland jurisdictions, their regulators and industry participants. I am fully aware that there exists among you and throughout the sub-region a considerable amount of jitteriness and anxiety about the future viability of the industry. You are worried about its resilience in the face of an incessant and relentless wave of external pressure. And about the rapidity of change – the intensity of change and the volume of change. This has inflicted the industry during this time. With some of our jurisdictions being early adopters of new standards and best practices, some of you feel we are moving too fast to comply with international demands that add nothing to your bottom line. Yes, you are right to remind us of the need to remain alert to the impact that our reforms have and to raise concerns about the sustainability



of the industry in the wake of these relentless changes. But I would strongly suggest that none of us can allow ourselves to be found on the wrong side of the global arguments around standards of control, transparency, international cooperation and the exchange of information. The environment for international financial centres – especially, it seems, those from the Caribbean – is already inhospitable enough.

The urgency of now

track record of good conduct and a reputation for integrity and prudence. If we license institutions who do not meet these standards, we leave the quality of our regulation open to challenge. As business models change, so too must regulators. With courage, candour and common sense, we must look anew at the things we’ve always done. We must review, recalibrate and refresh our regulatory and supervisory approaches periodically. We will need to be prepared to change regulations, codes and guidelines; pass new legislation; cut red tape; identify new market needs and trends; and act to exploit these.

Let us operate not in an adversarial way, but in a candid, collaborative and collegial fashion – with an honest and open dialogue aimed at finding practical solutions to address the challenges, and new, innovative ideas to solve legitimate business needs.

We will have to live up to our commitments and facilitate promotion of the sector and its offerings without compromising our independence.

A true partnership relies on mutual trust, respect and candour. It involves all partners freely challenging each other without any becoming offended and walking off.

So where next? To quote a famous phrase of Dr King’s, “We are confronted with the fierce urgency of now. In this unfolding conundrum of life and history there is such a thing as being too late.” The urgency of now for Caribbean centres engaged in cross-border financial services activity is to ensure both individually and collectively that we are credible, compliant, transparent, cooperative, competitive, vibrant and clean. Now, more than ever, we are all required to act decisively, proactively and with common sense to move our financial services sectors forward in a way that neither threatens them nor places them at risk of becoming collateral damage. In doing this, we must recognise a shared direction of travel – one that leads to our winning enhanced international respect for our determination to remain jurisdictions that are reputable, credible and well-regulated. For when our standing with the international community is good, our licensees and registrants can negotiate beyond our borders and become appealing and attractive to their stakeholders wherever they are situated.

Being prepared to change If this requires some of us to change our behaviour – we must have the courage to do so. Today, there is no preordained path to success. Continued advancement requires vigilance and dexterity. It requires different things to be done and things to be done differently. It means doing not only what is legal – but also what is right and ethical. I have always maintained that one of the most effective use of regulatory power lies at the authorisation stage. This should not be taken lightly. Authorisation should not be conferred willy-nilly. Licensing and registering financial institutions gives them a degree of legitimacy. It suggests a



the supranational bodies – OECD, FATF, etc. – to ensure we have a voice at the table when matters of critical importance to us are being formulated. Let us determine to show goodwill and turn any disagreements into a catalyst for better ideas and real results.

Only by acting in this manner can Caribbean financial centres evolve and continue to provide creative, efficient and legitimate 21st-century solutions to emerging 21st-century problems. We simply cannot pursue analogue solution in a digital world.

Caribbean cooperation I said there is no longer a preordained path to success. This is certainly so for the Caribbean. Indeed, you might almost say that success for our region has become particularly precarious. As IFCs connected to the global network of financial flows and playing host to hundreds of foreign financial institutions, Caribbean financial centres are especially vulnerable to contagion and shocks from abroad. There is simply no way that we can hope to insulate or isolate our financial sectors from stress and turbulence in international markets. Instead, we have to become more able to absorb shocks and bounce back. We must strengthen our resilience through higher prudential standards, governance, internal control systems – and through smarter and more effective supervisory and regulatory oversight and through the provision of efficient, innovative and quality services. With so much at stake, is it really common sense to continue to be at each other’s throats? Clearly not. The fact is, we can only get so far on our own. But together we can move mountains. Better is not only possible, it is inevitable when you work together for the common good. So across our region, we must find the courage to work together – governments, industries and regulators – for the long haul. And as a united region, we must engage the standard setters and

And it requires patience to reap rewards. Building trust is a journey, not a destination. The role of the regulator here is paramount. Strong, effective systems of oversight and risk management will be essential to ensure safety and soundness. All regulators need to be alert to emerging risks. This can best be achieved through an “all cards on the table” approach to registration, licensing, supervision, compliance and enforcement and through enhanced, open communication, collaboration and dialogue involving all stakeholders, both within and between our jurisdictions. This will, of necessity, require hard choices and tough decisions. At times, reaching a consensus on the way forward will be hard. As regulators, we must have the courage and candour to admit we may not always get it completely right. And when this happens, we must have the common sense to change approach. Unless they embrace this joined-up, adult, “all hands on deck” approach, I fear that our Caribbean jurisdictions will be unable to adapt, evolve and remain relevant global players in cross-border financial services.

Industry compliance Ladies and gentlemen, I have focused heavily on the role of regulators and supervisors. But the role of the industry in the survival and growth of our region is crucial, too. People trust actions more than words and platitudes. No jurisdiction can win business or friends by just talking about the excellence of its rules, codes or regulations, if practitioners and services providers do not actually obey the rules. Even if just a few firms – or indeed one – fail to

comply, everyone’s livelihood is threatened. This stark truth requires everyone with a stake in our industry to show personal candour and courage. They must look in the mirror and ask themselves, “What am I willing to do to build a stronger, more resilient, more vibrant, more competitive and more compliant industry? An industry that is better prepared to compete, prosper and prevail in the years ahead?” We cannot permit our jurisdictions’ corporate structures and vehicles to be used without concern for who is in the driver or passenger seats, the vehicles’ destination and purpose, or the victims that may be struck down along the route. Such a high-handed attitude, whether real or perceived, only empowers our detractors.

New technology The final issue I wish to address today is the importance of new technology in providing the enhanced data that regulators need. There can be no long-term, risk-based regulation and supervision without adequate information capable of measuring and evaluating the nature, scale and complexity of underlying risks. Enhanced information or data is the oxygen of efficient regulation and supervision. And enhanced data must come from enhanced reporting. Our challenge is to ensure that both regulators and those we regulate are able to capture, analyse and apply information in the most cost-efficient manner possible. Regulators should have no interest in stifling such innovation. Whether for AML/CFT purposes or data analysis and processing, we should welcome the use of new technology as a competitive differentiator. We should not create a prohibitive trade-off between a service provider’s ability to use technology creatively versus their ability to manage risks. We must also remain technology-neutral – open to using it, but not wedded to any one technological approach as being the sole way of working. The growing use of FinTech and RegTech offers the possibility of being able to tap into a much deeper well of evidence for informed decision-making. It is a helpful response to the fact that regulatory resources rarely match the size and scope of our responsibilities. FinTech makes new use of software and modern technology to provide financial services, while RegTech uses new technology to facilitate regulatory requirements. For example, by using real-time information better and by incorporating algorithms and analytics, RegTech has the potential to lead to more differentiated and effective approaches to such things as AML checks, customer due diligence, anti-fraud measures and suspicious activity reporting. Yes, I recognise that with technology comes the constant and present risk of exposure to cyber risk. Evidence suggests that cyber security must become a major preoccupation, not only of regulators, but all players in the financial services industry. But this is not a reason to shy away from innovation. We must harvest its promise and potential. This is a pressure that we will have to learn to manage.

global turbulence and uncertainty. But it is our responsibility and our duty to preserve and protect, maintain, and enhance a sound, stable and successful business environment for economic growth that allows people to pursue their dreams, both for the present and for the long haul. Regulators exist to serve the public interest. Every day, people count on us regulators not to let them down. They look to us and really want us there to give them hope for the future. Every day, they count on us to keep the financial sector safe and secure, and the domestic market free from scandals, malfeasance and market abuse. I hope that what I have said to you today will prove to be of some small help in protecting, maintaining and enhancing the business environment here in Barbados, and that you do so with courage, candour, and common sense. As I opened with a disclaimer, permit me to close with a disclosure I often tell my own regulatory staff and the BVI Financial Services Industry. No matter how hard you are prepared to work, there are millions of people in both India and China willing to work harder and cheaper for one tenth pay. To be competitive, you, regulators and supervisors, simply cannot rely on resolve or hard work. You must be innovative, creative professionals willing to work smarter, more efficiently and more effectively. In other words, we must compete on our wits and the quality of service we provide. As you pursue the important work that lies ahead, and as you set about to write new chapters in the history of Barbados’ Financial Services Industry, you have both the comfort and the challenge of knowing that the people of Barbados have placed their trust in you to help build a better future for their country. May divine providence guide you, make you worthy custodians of the faith bestowed in you and help you to forge an even better Barbados Financial Services Industry and may you always have the wisdom to use courage, candour and common sense in all your endeavours.

Conclusion Ladies and gentlemen, as regulators, it is beyond our power to bring order to

Thank you. B AUGUST 2017 EDITION



We actually do it right LORNA SMITH, OBE

INTERIM CEO, BVI FINANCE STEP Caribbean Conference May 1-3, 2017 | Grand Cayman


Good Morning!

y task today is to not only reinforce that some of the best regulated jurisdictions in the world are in the Caribbean, but to say how and why we are. I am also here to tell you how being above board, and having a reputation for being so, is good for the region and good for your business. I speak today from the perspective of the British Virgin Islands, as a jurisdiction providing international business and financial services to the rest of the world - in fact the BVI is the fourth largest corporate domicile globally. But whether its Cayman, our host, providing the most sophisticated and impressive array of fund services globally, or Bermuda with its well-developed insurance advantage, or Barbados with its rich and diverse offerings or any of the other Caribbean jurisdictions, we have all been painted with the same brush and are too often perceived at best as dodgy or at worst, as engaging in malfeasance. Despite the unwarranted and frequent criticisms, Caribbean jurisdictions remain nimble, strong and most importantly, legitimate. For the next few minutes, I shall explain why John Grisham and others will have to look elsewhere for a sequel to books like ‘The Firm’ etc. You see in a world where there are constant and consistent demands for transparency



in the financial services that we offer, the Caribbean has not only risen to the challenge, but now sits at the table of international standard setters and helps to shape those requirements. We firmly believe that it is better to be able to select from the menu, than to be on the menu! I issue a disclaimer: I have never been a regulator, nor am I a legal practitioner, nor can I call myself an insider. I come to this podium today after years of engagement from as far back as the 90s - Chris McKenzie will tell you often in the trenches - or worse waging guerrilla warfare - with those Agencies who thought they needed only to say the word and the region would be shut down. But because might is not always right, we managed to put them on the back foot. We insisted that positive change would only come if all countries were committed to it. A global level playing field was needed and the G20 countries themselves, needed to put their own houses in order. This trend was already beginning. However, the financial crisis of 2008 ushered in a new era of global regulatory change, more sweeping and fastermoving than anything in recent history. I clearly recall the G20 Heads of Government in London, summoning Angel Gurria of the OECD and giving him his marching orders, which saw the resurgence or dominant role of the OECD and in particular the Global Forum on Transparency and Exchange of Information for Tax Purposes. Many of the basic rules of the road were

rewritten, altering how countries and companies manage and navigate the vast array of critical financial products, services and systems. Before getting into the changes Caribbean jurisdictions have had to make to ensure that they consistently meet international regulatory standards, it is worth stepping back to recall just how breathtaking the scale and scope of that change has been. In just over eight years, the OECD Global Forum has increased membership by nearly 70% and is now comprised of 139 active members, including at least 17 countries from the Caribbean. As a region, we have emerged stronger for several reasons: • Firstly, as I suggested earlier, we have a seat at the table when new international standards are being drawn up - some of the time at least • Secondly, we have complied with all the rules as they relate to transparency, despite ever-shifting goal posts • Finally, we recognize that we live in a period of constant turbulence and accept that as the new normal. As a result, we know that we must be nimble, and ready to adapt to the continuing and ever more rapid evolution of the global financial system. As a friend of mine of blessed memory used to say ‘bob and weave’. AUGUST 2017 EDITION


ALLEGED CARIBBEAN JURISDICTIONS MISCHIEF However, despite this progress the allegations against the Caribbean continue. At the root have been various claims by largely ill-informed third parties about monies either being illicitly hidden or taken from developing countries illegally. Even though these claims, in some cases, are decades old, they continue to be widely reported by media. In turn they have been taken up by political leaders from outside the Caribbean and continue to spiral. These claims have been assessed in more detail by leading international consultants, Capital Economics. I borrowed the following from a study recently commissioned for the BVI which will be published in June. You would be familiar with many of these allegations. “These headline grabbing numbers do not bear scrutiny... All are based on data sources that are unsuitable for the task and incapable of supporting the conclusions that the authors draw.” But do they care? Absolutely not! They sound impressive to their readers, raise their ire and that’s all that matters. The fact is that it is global financial centres, large and small, which have enabled globalization and the cross-border trade that is at its heart, to happen. Further, the processes in place which ensure this trade, are supported by jurisdictions such as ours, which are entirely legitimate, and from a regulatory perspective meet the requirements of international standard setters. The trouble is that the dimensions of the 2008 financial crisis were extraordinary and have left many OECD countries still reeling. As the Capital Economics Report points out ‘Increasing debt burdens have put pressure on government finances, and while globalization has increased prosperity across the world, not everyone has benefitted equally. In fact, it is often the lower middle classes in these major developed western economies which have perhaps fared the worst. And how have OECD Governments responded to this ongoing crisis? By identifying gaps in tax revenues and placing the public blame for such gaps largely on Caribbean jurisdictions with low or tax neutral bases. We have been the easy targets, when in fact such gaps in revenue are much more likely to be down to lack of tax collecting capacity; maladministration and simple non-payment.

