One of the guiding principles that has made the BVI the globally respected financial centre it is today is partnership between the private and public sectors. A close spirit of collaboration has enabled the jurisdiction to the requirements of an ever-changing global financial services industry.
This partnership has been all the more crucial following 12 months that have rocked the foundations of the financial industry across the world. Offshore centres have come up against a growing storm of criticism and blame for the wider economic crisis – as opposed to the onshore centres where most of the problems actually arose.
Regulation has become a focus of the debate. At the London G20 summit in April, the world’s leading powers called for a stronger, more globally consistent supervisory and regulatory framework for the financial sector, and implied that offshore centres were the weakest link.
Yet independent experts say the root of the problem has been much closer to home. In 2008, the International Monetary Fund noted that compliance and regulatory standards in many offshore jurisdictions were better than those in leading onshore centres such as New York and London.
The great importance placed on maintaining high standards by the independent regulator, the BVI Financial Services Commission, enabled it two years ago to become the first member of the International Organization of Securities Commissions to be admitted through Iosco’s Multilateral Memorandum of Understanding Concerning Consultation and Co-operation and the Exchange of Information. An extensive review concluded that the BVI’s legislative and institutional regimes on international co-operation met Iosco’s standards.
The Caribbean Financial Action Task Force has also highlighted the tremendous efforts undertaken by the BVI to ensure compliance with international anti-money laundering principles.
The G20 also highlighted the need for increased transparency in tax matters, and invited the Organization for Economic Co-operation and Development to assess the progress of international standards for the exchange of information. Today the BVI is on the OECD’s white list, having signed 15 tax information exchange agreements, and is committed to meeting future standards as they evolve.
The quality of its regulation is a key reason why the BVI plays host to so many fund managers and administrators, as the world’s second largest hedge fund domicile with clients from the US, UK, Europe, the Middle East and Asia.
The BVI’s forthcoming Securities and Investment Business Act will further enhance the regulatory regime applicable to the fund industry, enhancing its ability to serve alternative investment clients in Europe and elsewhere and maintaining an attractive environment not only for fund managers but administrators, lawyers and custodians.
The past 12 months have seen an unprecedented challenge for the global financial sector, and a new era has dawned not just for offshore centres but for the financial services industry as a whole, but we embrace the challenges and opportunities.
The government and the BVI Financial Services Commission led by Robert Mathavious will continue to foster a spirit embracing both robust regulation and co-operation with the private sector. By standing firm together, meeting international standards and staying ahead of the curve, the BVI will continue to succeed and prosper in the years to come.
Alicia Green is a senior research analyst with the BVI International Finance Centre