The British Virgin Islands (BVI) has formally announced plans to create a publicly accessible register of company ownership by 2023 in an effort to clamp down on corruption.
The long-awaited announcement follows years of scandals relating to money-laundering and tax evasion involving BVI-based shell companies, most recently the FinCen Files.
This [is a] positive step towards greater transparency and clarity of corporate structures, which should help stem the flow of illicit funds around the world feeding the engine of organized crime."
Andrew Fahie, the BVI premier and also minister of finance, addressed parliament yesterday to reconfirm its "commitment": "The format must be in line with international standards and best practices as they develop globally and, at least, as implemented by EU member states. In advancing this commitment, we will be informed at all times by global best practice at the time within a timeframe that we consider deliverable."
Beneficial owners are persons who own property rights to a company even though the legal title of the property is in another person's name. The registers seek to make the identities of these "secret owners" public and other overseas territories are said to have already decided to implement them.
Michael Harris, Financial Crime Compliance at LexisNexis Risk Solutions said he welcomes "this positive step towards greater transparency and clarity of corporate structures, which should help stem the flow of illicit funds around the world feeding the engine of organized crime."
However, Harris went on, "It's worth noting that for financial crime compliance teams, identifying beneficial owners is often a difficult and imprecise task - especially if done manually. All too often financial criminals create complex corporate structures, covering multiple jurisdictions, to move illicit money around the world without detection, making it difficult to identify who the actual owner is."
"As the changes won't be effective for at least 3 years, we are yet to see what this will look like in practice for financial crime investigation. As ever, the devil is in the detail, and so we must wait to see how this will actually work, and if it will truly be effective," he said.