So while the noisier advanced western economies have seen sectors of their populations struggle,



Taken during the BVI Business Outlook, 2017, TScrub Island, BVI

it is undeniable that globalization has made the wider world a better place, as you would observe from this World Bank slide. Over the last 25 years the number of people around the world living in extreme poverty has declined by 1 billion. A significant number by any calculation, led by China and India but includes over 60 countries globally. Through our corporate structures that are used by the World Bank, the European Bank for Reconstruction and Development and so on, developing countries have greater access to technologies from global markets, including in agriculture and health, better infrastructure and the like. Rather than apologize, the Caribbean should be proud of what it contributes to the rest of the world and we should be more vocal in that pride.

PANAMA PAPERS While the Caribbean can indeed be proud of progress made, the challenges we face will continue. On the 10th of last month, just following the anniversary of the Panama Papers, along with my favorite journalist, Peggy Noonan of the New York Times, the International Consortium of Investigative Journalists (ICIJ) also received a Pulitzer Prize for journalism and I congratulate them. This presentation would therefore be incomplete without at least a footnote on the Panama Papers, which have been squeezed for all their worth over the last twelve months. We all recall our own Kerry Harris in her inimitable style, last year recounting to this very audience how the Panama Papers became public. We were all spellbound! From our perspective, the Consortium identified roughly 114,000 BVI Business Companies incorporated by Mossack Fonseca since 1977. Many of you were still running around in diapers then! In fact, most of BVI Business Companies listed in the Panama Papers have been identified as either ‘inactive’, ‘discontinued’, ‘dissolved’ or ‘defaulted’. The ICIJ very well knew that between 1985 and 1999, 90 per cent of all BVI Business Companies incorporated by that firm were not active. But had they reported that, the sensationalism would be lost. As we know the world has changed radically since 1977 and certainly we in the BVI have transformed, improved and innovated with it. Given the stringent rules and systems now in place in the territory to stop money laundering, financial crime and abuse of other jurisdictions’ tax codes, there is every reason to believe that the 30,000 active BVI Business Companies identified in the Panama Papers are legitimate vehicles being used to facilitate cross-border trade and investment.

In a world where there are constant and consistent demands for transparency in the financial services that we offer, the Caribbean has not only risen to the challenge, but now sits at the table of international standard setters and helps to shape those requirements. THE CARIBBEAN ADVANTAGE Allow me now to briefly describe what it is Caribbean jurisdictions do well and how, and then to break down the Caribbean’s response to the major international standards as they relate to financial services. I know you would agree that we are indeed Above Board and hold our own among the best regulated jurisdictions worldwide. But sometimes we all need to be reminded of why that is. At its heart, by improving the availability of credit and encouraging competition in the domestic banking system, international finance centres boost investment in the major economies which ultimately supports growth and employment Here are some examples of the use of Caribbean companies in major international businesses granted mostly BVI structures: • Canadian-based financial institution Scotiabank’s USD1bn acquisition of a 51% stake in Colombia’s Banco Colpatria Red Multibanca Colpatria S.A., that country’s fifth largest financial group, representing Scotiabank’s largest ever-international takeover; • UK private equity group CVC Capital Partners’ purchase of a 51% controlling stake in Virgin Active - the fitness chain, part of Richard Branson’s Virgin Group, valued at GBP900m; • Australian-listed diversified services company UGL Limited’s GBP77.5m acquisition of the trading operations of UKlisted property services company DTZ; and, • NYSE-listed global agri-tech provider, Monsanto Company’s acquisition of Beeologics, a start-up that researches and develops biological tools for targeted pest and disease control

This is an impressive array of business by any standards and the trend continues. I list these merely to show the diversity of the use of such corporate vehicles.

WINDS OF CHANGE Yet while we have all contributed to globalization and benefitted from this movement, as I have said before, we and indeed the whole financial system were impacted by the global financial crisis in 2008 and consequent changes in global regulatory standards and processes. These reforms appear to be endless and include increasing numbers of TIEAs, AEOI arrangements between Caribbean jurisdictions and their counterparts from around the world; the Multilateral Convention which is being widely adopted; the Common Reporting Standard (CRS) similarly; FATCA the BEPS initiative and new AML rules. Let me be clear, the Caribbean region has always signaled that we are not interested in illegality in any form. The region’s various competent authorities meet regularly under the auspices of the OECD Global Forum, the Financial Action Task Force and its regional bodies, cooperating fully with their international counterparts to bring an end to criminal activity that may be related to persons using their structures. Today, the Caribbean is an engaged and active international participant in tax, antimoney laundering and anti-corruption matters, committed to fully supporting the development of a global regulatory framework which is fit for purpose. Let’s now look more closely at the criteria used for judging adherence to global standards and measure the Caribbean jurisdictions’ response versus ‘onshore’s:

Compliance with Global Standards as they relate to Transparency and Information Exchange: Every Caribbean country is a member of the OECD Global Forum and has been now deemed either Compliant, Largely Compliant and in a few small instances Partially Compliant with the standard. Trinidad and Tobago is the exception. Caribbean jurisdictions and most onshore jurisdictions have received the same rating, yet we are perceived to be less transparent and less compliant, begging the question why. • TIEA’s / DTA’s: Every member of the OECD Global Forum and so every Caribbean Government has made the entry into these agreements a priority. The BVI for instance has signed 28 TIEA’s, Caymans 30 plus, Bermuda a similar number, Bahamas a similar number and so it goes throughout the region. Additionally, Barbados and a number of Caribbean countries also have active DTA’s with a number of G20 countries. • The Multilateral Convention on Mutual Administrative Assistance in Tax Matters: Most OECD members, including Caribbean jurisdictions have signed the MC, which is becoming increasingly popular. • Common reporting Standard: The BVI and several other Caribbean countries including Cayman and Bermuda were early adopters of CRS which means exchanging information this year. (Recall the formalities in Germany in 2014 – quite a feat for Pascal St Amans and his team) As of November 2016, 87 countries had signed up. N.B. The US has to date not become a signatory to the CRS. US FATCA: Most Caribbean countries have signed an Intergovernmental Agreement with the US. There has been some noise around whether FATCA would be repealed under President Trump. I checked it out: had it been one of the promises he had made, we stood a better chance of this happening as he tries to be a promises made, promises kept type. • Base Erosion and Profit Shifting (BEPS) – this is aimed at companies who utilize double tax agreements to shift profits from higher tax to lower tax jurisdictions. BEPS is a good example of how reputation takes precedence over practical effect. The BVI hosted a BEPS conference for the Caribbean to facilitate discussions with the AUGUST 2017 EDITION


OECD Global Forum and assess the value of joining the Inclusive framework. After prolonged dialogue between the OECD and ourselves, the consensus we arrived at was that there would be little value in doing so. However, despite this consensus we will join as Bermuda and Belize have done and as Cayman will shortly do. The reason is entirely down to reputation and the view expressed by media and others, including influential political stakeholders, that if we are not part of this solution we must be part of the problem. Further, joining the Inclusive Framework is one of the criteria to be used by the EU for their ‘third country listing’ of non-cooperative jurisdictions (or black listing), to be determined by the end of this year. Again, entirely down to reputation. • Improvements to our AML Regime by the onshoring of ultimate beneficial ownership information: It is now a FATF requirement that beneficial owners be known, with new enhanced requirements for information and verification. • To enhance the BVI’s capability in this area the BVI is introducing a Beneficial Ownership Secure Search System (BOSSs). This cloud based platform, balances the need for privacy with the requirement by competent authorities to directly access verified beneficial ownership information efficiently and in real time, without a CSP being aware a search is being made, thereby avoiding any possibility of ‘tipping’ off. Cayman has adopted a similar approach while Bermuda will maintain its current central register. I believe that Anguilla has also opted for a central Register. • Membership of International Regulatory Authorities. BVI and several other Caribbean countries have been a member of IOSCO and the Egmont Group of Financial Intelligence Units for many years. • National Risk Assessment:The BVI has completed its National Risk Assessment and produced a comprehensive report covering all sectors of financial services. This makes us compliant with Recommendation 1 of FATF which requires countries to identify, assess and understand their ML/TF risks with the objective of ensuring their effective mitigation. No doubt other Caribbean jurisdictions have gone through similar procedures.



Looking ahead, Caribbean jurisdictions will continue to face a litany of challenges as a new equilibrium is achieved. Legislative and regulatory agility, and a strong partnership between industry and government are the secret sauce for those who would adapt and thrive in this new era. How does the Caribbean stack up against other jurisdictions including the US? More than half of Caribbean jurisdictions have been deemed largely compliant by the OECD which puts them on par with the US, the UK and most other western developed countries. At least five Caribbean jurisdictions have sat on the Steering Committee of the OECD Global Forum, where policy relating to transparency and good governance is made. The BVI and Barbados continue to serve as members of the Steering Committee. Despite this, NGO’s, many politicians and indeed their constituents onshore have adopted the position of ‘my mind is made up; don’t confuse me with the facts. You would be familiar with the results of Jason Sharman’s book entitled Global Shell Games concluding that obtaining a company in the US is easier than anywhere else in the world.

THE STRENGTH OF THE CARIBBEAN’S LEGAL INFRASTRUCTURE Based on the sheer magnitude of regulatory developments between 2009 and today, Caribbean financial jurisdictions have embraced an “adapt or die” attitude. It is not simply a matter

of compliance – it is about preserving our standing as jurisdictions that are stable, transparent and safe for business. In the Caribbean, that adaptive response has also been driven by the Regulators and lawmakers working diligently to update local laws to conform to new standards and create new propositions to support international trade. A few examples are illustrative of the wider trend. In 2009 in response to the growing needs of the many BVI companies for resolution of cross border commercial and insolvency matters, a standalone Commercial Court, as part of the Eastern Caribbean Supreme Court, was established in the BVI. All members of the OECS have access to this special court. Separately the reputation of Cayman’s Court in dealing with Commercial matters is well known. Caribbean Jurisdictions as a whole are known for the strength of their legal systems based as they are on English Common Law. Several Caribbean jurisdictions now have an International Tax Authority or the equivalent, to allow us to respond directly to the many requests for information from Treaty partners and to engage directly with the OECD Secretariat, as well as with fellow members of the Global Forum. In the BVI, The Business Companies Act, which is the foundation of our industry, has been substantially updated over the years. In 2013, we took the step of opening BVI House Asia in Hong Kong to assist financial services firms to better meet their regional clients’ needs in real time. A senior member of the FSC staff is co-located there. This combination of Government and FSC representation means that legal or regulatory issues can be dealt with in the right time zone from that office. In the BVI we also passed a new Arbitration Act followed last year by the establishment of a BVI International Arbitration Centre. This can now provide support and facilities for arbitration and mediation proceedings. Given our experience in incorporations and the legal frameworks that govern them, we expect this to be a strong area of growth. Our host country as well, is committed to being above board and is currently one of the top financial services jurisdictions. In 2015, the Cayman Islands were voted the best hedge fund services jurisdiction by HedgeWeek. And in 2016, they were ranked top specialized financial centre for the 8th consecutive year by the Banker Magazine. To be sure, challenges still abound: the cost of

BVI Finance Office Cutlass Tower, 4th Floor Road Town, Tortola VG1110 British Virgin Islands

Simply put a tax haven offers individuals and businesses a minimal tax liability with little or no financial information shared with foreign tax authorities.

I hope that I have established in

this presentation why they cannot be tax havens. And blaming the continuation of the perpetuation of this description on ‘legacy’ issues is just as unsatisfactory.

compliance for example is a legitimate concern. In some instances, compliance cost has gone up by as much as 60% in only two years. Yet despite all this, the fundamentals remain strong. The fact is global capital needs certain attributes that jurisdictions like those of the Caribbean offer. Our legal system, based on the common law, is simple to use and universally accepted. Our tax neutrality makes a BVI company for instance a perfect pooling vehicle for investments. For example, for Joint Ventures where funds from the United States, China, Russia and EU companies are involved, the easiest vehicle to use remains a BVI company’ as a jurisdiction trusted by all parties involved. Looking ahead, Caribbean jurisdictions will continue to face a litany of challenges as a new equilibrium is achieved. Legislative and regulatory agility, and a strong partnership between industry and government are the secret sauce for those who would adapt and thrive in this new era. My conclusion was completely different a few days ago. In essence I was ending where we started and concluding that our products and services contribute much to globalization, are great for the region and make for good business sense because our clients themselves while wanting a degree of privacy want to know that our offerings are fully above board. But sadly , the name ‘tax haven’ continues to dog our every move and can cause our economies irreparable harm: While we may be able to withstand the vitriol from the NGO’s, when it hits us in our pockets, that’s another matter. Last month, for instance, the State of Illinois introduced HB3419. The Illinois income tax code identifies 18 countries including many in the

Caribbean, as tax havens. The new law states that a company that has incorporated in any of these nations would be considered an expatriate corporation under the bill, which calls on the Illinois Investment Policy Board to create a list of expatriate corporations to include in the state’s rolls of “restricted companies.” When the list is finished, it will be provided to the Illinois’ state pension funds, which will in turn have 12 months to dispose of any direct holdings in any company that is on the list of restricted companies. The impact is potentially significant and I know that many in the room including the Governments of Antigua and Barbuda, St. Kitts, Nevis and I believe Barbados have made direct representation to the State of Illinois and its legislators. This law is only one example of the increasingly fraught relationship we in the Caribbean have with our closest large neighbor you will all know the impact that bank de-risking is having. There are enough persons of influence in this room, with an interest in these developments, developments that will affect your livelihood and our economies, to do something about these issues, which are based on misleading perceptions rather than facts, both in the US and beyond. In reviewing the delegates list I noted a strong contingent here from the US. Perhaps the perfect opportunity presents itself here? Similarly, what will it take for Caribbean jurisdictions to wake up and realize that despite our individual competitiveness, our strength lies in our unity as a region. It’s the only answer! We must get together and agree a way forward for the Caribbean. Caribbean jurisdictions are not tax havens.

As Caribbean jurisdictions, we have more than established our value to the world. We have done everything right, we are above board, but it just does not seem to be enough! My challenge to this gathering of professionals here today is to speak truth to power, to do what we did over fifteen years ago which was to put down a marker, requiring Western economies to start to treat us as equals in financial services. Ladies and Gentlemen the next move has to be ours! Thank you. B AUGUST 2017 EDITION







Business BVI Guides


he BVI grew as an offshore finance centre in the 1980s, by providing tax efficient solutions for U.S. businesses. Over the past 30 years, the BVI has evolved rapidly with the changing times to become the leading offshore corporate

domicile, offering an exceptional depth of corporate experience and expertise to individuals and interests from across the world. Just as the BVI Corporate Advantage has evolved to become about much more than tax, its geographical interests have widened far beyond the U.S. With almost half a million active BVI Business Companies, BVI structures have become a favoured vehicle through which to transact



cross-border commerce, M&A and investment. BVI companies remain popular with investors from China and Hong Kong – in 2009 it is estimated that Hong Kong and the BVI together received 73% of China’s FDI outflows. They are used increasingly by entrepreneurs and investors from emerging markets. BVI companies are behind many of the most substantial cross-border investments in Africa, used by investors from the U.S., Europe and China. According to the Financial Times, the BVI is the second largest global source of international foreign direct investment, with more than $125 billion invested through the BVI each year. The BVI has emerged as an engine of global economic growth. International investors do not choose the BVI to minimise tax, though this may be an added benefit. International investors make investment decisions based on risk profile, and will only invest in a foreign market if there is a reasonable prospect of success and the legal structure is sufficient to protect the investment. Using BVI corporate structures can help achieve this by mitigating structural risks.

The British Virgin Islands and Global Commerce

• The FATF ranks BVI as more compliant with

markets, while treating all investors equally or

international regulatory standards than the

as commercially agreed. Other advantages are

US and UK 1

credible and efficient dispute resolution and

The recent ‘Panama Papers’ hacking scandal

• BVI has inter-governmental agreements

and subsequent reporting appears to make

with the US and UK to comply with US

little distinction between the allegations of misconduct by Mossack Fonseca and the

Islands play in international trade and

the flow of foreign direct investment2; it is an

to provide data on financial accounts held

engine of economic growth benefiting developed

by its residents to the United Kingdom

and developing economies alike.

As well as strict AML rules, due diligence policies, KYC protocols and domestic laws, the BVI’s financial regulators are recognised members of

finance. Much of the media coverage also

IOSCO (the International Organization of Securities

fails to acknowledge basic facts about the

Commissions, which is the global standard

BVI’s role in international finance.

setter for the securities sector). Intermediaries in the BVI are bound by professional obligation to maintain adequate, accurate and current


The fact is that international regulatory standards have become much stronger – onshore and offshore – in the past two decades. Since the regulation of the offshore industry began 20

the Organisation for Economic Co-operation and

legitimate, fundamental, role in global commerce.

TIEAs with 27 countries and multilateral agreements providing for tax cooperation on



• BVI is ranked by the NGO Tax Justice Network as more compliant in tracking corporate beneficial ownership than half

services including water, power, healthcare and education3.

water, power, healthcare and education. Through FDI, developed economies can access and serve new markets and customers, and access technological and natural resources. This means increased revenue for the home economy, which ultimately translates into economic growth, more jobs and better lifestyles for the people in ‘home’ economies. The BVI enables businesses, which would

because of regulatory, political, legal complexity or development reasons – to access capital in the international market via equity investment, IPOs, project and acquisition debt financing. BVI’s laws and courts are based on UK Common Law. The Privy Council serves as the court of final appeal for the BVI and the local courts settle disputes efficiently and effectively. Globalisation is dependent on functioning free markets and free trade. Accessing corporate


Assistance in Tax Matters.

fuelled socio-economic progress and access to

that restrict access to international finance

with 76 countries, under the OECD’s Convention


otherwise be forced to operate in jurisdictions

Development (OECD) and Financial Action Task

over 100 developed countries including


development and access to services including

international standards, and continue to play a

• BVI has tax transparency agreements with


advances and resources growth, all of which have

Government as required.

regulatory standards in the world, as judged by

exchange of tax information.


markets: through job creation, infrastructure

compliant regimes and ongoing compliance with

Reporting Standard for the automatic

market economies, into projects ranging from

of any BVI company and to disclose to the BVI

The BVI has some of the highest global

world to implement the OECD’s Common

investment of US$82.5 billion into emerging

FDI fuels socio-economic growth in emerging

of offshore financial centres have adopted fully

• BVI was one of the first jurisdictions in the

In 2013 alone, BVI companies facilitated the

information regarding the beneficial ownership

years ago, the BVI together with the majority

Force (FATF).

leading international finance centre for facilitating

FATCA, and UK International Tax Compliance

important role that internationally regulated offshore jurisdictions like the British Virgin

effective exit strategies. The BVI is the world’s

Not only are offshore structures legal but they are also normal and extremely common, and used by companies around the world to aid in the efficient organisation of their businesses.

advantage is consistent with the principles of free market specialisation. The BVI’s depth of expertise in relation to cross border transactions (including the resolution of disputes) is a significant attraction factor and why BVI is and

of the G8 countries (US, UK, Germany

Law abiding, legitimate investors choose BVI

will continue to be the corporate solution of

and Japan), and is ranked ahead of 20

because it offers a structural advantage, that

choice for cross-border trade, joint ventures, debt

countries in total.

delivers management control and access to new

financing, IPOs and more. AUGUST 2017 EDITION


THE BVI CORPORATE ADVANTAGE: • OECD-compliant jurisdiction • Progressive legislation that evolves with business demands, including the BVI Business Companies Act


• Competitive on costs relative to other offshore finance centres • Commercially focused and responsible corporate governance • Rapid registration – within 24 hours, subject to satisfying regulatory requirements • Maximum corporate flexibility (ideal for multinational Joint Ventures and cross-border M&A)

The BVI cooperates fully with foreign tax authorities and the jurisdiction has led the way in adoption of automatic exchange of tax information, the gold standard of tax transparency. BVI was one of the first jurisdictions in the world to implement the OECD’s Common Reporting Standard for the automatic exchange of tax information. As the UK Government recognised in the communiqué of the Joint Ministerial Council in December 2015, “it is not appropriate to refer to these Overseas Territories as ‘tax havens’.”4 Unlike Panama, BVI and most offshore jurisdictions are not blacklisted by the OECD, and operate to the highest standards of integrity. The BVI is a tax neutral jurisdiction. Tax neutral jurisdictions do not add additional tax to whatever is imposed by onshore or home jurisdictions. Equally they do not reduce the tax burden otherwise owed in the ‘home’ jurisdiction.


The BVI has robust anti money laundering and know your customer checks, which are absent in Nevada, Wyoming and Delaware, for example. The BVI regularly improves its transparency regime: for example, on 1 April 2016, the BVI introduced a central private registry of directors. The BVI actively investigates appearances of non-compliance and works with foreign competent authorities to detect, prevent and prosecute illegal activities, ensuring that its laws are enforced and action taken transparently if any wrongdoing is identified. For example, in December 2013 the FSC fined Mossack Fonseca for failing to undertake enhanced due diligence5. In 2014 the Global Shell Games6 report found that BVI service providers (94%) had some of the highest standards of compliance in the world, when it comes to refusing to establish companies without proper documentation, compared to the US state of Delaware (6%) and the UK (45%). In 2015 the BVI made commitments to enhance cooperation between UK and BVI law enforcement authorities on beneficial ownership at the Joint Ministerial Summit with the UK Government. Beneficial ownership registers are new, and they are not widespread. The UK introduced its own register of beneficial ownership on 6 April 2016. B



• Innovative fund structures for investment strategies with a higher risk profile • Companies can be registered with foreign character names (eg Chinese) in addition to their English name • Effective exit strategies for investors (IPO, share or asset sale) • Credible and efficient dispute resolution supported by a robust legal framework based on Common Law, with rights of appeal to the Privy Council in London • Transactional fluency through deep skill set, expertise and professionalism • A neutral environment where commercial partners are able to structure deal parameters and objectives securely and without local or foreign law bias • A Corporate Registry with an unrivalled Premium service for key transaction approvals (ie mergers) • Adherence with international initiatives for transparency, mutual cooperation, information exchange, and anti money-laundering regulation The BVI is evolving to become the most progressive Corporate Finance Centre focused on maximising FDI flows and global commerce.


BVI is ranked by the OECD (3 August 2015) as ‘Largely Compliant’ with FATF recommendations on beneficial ownership (the Financial Action Task Force sets global standards for fighting money laundering and terrorist financing) – in the same study, the UK is ranked Partially Compliant, and the US is ranked Non-Compliant 2

FDI is the major economic driver of globalisation and accounts for over half of all cross border investment. FDI facilitates socio-economic factors such as job creation and primary infrastructure and services (water, power, healthcare and education). Through FDI, companies can access and serve new markets and customers and access technological and natural resources. 3

The BVI is the world’s 4th largest recipient of FDI inflows. Despite its comparatively small size, BVI is a close competitor to the US, where $159bn FDI flowed into developing countries in 2013. 4

“Joint Ministerial Council 2015 Communiqué”, Foreign & Commonwealth Office, 3 December 2015. ( Overseas_Territories_Joint_Ministerial_Council_2015_Communique.pdf) 5 mid/1188/actionId/16935/language/en-US/Default.aspx 6

Findley et al (2014): Global Shell Games. Cambridge University Press (Cambridge). Global Shell Games tested standards in practice by sending 7,500 email requests to corporate service providers in over 180 countries around the world, attempting to establish companies without the proper documentation required by the FATF Recommendations.

Business BVI Guides


The value of the BVI to the global economy


adam Speaker, I have just updated this Honourable House with where we are in strengthening our Financial Services structure. Now I would like to put things into a different perspective, focusing more on the value of the BVI to the global economy.

Madam Speaker, no doubt that earlier this month, the world was shocked by the release of the so-called Panama Papers. The leak of over 11 million documents from the law firm Mossack Fonseca has raised troubling questions for people and governments the world over. For the BVI, the most important is the role of offshore jurisdictions in the international finance system and the position of the BVI itself The ongoing investigation by the BVI Financial services Commission is not a reaction to a scandal – but is fundamental to how we run – and how we have always run - our financial centre – with an unwavering commitment to transparency, integrity and proper regulation. STATEMENT BY PREMIER AND MINISTER OF FINANCE


Now, more than ever, these values are essential to the future of our financial services industry and the broader global financial system of which it is a part. Because today, that system is under dire threat. Many in the global media and in countries around the world have rushed to draw false conclusions from the revelations in the Panama Papers. These critics have built an unsubstantiated argument that indicts not just the corrupt individuals and institutions implicated in the leaked papers – but the entire global financial system and, in particular, offshore jurisdictions including the BVI.



It is true that in the Panama Papers examples have surfaced of the law firm Mossack Fonseca establishing corporations in the BVI for potentially illegitimate purposes. The BVI does not now and never has claimed that our entire financial services system is 100% free of illegal activity. No financial system in the world has ever or could ever make such a claim. It is an impossible, unreasonable and unattainable standard. But, I stand here today before you and before the eyes of the international community and say with unwavering confidence:

The BVI’s financial system is well-regulated; it is well run; it is founded on a basis of integrity; and, we of the BVI are fiercely proud of our industry because we know the role it plays not just in our own prosperity, but in the progress and growth of the entire world. Those who today seek to smear the good name of the BVI and offshore jurisdictions generally must themselves be transparent about their real motivations and true message. Many of these critics are not simply offended by the allegations raised in the Panama Papers. Rather, they seek to sow doubt about the value of our modern, interconnected global economy. They fundamentally believe that the process of globalisation which has resulted in a totally interconnected market place, unhampered by time zones and national boundaries and which has transformed the world over the past three decades, has on the balance been a bad thing for humanity. They see the free flow of capital across borders as a threat to things they hold dear. And so they wish to turn back the clock. They wish to lessen the interconnection of nations. They wish to stem the flow of capital from one part of the world to another. They wish to slow the pace of global investment. I do not stand here to judge these critics. They are entitled to their own opinion and I trust that



their intentions are good. But I am here to say in the clearest possible terms – we could not disagree with them more. Globalisation has been by far the greatest driver of human progress ever unleashed. Over the past decades, billions of human beings in every corner of the planet – including in our Caribbean region and right here in the BVI – have been lifted from grinding poverty and given opportunities that previous generations could only have dreamed of. Thanks to this movement, the blessings of infrastructure, health care, education and a high quality of life are no longer the special privilege of those lucky few born in the United States, or in Europe or in the small number of other wealthy nations. Today, those basic needs are being met for more people in more places than at any time in history and it is all thanks to our interconnectedness. The fact that today capital that sits in New York, and London, Tokyo, Frankfurt, Dubai and other financial centres around the globe can be pooled and put to use to build a factory in Uganda; or a bridge in Bolivia; or start a business in Indonesia – that has unleashed progress for people the world over. Jurisdictions like the BVI have been fundamental to that powerful surge. Without offshore jurisdictions, global capital would struggle to be put to good use outside of national borders. If capital from multiple nations is to come together for a common purpose, it must be able to incorporate. And that place of incorporation typically cannot be the nation of origin of any one of the investing parties – after all, many of the other investors from other countries may never sleep easy knowing that their money was being held in a country whose laws they may not know, whose politicians they may not trust, and whose regulators they cannot rely upon. Jurisdictions like the BVI have risen up over the past decades precisely because we solve that problem. We create a neutral space where capital from all over the world can come together and be deployed for a common purpose. Whether an investor sits in Russia or America or

Europe or Asia – they know that if they put their money into an investment project incorporated in the BVI – then they have recourse to well-run courts that uphold the British common law; They know that their corporation will sit under the oversight of the Financial Services Commission in a jurisdiction that has been named among the best regulated in the world, a jurisdiction which conforms to the absolute highest global standards; They know that while they will pay all appropriate taxes in their home nations and in the nations where they ultimately invest their capital, they will not have to pay a double-tax for simply holding their assets through BVI structures These benefits are profound. In 2013 alone, BVI companies facilitated the investment of 82.5 billion US dollars into emerging market economies. It is no exaggeration to say that in virtually every corner of the world today there are businesses being run, profits being generated, people being employed and local taxes being paid by companies that are domiciled in the BVI. And it is also no exaggeration to say that many of those investments would simply never have been possible had a jurisdiction like the BVI not existed, that could make the pooling of resources possible and efficient. And so I say to the critics who have risen up in the wake of the Panama Papers – think carefully about what you wish for. Yes, we all agree that global corruption is a cancer that must be fought. But heaven help us if we throw the baby out with the bathwater. If we begin to sever the ties that bind nation to nation and make global investment possible, it is not the rich and the powerful and corrupt who will suffer. The rich and the powerful and the corrupt rarely suffer. They find their ways to do their business. It will be the poor and the striving who are hurt. It will be the workers whose jobs will be destroyed or never created. It will be the local government whose drive to develop infrastructure will falter. It will be the communities who will lose out on badly needed wealth creation. Those would be the victims of a de-globalised world.

Here in the BVI, we will not be shamed into silence on this point.

well-intentioned desire to strengthen the regulation of the financial system.

We know perfectly well that while we may not be perfect in the management of our financial services system – we absolutely adhere to standards that any nation – including the wealthiest and most developed nations on Earth – would be proud of.

Sometimes they are driven by their own special interests who seek to advantage themselves at the expense of others.

• Intermediaries in the BVI are bound by professional obligation to maintain adequate, accurate and current information regarding the beneficial ownership of any BVI company and to disclose to the Government of the Virgin Islands as required. The 2014 Global Shell Games report found that 94% of BVI service providers are compliant with regulations that compel them to refuse to establish companies without proper documentation, as compared to just 6% of providers in the US state of Delaware and just 45% of providers in the United Kingdom. • As well as strict Anti-Money Laundering rules, due diligence policies, Know Your Client protocols and domestic laws, the BVI’s financial regulators are recognised members of the International Organization of Securities Commissions, which is the global standard setter for the securities sector.

And in other cases – and this may be increasingly the case in the wake of the Panama Papers – these governments are simply responding to the pressure of the press and the public. Our job here in the BVI is to stand up for proper international regulation, to stand up for the global rule of law, and to stand up for globalisation as the transformative driver of human progress which it is. Ladies and gentlemen, let me conclude with this thought. We all live today in deeply uncertain times. Around the world, we witness growing problems like climate change, health epidemics and pollution and wonder what the future holds for humanity. And everywhere we see evidence of income inequality between the rich and the poor and we question whether justice will ever come to this world. I have no answers to these questions.

• The BVI was one of the first jurisdictions in the world to implement the OECD’s (Organisation for Economic Co-operation and Development) Common Reporting Standard for the automatic exchange of tax information.

But I do know this – the voices that we hear today louder than ever calling for nations to turn inward, to cut themselves off from the world, to shun those who are not like them – they are wrong and they stand on the wrong side of history.

• The BVI has tax transparency agreements with over 100 developed countries, including Tax Information Exchange Agreements with 27 countries and multilateral agreements providing for tax cooperation with 76 countries, under the OECD’s Convention on Mutual Administrative Assistance in Tax Matters.

The problems of our world will not be solved by people severing the ties that bind.

• The BVI is ranked by the non-governmental organisation (NGO) Tax Justice Network as more compliant in tracking corporate beneficial ownership than half of the G8 countries - ahead of the United States, the United Kingdom, Germany and Japan.

And we will not stamp out corruption by destroying offshore jurisdictions like the BVI that make the global flow of capital safer, better regulated and more efficient.

• The Financial Action Task Force (FATF) ranks the BVI as more compliant with international regulatory standards than the United States (US) and UK[1] • And the BVI has inter-governmental agreements with the US and UK to comply with US Foreign Account Tax Compliance Act (FATCA), and UK International Tax Compliance to provide data on financial accounts held by their residents to the United Kingdom And let me be clear – the BVI was not dragged kicking and screaming to these reforms. We embraced them. Indeed, we led on them. To the extent that we have had moments of contention between us and various international bodies as well as other national governments – it has been over legitimate disagreements about the substance of proposed regulation.

We will not uplift the poor by destroying the ability of investors to create wealth.

My fellow BVIslanders and my fellow citizens of the world – on all these issues there is but one direction we must go: forward. We must work together, not tear each other apart. We must unite in common cause to create a global economy and global community in which opportunity, prosperity and dignity are broadly shared and where corruption, terror and criminality are rooted out. Only together will we create that better and more just world we all seek. This era is a true test of our collective resolve. We will either let scandals like the Panama Papers, or the economic crisis frighten us into a global retreat – or we will use them as inspiration to do even more to create a global environment that promotes legitimate investment and deeper human connections. Here in the BVI we will stand and we will fight on the side of progress.

It is neither our duty nor our right to simply go along with every proposal emanating out of London, or Washington, or Brussels or elsewhere.

That has been our way for decades. That is the foundation of our economy and our society. Those are the values we champion.

Those capitals have their own interests and perspectives – and we have ours.

And with the likeminded and the kindred spirits of the world we will move forward together to realise our shared vision of a better tomorrow.

When they advocate for certain proposals, sometimes they are driven by a

Thank you. B AUGUST 2017 EDITION


Business BVI Guides

Many dream of living in paradise, waking up to the sound of breaking waves, relaxing on white-sand beaches and living in a place where both the sky and sea are blue and the people are friendly and laid-back. Once you have decided to make this dream a reality and just before you take the leap you need to consider the practicalities, such as informing your loved ones of your decision (highlighting the benefits to them as you do so), researching the cost of living and finally securing a job that is going to enable you to make this life style change. The British Virgin Islands, a beautiful collection of 60 islands, cays and rocks in the north eastern Caribbean, some 60 miles east of Puerto Rico, offer what many expatriates are looking for. The strong economy, characterized by a growing tourism and financial services sector, a strong public sector and a growing private sector continue to draw people from virtually every country in the world. The process of emigration is fairly straight forward, once you know what to expect and how to go about it.






A thorough medical must be done and a medical certificate granted before entering the BVI. Once the employee enters the Territory, the medical certificate must be approved by the BVI Health Services Authority. If any additional vaccinations or tests are needed, these can be done by the Government’s health clinic.



nce you have found your ideal job in the British Virgin Islands, if you are not a citizen of the BVI, you must obtain a work permit. This permit allows you to legally work in the Territory for a specific employer. Even if individuals plan to work for a few months, a Temporary Work Permit must be obtained. While work permits are being processed, perspective employees must reside outside of the BVI. Work permit applications are filed by the employer and not the employee. A new work permit application form must be filed with supporting documents, such as: • Cover letter from employer • Prospective employee’s resume • Proof of qualifications for the job • Copy of newspaper advertisement of the job • 1 passport sized photo of applicant Work permit applications are processed within 30 working days. Once the work permit is approved, the application is forwarded to the Immigration Department. Immigration then grants a clearance letter which will be used by the employee to enter the Territory. The employer will be given the clearance letter and a medical form to forward to the employee.


It is important to note that citizens of particular countries must obtain a visitor’s VISA to enter the British Virgin Islands. This can be obtained at the nearest British embassy in the applicant’s home or residing country. A full list of qualifying countries can be obtained from the Deputy Governor’s Office website at www. Additionally, while the need for passports to enter the BVI for United States and Canadian citizens have been extended; citizens of those countries are urged to obtain passports to enter the BVI. Upon entering the BVI, all expatriates must have a return ticket to their home country. Once in the BVI, the employee can receive his work permit by visiting the Labour Department. The Territory’s new work permit cards are highly sophisticated holographic cards, that can also be used as a pictured identification card and are the size of a regular bank card. It is very important that work permit holders have their work permit cards on their person at all times. Once the card is received, employees must take the card and job letter to the Immigration Department. There a stamp is placed in the employee’s passport showing that he or she is a legal resident of the BVI. Once this process is completed, employees are legally permitted to work, reside and travel in and out of the British Virgin Islands. Labour Department 284 468 3701 ext. 4708/ 4780 Immigration Department 284 468 3701 ext. 4700/ 4770




ffective September 1, 2016, the BVI will implement a Visa Exemption Program which will allow nationals of a country that require a BVI visa, but who also hold a United Kingdom (UK), United States of America (USA) or Canadian visa, and are visiting the Territory for business, tourism and other related matters, to enter and remain for a period less than six months. Visiting for the purpose of employment has been excluded as a reason to enter and remain in the Territory under this exemption program. The initiative is part of labour and immigration reforms designed to further streamline entry to the territory by visitors and is aimed at facilitating economic growth. Premier and Minister of Finance, Dr. the Hon. D. Orlando Smith, OBE said “My Government believes that the implementation of our visa exemption program will also help tremendously with our global marketability in tourism and in the financial services sector. Given recent advancements in trade, investment, tourism and financial services in the region, and with Britain’s exit from the European Union, it is in the Territory’s best interest to lift certain visa restrictions as needed in order to facilitate further economic growth in the British Virgin Islands.” The Premier added that it is an established fact that the UK, USA and Canada already have strong systems for issuing visas, therefore, visitors from a country that would typically require a BVI visa or a visa-waiver to enter the BVI, once they hold a current and valid visa issued by the United Kingdom, United States of America or Canada, can travel easily to the BVI. However, the UK, USA or Canadian visas should have more than six months of validity before travel to the territory, and would only apply to visits of six months or less. However, there are still a large number of countries requiring visas to visit the BVI. The Government of the Virgin Islands envisions that the next stage of its visa processes will be the implementation of an e-Visa regime designed to further streamline entry and facilitate economic growth in the Territory. Immigration Department

284 468 3701 ext. 4700/ 4770





ocial Security is a compulsory insurance plan to which employers, employees, self employed individuals must contribute. It is designed to protect insured persons from financial distress by providing partial income replacement when particular contingencies arise. Sickness, maternity, invalidity, age, funeral, survivor’s and employment injury benefits are paid to qualified persons. All working individuals between the ages of 15 and 65 years must register with the Social Security Board and obtain a BVI Social Security card. This is a one time registration. To register, persons must fill out an Employee’s Registration Form and submit proof of birth, i.e. birth certificate or passport. Forms may be collected and filed at the Board’s office in Road Town. Social Security payments are mandatory. Contributions for private employees and selfemployed persons are 81/2 percent of insurable earnings. Employees contribute 4 percent of that total and 41/2 percent is contributed by employers. Civil servants contribute 71/2 percent; 31/2 percent by employee and 4 percent by Government. Social Security contributions can also be voluntary for persons who have worked in the Territory and are living abroad or for persons who no longer work but are not at the eligible age of 65 to collect benefits. This contribution is 7 percent of earnings established by the Board. Social Security Board 284 494 3418




he Terrance B. Lettsome International Airport is located on Beef Island. It is the Territory’s main airport with internationally recognised airport code, EIS. Some travelers fly into the United States Virgin Islands’ island of St. Thomas at the Cyril E. King International Airport, code STT. After arriving at this airport take a 10 minute taxi ride to the waterfront ferry terminal in Charlotte Amalie where you can catch various ferries over to the BVI. The ferry ride is usually 45 minutes to West End, Tortola or 60 minutes to Road Town, Tortola. In St. Thomas, persons may also travel via sea plane to the BVI’s Sister Island of Virgin Gorda. If you choose to arrive in the BVI, via the USVI, you must clear immigration in the British Virgin Islands.

done through a shipping agent in the Territory. Once you have identified the agent you would like to use, you will be informed of the closest company to your address in your home country that you can have items delivered to or packed for pick up. As the sender, you must provide shipping agents with a list of items to be shipped as well as their estimated costs. Make certain you receive all documents and agreements pertaining to your shipment from the partnering agent in your home country in order to retrieve your goods once they have landed in the BVI. Once completed, items are then shipped to the Territory. Once they have arrived you will be notified by the local shipping agent who will sign release forms to be presented to port authority and Customs officials to clear your items. The cost of shipping items to the Territory varies widely. Ensure that you research estimates from companies before deciding on a final shipping agent. Once your items arrive in the Territory, you will only then be charged for the service. It is always recommended to insure items with the shipping agent. To declare goods with Customs you must have an itemised list of goods shipped and their costs. Government waives up to $1000 for new residents on goods imported. The following is a break down of duty charges for other items: • Vehicles


• Household goods/furniture 15% SHIPPING TO THE BVI



hipping personal effects from home furniture, personal goods and even vehicles can easily be

• Electronics/computer hardware 15% • Clothing

• Reading materials Her Majesty’s Customs 284 494 3701 Ext. 6800/6802

10% 0%



hough the Territory does not have home mail boxes, the mailing service is much like most postal services world wide. Without a private mail box, persons can collect mail sent to them at their community post office. Residents may apply for private mail boxes by submitting an application with the BVI Postal Service at the main Post Office in Road Town, Tortola. The annual cost for these mail box rentals is $35 for a letter size box. In 2006 the BVI launched its internationally recognised postal codes. These postal codes allow other mail services to have an exact and distinctive code for the Territory. This works just the same as zip codes in the United States and postal codes in the United Kingdom and Canada. This allows mailing companies to process mail to be shipped to the Territory more efficiently. Ultimately, this allows residents in the BVI to obtain their mail in a more timely manner. Residents can also obtain United States mail boxes through various companies in the BVI. This allows persons to have their international mail sent to a US post box and delivered by their hired company to the BVI. This is an excellent resource when ordering items online or to receive mail quickly from the United States. Major courier companies such as UPS, FedEx and DHL also operate in the BVI. Post Office 284 468 3701 ext. 4996

Labour. To obtain this licence the following documents are needed with a completed application form:



he real estate market in the BVI is growing steadily. At times it may seem difficult to find your right home in paradise, but with persistence and a good realtor, in no time you can be listening to the waves, watching the sun come up from the hill tops or living in a town that still has more greenery than most in other parts of the world. Unlike some countries, the British Virgin Islands does not have a Housing Authority. Prospective tenants and home owners are responsible for finding living arrangements and negotiating the best rent or lease. Many landlords offer short term leases to accommodate the Territory’s migrant labour force. The average starting rent of a two bedroom apartment in the BVI is approximately $800. Most land lords require two months rent as a refundable deposit along with proof of income - such as a job letter, before renting to new tenants. If you are in the market to purchase or build a home, all expatriates must obtain a Non-Belonger Land Holding Licence. The application process is managed by the Ministry of Natural Resources and

• A police certificate • Four consecutive newspaper clippings of the property’s sale ad • A valuation report of the property • A financial statement showing one year of banking practices • Two references • Sale agreement for the property • Proposed purpose of property • A detailed description and time table of any works to be done on the property. The Ministry of Natural Resources and Labour reserves the option to ask for additional supporting documents from applicants. A non refundable fee of $200 is required for processing of the application. For corporate groups the application fee is $500. The average processing time for a Non-Belonger Land Holding Licence is 12 to 14 weeks. Once a licence is granted, property owners must follow development agreements that were stated when applying for a licence. Failure to do so may result in a fine of 40 percent of the cost of the property or forfeiture of the property. Property taxes are payable annually to the Government’s Inland Revenue Department. If home owners are seeking to rent their property, non-belongers or persons that are not citizens of the BVI, must seek permission from the Ministry before undertaking such a venture. Ministry of Natural Resources & Labour 284 468 3701 ext. 2147/ 2137 Inland Revenue Department 284 468 3701 ext. 2155/ 3140



he British Virgin Islands does not have a formal public transportation system. However, taxi services may be called from any location on islands. Various ferry services operate inter-island shuttles throughout the major islands of the British Virgin Islands, Tortola, Virgin Gorda, Anegada and Jost Van Dyke. Plane services may also be obtained to travel from Tortola to Anegada and Virgin Gorda.

temporary licence has expired, driver’s must file an application at the Vehicle Licensing Department, along with supporting documents; work permit, passport, BVI Social Security card, and temporary licence. Additionally, a written driver’s test must be taken. The written test is administered from 8:30 a.m. to 1:30 p.m. daily. Once a driver passes this test, a BVI licence will be granted. If a new resident is importing a vehicle into the Territory or purchasing a vehicle in the BVI, the vehicle must be registered and licensed in the BVI. Drivers may purchase licence plates from the Vehicle Licensing Department, then have the car insured and inspected before the car is registered and qualified to be driven in the BVI. Vehicle Licensing Department 284 468 3701 ext. 4938/ 4939



isitors to the BVI may obtain a Temporary Driver’s Licence from the Licensing Department or car rental companies. For $10, drivers will get a temporary licence that is good for 3 months. If stopped by authorities, visitors must have this temporary licence along with their passport. If you plan to live and drive in the BVI for longer than 3 months, a BVI driver’s licence must be obtained. To obtain such a licence, once the



he British Virgin Islands hosts a variety of private and public banks that are recognised internationally. Some of these institutions are: Banco Popular, Scotia Bank, First Bank, First Caribbean and VP Bank. Presently the BVI does not host any credit unions. Once becoming a resident of the BVI, to obtain a bank account, persons are required to show proof of



identification, passport as well as a social security card. Some banks allow residents to use a United States social security card when registering for an account. Account holders may then begin to build a financial identity within the BVI’s banking system. Persons may apply for credit cards, loans and mortgages and even consolidate accounts from their previous country of residence.



here is a wide variety of child care facilities in the BVI. Day care centres accept children as young as 4 months old. The cost of this type of care ranges from $160.00 to $430.00 monthly.



ealth care in the British Virgin Islands remains relatively inexpensive to consumers in comparison with other developing Territory’s. Peebles Hospital, the main hospital servicing the BVI is on the island of Tortola. The new Peebles Hospital was officially opened in mid December 2014. A number of private clinics also service residents of the BVI. These clinics have on staff senior medical professionals that are general doctors as well as practising physicians in a wide range of specialisations such as gynecology and obstetrics, cardiology as well as dermatology. Supporting these clinics are various private pharmacies with competitive pricing for the latest medicines.


The average school year begins in early September and ends in late June. Children that will be at least 5 years old within the school year and up to 16 years old are required by law to attend some form of matriculating educational facility, this also includes home schooling by a child’s parent. If expatriate parents are travelling with children to take up residency in the BVI, the parents must seek permission from the Immigration Department to have the child in the BVI for the purpose of attending school. There is a separate application to have the child enrolled in the school system. When in the BVI, the Education Department will facilitate the processing of applications for entrance into the BVI school system. It is important to note that if a parent plans to enroll a child in a private institution or home school their children, they must also register with the Education Department. Parents are then responsible for the filing of applications at private institutions.


Parents have a choice of two schools when entering the public school system. While there are numerous primary schools, there is only one public secondary school on Tortola, Virgin Gorda and Anegada. Students living on Jost Van Dyke must commute to Tortola to attend high school. The following information about the child or children is required when applying to attend public schools:

certification for various courses. The BVI also hosts a campus site for the prestigious University of the West Indies. Students are able to enroll in classes and participate in face to face as well as teleconference and distance learning courses. Applications to attend these institutions are available at their offices on Tortola.

• List of previous schools attended • Birth certificate • Immunisation card • School report or transcript • BVI Health Services authorisation of child’s immunisation card

Education Department

284 468 3701 ext. 2036/ 2037

Of the parents, the following documents are needed: • Work permit card • Passport • Contact information Once the child is approved by the Education Department to attend a public school, a letter is sent to the Immigration Department and the appropriate authorisation is placed in the child’s passport, declaring the child a legal resident of the BVI. There are a number of private primary and secondary schools in the BVI. Monthly tuition for such schools starts at $300. Parents wishing to home school their children are required to submit a course outline as well as the home school programme they intend to follow. Closing dates for school registration are April 30 for entrance beginning in September of the same year and November 30, for entrance in January of the upcoming year. The Territory currently has two tertiary institutions. Students may obtain accredited associates degrees from the H. Lavity Stoutt Community College as well as



here are five public libraries in the BVI that are located on the Territory’s four main Islands. Two on Tortola; in Road Town and East End, one on Virgin Gorda, Anegada and Jost Van Dyke. To obtain a permanent library card, persons must be residing in the Territory for at least 6 months. If visiting the Territory for shorter than six months, visitors may obtain a temporary card by paying a refundable fee of $5 and submitting the name of one reference that can return borrowed books in your absence. Library Services

284 468 3701 ext. 4931/ 4932



Business BVI Guides








Population Density

183.2 km2

Population growth rate (annual average) 2.5% Nationality Ratio


Literacy Rate


Life expectancy at Birth


Major Religious Denominations Methodist, Anglican, Roman Catholic


57.08 mi2

Rainfall (average annual)

40 inches

Temperature (average) Time Zone

The BVI is self-governing overseas Territory of the United Kingdom with the Queen as the Head of State represented locally by the Governor. The Governor is responsible for external affairs, defence and internal security, the Public Service and administration of the Courts. The ministerial system of government is led by an elected Premier, a Cabinet of Ministers and the House of Assembly. Government’s main source of revenue comes from financial service levies followed by payroll taxes and import duties. In order to ensure sustained growth the BVI government continues to implement measures aimed at increasing revenue collection and managing expenditure levels. The Protocols for Effective Financial Management negotiated with the United Kingdom and the 2012 amendments to the Public Financial Management Act, 2004 set out the Government’s commitment to fiscal sustainability. This will be accomplished through medium term planning, regular review and reporting of economic and fiscal affairs, delivering value for money by efficient procurement processes and by managing risk.

28 degrees celsius

Atlantic Standard Time




Capital City

Road Town

Dependency Status British Overseas Territory Judicial System Head of State

Common Law Queen Elizabeth II represented by the Governor

ECONOMY Currency

United States Dollar

GDP (nominal)*

US$ 973, 862 million

GDP per capita (nominal)* Inflation Rate (2015)

US$ 33,408 0.85%

Unemployment Rate


Employed Persons (2015)


The population of the British Virgin Islands (BVI) is diverse and growing. The majority of persons are of Afro-Caribbean decent. Minority ethnicities include Caucasians, East Indians, Middle Eastern, Chinese, and Portuguese. The major force driving population growth has been immigration mainly to meet the shortage in local labour supply. Approximately 68 percent of the employed are foreigners thus accounting for a diverse and varied labour force. The Government sector is the major employer followed by the tourism industry and the financial services sector. Annually there are twelve paid public holidays and the local labour code sets modest requirements for paid sick and holiday leave. Trade unions are virtually non-existent and work days lost through industrial action are infrequent. Local law provides for a work permit regime. Under this system a foreigner will only be granted with a work permit if a qualified local is not available to fill the position. The government has set a minimum wage of $4 per hour.

Major Industries Tourism and Financial Services EDUCATION

COMMUNICATION Country Phone Code Postal Codes

284 VG1110, VG1120, VG1130, VG1140, VG1150, VG1160

Telecommunication Providers Source: Macro-Fiscal Unit and Central Statistics Office ^2010 Population Census * 2015 provisional estimates




Publicly provided education is free at the primary, secondary and now territory levels thereby facilitating access to all children. Education is compulsory up to the age of 16 and the Education Act, 2004 regulates all aspects of the Territory’s education system including Early Childhood Education. The Government’s Ministry of Education operates 17 primary schools and four secondary schools, including a technical-vocational school and a school for disabled students. There are also several private primary and secondary schools; some parochial and some secular. The H. Lavity Stoutt Community College (HLSCC) is a two-year tertiary institution offering

associate degrees in the areas of business, natural science, social services, hospitality, computer studies, marine studies and financial services. Through affiliations with other tertiary institutions HLSCC also offers degree and master’s programmes in various disciplines. The College also offers specialty courses based on the needs of the labour market.

HEALTH The recently implemented National Health Insurance (NHI) Scheme provides universal affordable health care to all BVI residents. Currently, primary health care is provided by Peebles Hospital and community health centres. The new Peebles Hospital is a state of the art facility includes a physical theory unit, psychiatric ward and hydrotherapy pool. Additional medical services are provided by a small private hospital and several private medical clinics. Patients requiring treatment services beyond the scope of Peebles Hospital are referred to Puerto Rico, the US Virgin Islands, Jamaica, Barbados and mainland United States. The BVI Health Services Authority established under the BVI Health Services Authority Act, 2004 is responsible for managing the public health care service throughout the Territory including the general administration and functioning of the Peebles Hospital and the recruitment and training of health care professionals.




Nominal GDP Growth (%)



Inflation (%)



Unemployment1 (%)



Source: Central Statistical Office 1

Please note that the rate of unemployment is based on 2010 census figures.

The BVI economy is based on two distinct economic pillars, namely Tourism and Financial Services. Growth in the tourism and the financial services industries has resulted in expansion of the construction sector, both private (residential and commercial) and public, the real estate sector (residential and commercial) and the wholesale and retail sectors. For the majority of the past decade economic growth has been positive and the BVI’s economy is one of the strongest in the Caribbean. Prices in the BVI have increased moderately over the last five years with an average growth rate of 1-2%. The BVI’s principal trading partner is the United States. The majority of imports (goods) originate from the United States including Puerto Rico and the US Virgin Islands. Similarly, vast majority of BVI exports (in the form of services - specifically financial services and tourism) are used by United State consumers. The BVI is not a major exporter of goods.

MAJO R S ECT O RS TOURISM AT A GLANCE With its crystal clear waters and white sand beaches, breathtaking scenery, intricate coral formations, tranquil atmosphere and warm people the BVI is a popular destination for sports enthusiasts as well as those who want a peaceful vacation. The largest island Tortola is the major hub for most visitors and the starting point for discovering the other islands. Major attractions include the nature trails at Sage Mountain National Park, the huge boulders at the Baths, the pristine waters of White Bay, the wreck of the Rhone and the flamingos at Nutmeg Point. Yearly scheduled activities which attract numerous visitors include: the Emancipation Festival in August, the Anegada Lobster Festival in November, and the BVI Spring Regatta in April. Sailing is one of the most popular activities for tourists. The year round trade winds and numerous islands, inlets and cays has given the BVI the title of the ‘sailing capital of the world’. Other water sports such as scuba diving, snorkelling, windsurfing, kite boarding, paddle boarding and kayaking are also extremely popular. The BVI is also a popular port of call for major cruise ships. The Tortola Pier Park facility opened in 2016 can accommodate larger cruise ships and the landside development includes shops (international brands and local treasures), restaurants and entertainment.



The Government continues to upgrade tourist attractions and infrastructure and encourages private investment and public private partnerships in the sector. Other infrastructural developments expected in the near future include expansion of the T.B Lettsome International Airport and upgrades to various ports of entry throughout the BVI. Through the BVI Tourist Board numerous marketing initiatives have been developed to promote and enhance the Territory’s tourism product. The “Jewels of the BVI” programme promotes a collection of locally owned hotels, inns and villas by providing valuable information about the properties and activities via an official website ( and a hotline. The “BVI VIP Club” rewards repeat visitors with special discounts at participating businesses throughout the Territory, special arrival privileges at the airport and tourism updates via a newsletter subscription.


2014 *


Actual Change
















(Cruiseship and day trippers)


Source: Central Statistical Office * Estimate





Trust (general) Class I, II & III



Trust (restricted)



Company Managers



Money Services/Financing Business



Captive Insurance



Domestic Insurance



Insurance Managers



Banking and Fiduciary Banking (general and restricted)


Mutual Funds Professional








Private (cumulative active)






Public (cumulative active)



Professional (cumulative active)



BVI Business Companies



BVI Business Companies (cumulative active)





Insolvency Practitioners Source: BVI Financial Services Commission

Modern and innovative legislation, a robust regulatory framework, clever marketing, economic and political stability, quality technology and communication facilities and a full range of legal, banking and account services have contributed significantly to the continued growth of incorporations. Closely related sectors such as captive insurance, investment business (mutual funds), trust and estate formation, company management, corporate restructuring, securitisation, insolvency and shipping and trademarks have developed. The industry is regulated by the Financial Services Commission (FSC) which is an autonomous body responsible for the licensing, regulation, supervision and inspection of all financial services business. Marketing and promotion of the products and services of the financial services sector is conducted by the BVI Finance (formerly the International Finance Centre) The Financial Investigation Agency (FIA) which was launched in 2004 functions as a specialist investigative law enforcement arm of the government with the objective of curbing financial crime. Its primary focus is to investigate the BVI financial services industry and support the Virgin Islands mutual legal assistance regimes.



The BVI London Office and the BVI Asia House in Hong Kong were commissioned to establish a presence in Europe and Asia to take advantage of economic opportunities not limited to financial services and tourism. The Financial Services Implementation Unit (FSIU) was established late 2015 to put into effect the recommendations of a report outlining a strategic plan to chart the future of the financial services industry with the goal of securing the future of the industry. The recommendations centre on attracting value-added services, labour and immigration reform, strengthening business development and attracting investment in infrastructure.

BUS INES S CO MPANIES The BVI is one of the largest centres for the incorporation of business companies with around 1 million companies incorporated since the enactment of the International Business Companies (IBC) Act in 1984. Over 450,000 are still active today. Because of the flexibility of its use BVI business companies have been used in a plethora of business transactions and structures including structured finance and securitisation, succession planning, IPOs and listings on stock exchanges and joint ventures etc. The incorporation regime has changed somewhat with the introduction of new company legislation – the BVI Business Companies Act, 2004 which replaced the IBC Act repealed on January 1 2007. The core features of the IBC Act which made it a success remain

along with improvements to ensure the longevity of the Virgin Island’s market share. The new Act for instance widens the range of corporate vehicles available for use, simplifies the statement of capital and the registration of charges.

I N S U R A NCE ( CA P TIV E ) The BVI captive insurance market is one of the fastest growing and largest in the world with the majority of business originating from the United States. Other countries of origin include Guernsey, Taiwan, Switzerland, the Middle East and South America. In addition to this excellent geographic spread of business, there also has been a significant distribution of captives from an industry segment standpoint. The captives cover the following industries: finance and insurance, construction, health care and retail trade. The domestic insurance market is, however, smaller in comparison. The new Insurance Act, 2008 which replaced the 1994 provides a modern structure for licensing, supervision and administration of insurance business in the Virgin Islands while simultaneously meeting international insurance standards. The Insurance Regulations 2009 which replaced the 1995 regulations provides clarity on details relating to insurance business in and from within the BVI. Both came into force on February 1st, 2010. More recently the Insurance (Amendment) Act and Regulations 2015 provide greater flexibility for captive insurers with the introduction of two new categories for captive licences.

I N VE S TM EN T BU SIN E SS The BVI is one of the premier jurisdictions for fund domiciliation and is now is regulated by the Securities and Investment Business Act (SIBA) and Regulations which came into force on 17th May, 2010 replacing the Mutual Funds Act 1996 (as amended 1997). SIBA sets out the new legislative framework under which the Financial Services Commission (FSC) regulates individuals, mutual funds and other investment related

entities conducting business in and from within the BVI. Persons such as investment advisers, those dealing in investments or arranging dealings in investments, managers, custodians, those providing administration services with respect to investments, and operators of investment exchanges are now required to be licensed. SIBA introduces the authorised representative regime where all BVI funds are required to appoint an authorised representative resident in the BVI and licensed by the FSC. SIBA also provides a framework for dealing with insider trading and market abuses. The BVI continues to update its regulatory regime to meet the needs of stakeholders. The Approved Managers Regime came into force the end of 2012 and creates a new regulatory environment for fund managers by reducing the regulatory burden under SIBA. The SIBA (Amendment), 2012 facilitates the new regulations for the Approved Managers Regime. The FSC has created two new regulated fund categories – incubator fund and approved funds. They were created in order to provide more flexibility to smaller and start-up financial services businesses. Under the new fund categories, managers and principals of smaller, open-ended funds may be approved to conduct business within a lighter regulatory framework. The Securities and Investment Business (Incubator and Approved Funds) Regulations 2015 come into force on 1 June 2015.Â

BANK ING The Virgin Islands is characterised as a conservative banking jurisdiction. At the end of 2014 there were 6 banking institutions licensed to operate in and from within the BVI with total assets of approximately US$2.5 billion. The domestic market is serviced by six commercial banks which offer a wide range of competitive services: Scotia Bank (BVI) Limited, First Caribbean International Bank, First Bank Virgin Islands, Banco Popular de Puerto Rico, VP Bank (BVI) and the National Bank of the Virgin Islands. The banking sector is regulated by the Financial Services Commission under the Banking and Trust Companies Act, 1990 and subsequent amendments. AUGUST 2017 EDITION






I N S O LV E NC Y The Virgin Islands boasts a modern comprehensive insolvency regime that meets the needs of the growing incorporation, investment and financial services activities in the BVI. The governing legislation, the Insolvency Act 2003, makes provisions for the licensing and regulation of insolvency practitioners a wide range of liquidation and rehabilitation alternatives, a director’s disqualification regime and the establishment of an Official Receiver’s office.

T RU S T MA N AG E M E N T Trust Management forms a major component of financial services activity in the Virgin Islands. The BVI trust sector has experienced moderate growth since 1995. Revised legislation, together with the highly flexible BVI Business Company, has opened up wider markets for the BVI trust. Trusts are formed under the Trust Ordinance 1961 (based on the English Trustee Act 1925), as updated and amended by the Trustee Amendment Act 1993 and 2003. The amendment Acts considerably modernise and update the legislation, creating a more flexible regime for trusts. Changes include provisions to make trusts more attractive in a commercial context and a new set of conflict of law rules that contain robust, comprehensive, and carefully crafted provisions to protect BVI trusts against “forced heirship” claims. In addition, the rules surrounding trust duty have been updated to make it clear what documents are subject to trust duty and how this must be paid. At the same time, rules which require no public register of trusts in retained, thereby protecting confidentiality. The Virgin Islands Special Trusts Act, 2003 (VISTA) is another piece of legislation which updated the trust regime. VISTA trust, overcomes many problems associated with the “prudent man of business rule”, which typically made trusts unattractive vehicles to hold assets which settlers intended trustees to retain. The Act enables a shareholder to establish a trust of his company which disengages the trustee from management responsibility and permits the company and its business to be retained as long as the directors see fit. The majority of Virgin Island trusts are exempt from all taxes provided there are no beneficiaries resident in the BVI, and that the trust does not conduct any business in the BVI or own any land in the jurisdiction.

As a Category One Register, within the Red Ensign Group, large vessels of unlimited tonnage and mega yachts of up to 3,000 gross tons can be registered in the Territory. In both instances, the owners must be a Virgin Islands citizen, British citizen, British Overseas Territories Citizen, British subject, a British national under the Hong Kong Order 1986, a national of a European Union member state, or a body corporate incorporated in a member state of the European Union or a British possession, including the Virgin Islands. If you do not meet the nationality requirement, you may register a company in the Virgin Islands in order to register a vessel.

There is a large and sophisticated community of professional advisers on trust matters in the Virgin Islands. Companies offering trust services must be licensed under the Banks and Trust Companies Act, 1990.

Registration procedure also requires the de-registration of the vessel from its current registry, a survey of the vessel and the submission of ownership documents to the Registrar of Shipping. The registration fee is $550, and an annual fee of $100 is payable to maintain registration. In addition, there will be legal fees charged by the firm you choose to assist you with registration.






Annual Vessel Registrations



Total Vessels Registered



Source: Virgin Islands Shipping Registry

As the sailing capital of the Caribbean and an esteemed corporate domicile, the Virgin Islands is also a popular jurisdiction for the registration of ships.



A Tax Information Exchange Agreements (TIEAs) is a bilateral agreement that has been negotiated and signed between two countries to establish a formal regime for the exchange of information relating to civil and criminal tax matters. The purpose of TIEAs is to promote international co-operation in tax matters through exchange of information. TIEAs grew out of the work undertaken by the Organisation for Economic Cooperation and Development (OECD) to address the lack of effective exchange of information among financial centres. Information exchange is based on requests relating to specific criminal or civil tax matters that are under investigation.

Government of the British Virgin Islands, Ministry of Natural Resources and Labour. If the application for a license relates to undeveloped or partly developed land, the applicant will be required to make a commitment to the Government of the British Virgin Islands to expend a specified sum on development within a specified time period. The purchase of property by all persons including citizens and foreigners is subject to a Government stamp duty subsequent to transference of the property. The rate of 12% of the purchase price or appraised value whichever is higher, is payable by any foreigner and citizens are required to pay a 4%. The stamp duty on leaseholds is lower. Other costs associated with the purchasing of property in the BVI include: legal fee (usually between 1.5% to 2% of the purchase price), bank fees, 10% deposit to the seller’s agent to be held in escrow on the signing of the purchase agreement, pending acceptance and completion. There are no restrictions on an overseas investor re-selling a developed property. The property must however, be advertised for four weeks in the local press to give any local person the opportunity to purchase the property on the same terms.

BVI CO MMERCIAL CO URT The BVI has a long tradition of providing legal assistance to foreign regulatory and law enforcement authorities and continues to be committed to the OECD’s principles of transparency and effective exchange of information. Under the guidelines provided by the OECD and the new international tax standard emanating from the G-20 Summit in April 2009, jurisdictions are required to sign at least 12 TIEAs. To date the BVI has signed 28 TIEA’s. The BVI has agreements with Ireland, the Netherlands, Curacao, St. Maarten, Aruba, the United States, the United Kingdom, Australia, New Zealand, France, the Faroe Islands, Greenland, China, India, Germany, Poland, Portugal, the Czech Republic, Guernsey, Isle of Man, Canada, Japan and South Korea and the Nordic group of countries Sweden, Norway, Finland, Denmark and Iceland. The International Tax Authority (ITA), established under the Ministry of Finance, is the Competent Authority in respect of all matters relating to Tax Information exchange. It ensures that the BVI effectively exchanges tax information with other countries under the laws of the Virgin Islands and the relevant TIEAs.


The BVI now has a state of the art Commercial Court to serve the expanding needs of commercial litigation in the Territory and the Eastern Caribbean. The commercial court is a division of the regional Eastern Caribbean Supreme Court (ECSC) and will hear commercial matters from nine Caribbean nations and territories, including Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, St. Kitts and Nevis, St Vincent, St Lucia and the BVI. The court officially opened on 30th October, 2009 (although it was in operation since May 2009) and specialises exclusively in domestic and cross-border commercial and insolvency matters. Prior to the establishment of the Commercial Court, all cases were handled by the High Court.

BVI INT ERNAT IO NAL ARB ITR ATIO N C ENT RE The BVI is now a centre for the resolution of domestic and international disputes. The British Virgin Islands’ Arbitration Act 2013 came into force on October 1st, 2014 making provisions for a modern arbitration centre. The recently established BVI International Arbitration Centre provides neutral, efficient and reliable dispute resolution services. The state of the art facilities offers a variety rooms for hearings and meetings, video and audio conferencing, interpretation and translation services and concierge services.

Buying and Selling Property in the BVI Foreigners planning to purchase property in the British Virgin Islands require a Non-Belonger Land Holding License. Agreements to purchase property are therefore made contingent upon such a license being obtained by the purchaser. Application for a Non-Belonger Land Holding License is made to the

PUBLISHER’S NOTE: All of the information in this guide has been carefully collected and prepared, but it still remains subject to change and correction. Use these contents for general guidance only and seek extra assistance from a professional adviser with regards to any specific matters. Readers can contact the relevant authorities mentioned in this Fast Fact Guide..





New Year’s Day

Monday, 2nd January

Anniversary of H. Lavity Stoutt’s Birthday Monday, 6th March

Territory Day

Friday, 30th June

Festival Monday

Monday, 7th August

Festival Tuesday

Tuesday, 8th August

Festival Wednesday

Wednesday, 9th August

Commonwealth Day

Monday, 13th March

Good Friday

Friday, 14th April

Easter Monday

Monday, 17th April

St. Ursula’s Day

Friday, 20th October

Whit Monday

Monday, 5th June

Christmas Day

Monday, 25th December

Sovereign’s Birthday

Saturday, 17th June

Boxing Day

Tuesday, 26th December

GOVERNMENT MINISTRIES Central Administrative Complex Road Town Tortola British Virgin Islands Website:

Premier’s Office Tel: (284) 494-3701 ext 2152/2058 Fax: (284) 494-6413 E-mail: Ministry of Finance Tel: (284) 494-3701 ext 2144/3306 Fax: (284) 494-6180 Ministry of Health and Social Development Tel: (284) 494-3701 ext 2174/2172 Fax: (284) 494-5018 E-mail: Ministry of Communications and Works Tel: (284) 494-3701 ext 2183/2163 Fax: (284) 494-3873 Ministry of Natural Resources and Labour Tel: (284) 494-3701 ext 2147/2137 Fax: (284) 494-4283 Ministry of Education and Culture Tel: (284) 494-3701 ext 2151 Fax: (284) 494-5421


STATUTORY BODIES/ ASSOCIATED AGENCIES Financial Investigations Agency Ritter House Wickhams Cay II Road Town, Tortola Tel: (284) 494-1335 Fax: (284) 494-1435 E-mail: Website: BVI Finance Cutlass Tower, 4th Floor Road Town, Tortola Tel: (284) 468-4335 Fax: (284) 468-2590 E-mail: Website: BVI Tourist Board 2nd Floor, Akara Building De Castro Street Road Town, Tortola Tel: (284) 494-3134 Fax: (284) 494-3866 E-mail: Website: The BVI Commercial Court Old Banco Popular Building Main Street Road Town, Tortola Tel: (284) 468-2724 Fax: (284) 468-2729

Financial Services Commission Pasea Estate Road Town, Tortola Tel: (284) 494-1335 Fax: (284) 494-1435 E-mail: Website: Telecommunications Regulatory Commission Fishlock Road Road Town, Tortola Tel: (284) 494-6786 Fax: (284) 494-6786 Website:

BVI London Office 15 Upper Grosvernor Street London WIK 7PJ United Kingdom Tel: + 44 207 355 9570 BVI House Asia Suite 5106, 51/F., Central Plaza, 18 Harbour Road, Wanchai, Hong Kong Tel: (852) 3468 8533

Virgin Islands Shipping Registry Cutlass Tower, 3rd Floor Road Town, Tortola Tel: (284) 468-2902/2903 Fax: (284) 468-2913 E-mail: Website: BVI International Arbitration Centre Ritter House Wickhams Cay II Road Town, Tortola Tel: (284) 340-9002 E-mail: Website:




















Over & Out

25 YEARS IN OFFSHORE FINANCE Frances Woo’s aha moment came when she became antsy after spending more than 10 consecutive days in Hong Kong. She had gotten so used to her routine of constant travel and being jetlagged, that being in one place for 10 days just seemed abnormal. Happy with what she had accomplished in her 30 years in the legal sector and having done every conceivable role in her 25 year career leading up to being Group Chairman at the offshore law firm of Appleby, the goal-oriented Frances was itching for the next thing to grow. Plus, with her eldest son heading off to college in the coming months, she wanted to dedicate more time to family and explore her creative side. In March at the young age of 50 plus, Frances decided to retire from her professional career as a lawyer and leap into the daunting unknown. Recently she sat down with Director of BVI House Asia Elise Donovan and gave her insights from 25 years in the offshore financial services industry.



Elise Donovan: I was really inspired by your farewell presentation at the reception, and appreciate you taking the time to talk to us today. Can you give us some background on how you started in the industry? Frances Woo: Thank you very much for having me here, Elise, and allowing me to share that with you. It has been very gratifying and rewarding to be part of the offshore financial industry. When I first started on this journey, even as early as an undergraduate at university, I never thought I would go into law. I did my undergraduate in toxicology and pharmacology. Most of my family had a background in the medical sciences. My father was a surgeon and many of my role models tended to be in the sciences. There were not too many people in political science or in law or the humanities and so that wasn’t something I thought I would get into. It really all happened when I was in university and I got my first job at a law firm as a receptionist over the summer. From that time I gained a lot of insight into law, and one of the partners there took me under his wings and then suggested that I apply to law school, which I did. I recall that when I was admitted to law school in Canada, which, like the US, is a graduate degree program, my father said to me, “Lawyers are a dime a dozen.” He wasn’t very happy. He considered it a second rate profession. But I persevered, and being from a science background, I really thought I would go into environmental law or maybe intellectual property or patent. As it turned out, there was a recession in Canada, and after I did my articling, the positions that were available were in corporate law and finance, and so that’s where I went. How I got into the financial industry, and offshore, a lot of it was serendipity. None of it was planned. Very much is made of the saying, “If you’re given lemons, make lemonade.” It really was that, going with the flow, and adapt and change. I practiced a number of years in Canada, on Bay Street in a very large national firm. But then I felt I wanted to get more international exposure. I wanted to spend a year or two abroad before I got too old, and a number of my law school classmates said, okay, let’s write the Qualified Lawyers Transfer Test to qualify for England and Wales. At that time I had a choice whether to sit the exam in London, New York, Toronto or Hong Kong. I said, let’s go to Hong Kong and make a trip out of it. That’s what we did, and so I came here and sat the QLTT, having no intention to search for a job outside Toronto. Then I went back to Toronto, and at that time



Appleby was looking to recruit. I was thinking, unbeknownst to them, that perhaps I would follow the job to Hong Kong and then see what else was available. I did not want to practice Hong Kong law prior to the handover because I did not know what would happen, and I did not want to practice English law because I didn’t have ties to the UK, either. So I thought the best thing for me was to practice something a little more international.

ED: So, you moved from Toronto to Hong Kong with Appleby. What was the environment at that time? FW: The environment was extremely narrow. Very, very small. I would say that, when I first arrived, there were only two offshore firms, Appleby and Conyers, and even so, Conyers had two or three lawyers and Appleby had one or two lawyers. From the onshore legal industry, practicing offshore was not at all well respected. It was almost as if you couldn’t cut it in mainstream law, therefore you went into offshore. Everybody was very perplexed, and puzzled, why you would choose that route. It seemed to be more of a dead end. It wouldn’t get you anywhere. The feeling was, once you went offshore, you could never get back onshore. So it was very, very different from what it is now. People felt it wasn’t really a specialist area in and of itself. Also when I arrived in Hong Kong, in the early 90s, Hong Kong itself was very colonial, British companies and institutions dominated. Equally, it was a time when a lot of the international companies were rotating a lot of their executives on secondment every two years, every three years. It was also a time when a lot of the Hong Kong practitioners, the Hong Kong financial industry was still developing. Most of the business in the early Nineties was conducted in English – British English. There was a smattering of American English and North American English. Towards 1996 everyone was preparing for the handover and a lot of the meetings began to change, from focusing on English to focusing on Cantonese, because at that point a lot of the local Cantonese who had been working at British law firms and British institutions, as well as international companies, were becoming more senior and they began conducting meetings in Cantonese.

ED: So the handover from British to Chinese rule in Hong Kong in 1997 , would you say, was a major impetus for change in the industry? For example, you said there was a stigma attached to working in offshore law, and it’s not there now. Did the change happen organically with the handover?

FW: Yes, it was partly with the handover, because the handover was the impetus for a lot of the development. But in Hong Kong the financial services industry was growing more rapidly, becoming more sophisticated, more complex. It was also at the time of the opening up of China, and Hong Kong acting as China’s window to the world. So as China business became more complex, so too were the types of offshore structures that were required. For instance, starting from the mid 1980s you started seeing many of the offshore companies being utilized for listing on the Hong Kong Stock Exchange. Then the BVI worked for a lot of the intermediary companies, for a lot of the holding companies. And then you were seeing offshore used in the bond market and in structured finance deals. And as financial services became more sophisticated, offshore had a greater role to play as an intermediary facilitating a lot of these transactions, to translate what was being done in China through to Hong Kong, and from Hong Kong out into the international markets, whether they be in New York or in London. It was also at this time, through the 1980s and 1990s, that London started the rapid growth of its role on the international scene. As you look at the 1970s, the 1980s and the early 1990s, New York also grew in terms of its internationalism. So with all of these factors happening in tandem, I think that very much assisted the offshore industry globally, but certainly in Asia, in coming out from being stigmatized to a greater appreciation and understanding of its role.

ED: Could you talk about how different things were in the beginning for you, working with a typewriter, for example. FW: It was very challenging when I first arrived in Hong Kong, because it was before the internet age and before email. I am of that generation where I straddled both the analog and the digital. But having to be the interface with offshore, many of which were, like BVI, Cayman and Bermuda, based in the Caribbean time zone, and dealing with clients in Asia, with demands and urgency and getting things done like yesterday, and dealing with the lack of technology, was very challenging. When we had to send reams and reams of documents for filing or registration, we would have to stay there feeding pages into the fax machine into the wee hours of the morning, sometimes finding out that at page 383 the fax had stopped transmitting. Then you’d have to make a long distance call to find out how many pages had been received or not received, and if

None of it was planned. Very much is made of the saying, “If you’re given lemons, make lemonade.” It really was that, going with the flow, and adapt and change.

they hadn’t been received, you’d have to start all over again at page one, feeding in one page at a time. It was also very time sensitive. In terms of communication, sending things by post might take two or three weeks before you got word back. You were really a satellite, and nobody really thought of you and what your challenges were here in Hong Kong. So there were a lot of things you had to do independently, and you had to improvise, innovate and shoot from the hip a lot.

ED: With all of those challenges at the time, why did people want to do business offshore? FW: It was challenging, but the challenges people faced were not the same challenges that people faced in mainstream law with the financial institutions, because most of them had a lot larger presence here that they could draw

upon, and they were very focused on Asia, so they didn’t have to do deal with an interface. But people wanted to work with offshore because there were a lot of advantages. So places like the BVI had right of appeal to the Privy Council, dealing with the law of England and Wales, with a lot of statutory interpretation on top of that. There was a lot of political stability. And there was a lot of familiarity, because BVI law was similar to Hong Kong law, prehandover and post-handover, as a matter of fact. BVI law was also very streamlined, and administratively not unwieldy, versus Hong Kong law, which was very unwieldy. If Hong Kong wanted to make any quick changes, to adapt to any trends or developments in international business, they couldn’t do it, because they weren’t as flexible or as nimble as the BVI with any of the developments that international business required. Also, offshore learned very early that they needed to reach out and understand what the trends and the needs were. Therefore, they had their tentacles on the ground in Asia, versus international business, which said I’m a temple, come worship where I am. So the fiduciary providers were on the ground very early to facilitate that.

ED: What have been some of the highlights in your 25-year career? FW: There have been many. Just coming to Hong Kong was an amazing experience, and seeing the growth in the financial industry and changes in language use was also a real highlight. Certainly, the handover and the Asian financial crisis were big deals. Prior to the handover there was a lot of nervousness, a lot of concern, but equally a lot of anticipation of what the handover would be like, what AUGUST 2017 EDITION


changes it would entail for Hong Kong and how the international community would view Hong Kong after the handover. But it was almost anticlimactic because once the handover had occurred in July, then very soon after that there was a market crash. For Hong Kong, it was the first crash they had experienced in a very, very long time. For a lot of the Hong Kong elite and business executives, many of whom were taking over from international businesses and especially British businesses moving back to the UK, it was quite a shock, and people had to scramble in terms of how they coped with it, deploying a lot of the structures and action plans that they had developed. That was quite memorable. Also memorable was becoming a partner at Appleby in 1997 and then a managing partner in 2000. Even prior to that, I think the highlight was being able to practice the laws of various offshore jurisdictions. Because that meant having a broader understanding and a broader appreciation of how the offshore industry fit together, rather than from a narrow lens. I think that brought a lot to bear on each of the offshore jurisdictions that we worked with, because then we could say, look, we’ve seen this in other offshore jurisdictions. And slowly, beyond the offshore jurisdictions that Appleby covers, we were equally able to see what was happening in places like Lichtenstein or Singapore or other offshore places that would bring intelligence and information to other jurisdictions that we represented. And then of course the different roles I played in management and ultimately becoming Global Chair of Appleby in 2014. That was very much a heavy and demanding global role that I played, but it was very fulfilling in terms of being able to interact with clients and with the industry in all of the places where we had clients.

ED: It sounds like things happened for you naturally, or in some cases, as you said, it was serendipity. But at what point in time did you set your sights on the pinnacle? FW: At no point did I set my sights on the pinnacle! For me, the ethos, which came from my father, was 90 percent hard work and 10 percent talent. Do things with a lot of integrity and to the best of your ability and really, give your best and full heart and attention to it. I think over a period of time I recognized that I had a lot of institutional knowledge, and there’s a legacy to that. Once you’re involved in how the industry or how your firm develops over time, then that in itself is also very helpful. If you have an interest and



a passion and enthusiasm in what you do, and you’re vocal about it and you want to participate in various projects, then people tend to want to find workhorses to do those things, and over time you generate respect. It’s not something that happens overnight. It’s not something that I ever thought when I first arrived in Hong Kong that ultimately I would want to be global chair of this international law firm. Even in 2012 and 2013 I really didn’t think I wanted it, but it was my fellow partners who were encouraging me to play that role. I guess maybe they saw I was doing those things already. I think that at every point of what I wanted to do I had mini goals and a mini action plan, and things that I wanted to see and improve. I was always interested in law, not just from a narrow lens, but what law did and how it integrated and how it was implemented and assisted in getting the results the business community wanted.

what made you overcome those obstacles? FW: From a very young age I’ve had a lot of training in developing resilience. If you had the father I had, you would be very resilient. I played a lot of competitive tennis as a young person. Then I played varsity tennis for my university. I think sport probably helps you with a lot of that, developing the mental toughness that you need. So part of the motivation is always seek to do your best and try to push that envelope. Another motivator is pride in your work, and also fear. Fear is a motivator, not necessarily the most positive motivator, but it’s there in the background and you need to recognize that. Other positive motivators wouldn’t be accolades or recognition but the feeling of a job well done. The ability to collaborate with others, to see the final goal and bring others along with you, is what I enjoyed.

ED: How do you build diverse teams effectively? ED: You’re one of the few women I know who became global chair of an international law firm in the financial services industry. What advice do you have for women? FW: Just empower yourself, be confident, be passionate, and do not be afraid of going for whatever it is that your goal is, because you will find a way to make it work. I think a lot of the concern, particularly for women, and even for some men, so I don’t want to generalize in that way, but they’re always very worried that they can’t meet expectations or exceed them. Have the confidence to do that and embrace your ambition, and then find a way to make it happen, as opposed to self-doubt and worry that you won’t meet expectations. There are all different types of role models out there, and there’s no one size that fits all. Make it your own, as opposed to, I need to fill the shoes of someone who did it this way. That’s why if you take up that role it’s going to be unique, and it’s really because you bring in your own characteristics and your own stamp to it. That’s what people are looking for, and that’s what international business needs: disruptors, innovators, people who are looking at it from a different perspective. If they’re looking for the same old same old, then they can grab the same old same old, and nothing is going to change. That’s my take on it, not that I knew that as a young person. Don’t stop trying, keep pushing the boundaries.

ED: What was your inner motivation? Did you have a mantra you kept telling yourself? What drove you? We all have challenges and self-doubts, but

FW: Through a real interest in understanding people’s backgrounds and what motivates them, and a love of different cultures, and loving to collaborate. I’ve always felt that to be an excellent leader you can’t dictate. Yes, the stick is there, but to get a team that is really going to perform optimally, it really needs to come from their heart. So I spent a lot of time on buy-in, on discussion and collaboration. And when you’re devising your projects on collaboration and how to measure them, those have to be properly aligned. A lot of time is spent on listening and allowing others to talk. It helped me that I came from a Western upbringing but also had, three or four generations back, immigrants, and was a visible minority. But, truth be told, when I first landed in Hong Kong I hadn’t had a lot of exposure to the UK and European cultures, so I spent a lot of time trying to understand them, and it turned out that at Appleby a large proportion of our fellow partners are from the UK or Europe. I tried to understand their backgrounds, their sense of humor, the various classes in the UK, all of that, coming from Canada was not natural, so I needed to understand the sensitivities around that as well. In the offshore jurisdictions, sensitivities to race and gender and language.

ED: And the Asian culture. FW: Yes. Understanding that and a lot of the nuances attached to that. For somebody that is new to Asia they would think there is just one culture. And it is not. It is a very complex cornucopia of cultures. Even within Southeast Asia it’s all very different. Even for Chinese

speakers it’s very different. For someone from Hong Kong who is a Cantonese speaker it’s different than for someone from the Mainland, who is then very different from someone who can speak the language, but who might have been raised in England, or in the US or from Taiwan. I love those differences – they’re absolutely fascinating. ED: Do you think you were able to bridge them because you come from both worlds? FW: Yes, I definitely felt that. The other day my youngest son was saying that sometimes as a third culture kid he doesn’t fit in. I said, you know what, at no point have I felt I ever fit in 100 percent anywhere. But I think that’s a strength. It means that wherever you are, you turn on the facet that allows you to fit in the most. And that allows you to go somewhere else and turn on a different facet that allows you to fit in. I think that’s okay because at the end of the day we are all unique. The fact that you’re not going to be comfortable 100 percent of the time I think is good, because that means you continue to try to comprehend, and learn and understand. So my acting as a bridge was definitely one of the features that helped.

ED: What advice would you give to young people, seeing what you’ve seen over the last 25 years? FW: I fully acknowledge for young people today, it’s very challenging because innovation is happening at such a pace that we never experienced. But I guess if you go back 100 years, 100 and 50 years, our previous generations had a tough time too. At each moment in time they will encounter their unique set of challenging environments or opportunities. So I would say, for a young person wanting to go into the financial services industry, identify what area you’re passionate about or that you’re interested in. Don’t just look at it as a means to an end. And then when you identify that area, think all you can about that area and show your enthusiasm, that passion, whether you’re going to university or you’re finding your first job. Because wherever you go, people are seeking those kinds of people who they see can bring the organization to the next level. It’s not just about talk (I’m going to do this) but you’re already doing it and the organization can see that you’re doing it,so they will naturally give it to you. They can see you are already in the saddle and participating. If it’s something that’s yet to be done, then volunteer your time. Also be interested in how things fit together, rather than looking at things through a narrow lens. Offshore is by itself already very niche, so you need to find a way how

offshore can help or fits in, or how it will sell to international business. That means you really need to be quite current on developments or even ahead of the curve on developments. You need to read and talk to people.

ED: What do you see as the disruptors in the industry? FW: Definitely technology. Artificial intelligence is happening at a fantastic pace. The digitalization of everything, even when you are talking about law or the financial industry, the pace at which they can use artificial intelligence to consume information, to analyze it, and also to learn how to make decisions, is happening. Humans or mankind will need to find a way to make a difference from an emotional aspect rather than purely an analytical aspect. I can see that as being very much a disruptor. What that means is that a lot of the labor intensive technical review of documentation or a technical review of the latest fund, those are going to be replaced. Never mind manual labor. So in the next 10, 15, 20 years it’s going to be very difficult to predict what the next big professional career is going to be. That means that it’s all the more important to stay ahead of the curve. Governments need to be that much more nimble in predicting.

ED: What else besides technology is driving the offshore financial services industry in the Asian market? FW: Going back three or four years Asia benefitted from being a little bit insulated from the developments that were happening in the UK and in the US by way of FATCA, CRS and other developments. Certainly in the past two to three years, as Asia has become more and more integrated, they are less insulated. That and the fact that China is going outbound, it’s more difficult for them to be insulated. On the political side, all these developments that you are seeing – the US pulling out of the Paris accord, and the US pulling away from the TPP, it means that Asia is more and more on the rise, particularly China, in terms of its role and reputation on the world stage. So that means it’s difficult for Asia to be insulated from international regulations and demands. There’s been a lot of pressure on the offshore industry in terms of OECD, FATCA and CRS, but in a way it just means that offshore will be narrowed, there will be less competition and there will be an elite stable of offshore jurisdictions that will be well recognized and blue chip. Equally, there will be more of a hybrid that’s developing in offshore between the

onshore / offshore space. That means some of the onshores will be taking on some of the offshore characteristics and offshore taking on more of the onshore hybrid characteristics in order to comply in the race to become blue chip jurisdictions.

ED: How do you see the BVI performing? FW: The BVI is in a very strong position in Asia, and has had that position of ubiquity and volume during the past five to seven years of increasing sophistication in the use of the BVI. Having said that, I think the BVI is at a crossroads now in terms of where it wants to take the next phase because it is very, very clear to me at least that it cannot rest on its laurels. So it needs to innovate and disrupt quickly. In a way it’s in a strong position because Asia is still growing and developing and China is very dominant in terms of its position on the world stage both economically and politically as well. So how does the BVI align itself in assisting China and Asia and achieving Asia’s own growth plans, in a strong and reputable manner. That will probably entail continued investment and staying power by the BVI. But it also means that because of limited resources, it’s very difficult to put too many eggs in all the baskets. You need to have the conviction to stick with the plan, whatever it is, and enhance dialogue on that stage. There’s a lot to play for. Just look at China’s Belt and Road Initiative. That’s huge in terms of the infrastructure and investment that’s running west all the way through Asia to Europe. There’s a lot the BVI can do to assist and aid and participate. That’s part of the BVI bank trying to assist in getting over that hurdle. It’s also engaging with tax practitioners to educate them, and also speaking with private banks and getting them to understand. It’s good to band together with the offshore community, it’s only in that way that you can have a stronger and louder voice, particularly when you are combatting onshore and governments’ inclination to increase tax revenues.

ED: So what does the next chapter look like for you? FW: I think right now I’m just focused on taking a bit of a breather. I have a number of priorities that I have long neglected, including family and parents and a bit of travel. After that it’s a really an open world for me. I’m trying to discover it and embrace it. B AUGUST 2017 EDITION








Profile for Business BVI

Business BVI August 2017  

Business BVI August 2017