In just over 30 years the British Virgin Islands (BVI) has firmly established itself as one of the world’s leading international finance centres and the go-to jurisdiction for the incorporation of companies – especially those created to facilitate cross-border trade, investment and business.
The foundations of the BVI’s success are its modern, flexible and efficient company, trust, and funds legislation which has been tailored to the needs of global business; its sound and stable government and respected financial regulation; and its cost effectiveness in addition to its tax neutrality. An important element remains the culture of collaboration that exists between regulator and regulated alike, leading to regulatory changes that are practical, proportionate and workable. Perhaps this is best evidenced via BVI Finance’s many Working Groups which pool experts from all elements of financial services. The BVI has attracted a global talent pool with world-class expertise across the spectrum of international finance, from company incorporation through to mergers and acquisitions and advisory services on a range of complex global cross-border deals.
One of the hallmarks of the BVI has been its track record of international cooperation and efforts to maintain and often surpass international standards. We are continuing to engage with the relevant countries and authorities on the practical application of new global standards whilst ensuring the continued success of the BVI’s international business and finance centre and its positive role in the global economy. The combination of all these factors has ensured the BVI remains a business-friendly environment, attracting business from an increasingly broad global base.
Future-proofing For Growth
During these uniquely challenging and uncertain times, investors, business and clients drew confidence not only from the strength of the BVI’s reputation in financial services but also for its resilience in the face of crisis. With the challenges brought by the arrival of a Global Pandemic at the beginning of 2020, we sought to address the immediate needs of BVI businesses and the safety of our local workforce and community. Using this as an opportunity, we accelerated our own digital transformation in terms of business and working practices with a long-term view that continued to innovate for growth. We quickly adopted new technologies to facilitate virtual events including conferences and round tables for international clients across regions such as Africa, China and Latin America. And our results that first year demonstrated the success of our wider initiatives. BVI registered companies were involved in global transactions worth US$5 billion during 2020 and incorporations in our jurisdiction dropped only slightly below 2019 levels. This growth trend carried into 2021 with company incorporations up by 62 per cent in the first three quarters (Q1-Q3) compared to the same period in 2020. There was also exponential growth in new Limited Partnerships (LPs) formed in Q3 2021 with an increase of 210.91 per cent on the same period in 2020.
Furthermore, while not a new innovation, the surge in global popularity of the Special Purpose Acquisition Company (SPAC) over the past two years, and in particular its increasing use in private equity and venture capital structures, has highlighted the attractiveness of the already innovative features of the BVI Business Company as a SPAC vehicle. The BVI has seen a good share of recent SPAC activity in large due to these key features of our Business Companies and surrounding company law, but also due to other favourable factors such as limited additional local mandatory regulatory compliance requirements, tax neutrality, and a highly efficient, competent and commercial legal and professional support infrastructure in the BVI.
In addition, we continued to innovate in terms of our service offering. For instance, we launched a Private Investment Fund (PIF) regime in the BVI which delivered a new-look regulatory framework for close-ended funds, including private equity and venture capital funds. Our highly successful Incubator Fund regime, already coveted by hedge fund managers, has also attracted significant custom from managers needing a digital or crypto solution for their fund structures.
Global Investor Confidence
A report by Capital Economics[i] indicated that approximately 40 per cent of the US$1.5 trillion that mediates through the BVI each year originates in China, while US$114 billion of outward investment stock comes from Latin America. These figures underpin the investment confidence we have in the Chinese and Latin American markets as growth drivers going forward. Key growth services for these developing markets include the family office model, the uptake of which is growing in territories across Asia where the culture of wealth creation still has ties to the family business. Family office requirements fit readily within the BVI client services suite and dovetail with the growth of philanthropy and ethical finance services provision. We have further nurtured our relationships with clients in China and Latin America through a series of virtual conferences to facilitate conversations on future trade and investment.
As the largest portion of BVI business continues to emerge from the Asia-Pacific region, we also expect to see significant growth in business from India as the south Asian nation’s finance sector is rapidly digitised. The Indian market is yet to mature and represents a significant development opportunity for the BVI in a similar manner to China. Indonesia, as Southeast Asia’s largest economy, offers similar development opportunities as it continues to grow and digitally transform over the coming decade. In the wider global context, Latin America, the Middle East, and Africa are all regions with as yet unfulfilled potential for the BVI as they continue to grow and share in the benefits of the global digital economy. Through conferences and events, we are continuing to facilitate discussions and nurture relationships with clients in developing markets.
A Leader In Data Technology
In the BVI, we view data technology as intrinsic to the future of the financial services industry. Data-driven regulation and compliance are key to global growth and success in the sector and the BVI is leading by example. For instance, the BVI government enacted the Data Protection Act (DPA), our regulatory equivalent to the EU’s General Data Protection Regulation (GDPR). The BVI is a regulation-focused, smart financial services centre where data technologies are a means to drive innovation, leverage value, increase efficiency, manage risk, and create new opportunities. Moreover, we view the automation of regulation and compliance as areas that offer significant potential to transform services and support the work of regulators at a local and global level. A good example of this can be seen in the success of the Beneficial Ownership Secure Search system (BOSSs), which we launched in 2017 to make company registration more efficient and robust for clients and to advance our reputation as a leader in regulatory innovation. BOSSs has been lauded by law enforcement authorities, such as the UK’s National Crime Agency (NCA), and we currently share critical information with more than 200 countries worldwide.
We continue to be at the forefront of jurisdictions leading the development of regulation for data technologies. We have focused on building a competitive advantage by providing the best environment for ﬁnancial technology (FinTech) fused with the strongest regulatory technology (RegTech). An example of this is the BVI FinTech Regulatory Sandbox which was developed to support FinTech innovators and the needs of financial services in testing new FinTech products. The sandbox enables the BVI Financial Services Commission (FSC) to assess new FinTech products for essential compliance with legal and regulatory requirements. Companies undergoing sandbox testing are afforded 18 months to conduct business in the BVI without a licence. Moreover, the BVI sandbox anticipates the needs of financial services providers and innovators striving to succeed in an irrevocably digitised global commercial environment.
Supporting The Global Village
The role of the BVI in facilitating cross-border business helps to make a “global village” based on investment and cooperation a reality. Over the past three decades, we have carefully and systematically increased the significance of our role in the global financial system through our leadership in regulatory development and services provision. Demonstrating the extent of our role in the “global village” today, research by Capital Economics found that the BVI mediates more than US$1.5 trillion in global investment and contributes over US$15 billion in tax to national revenues while supporting 2.2 million jobs worldwide. But the role of the BVI in global regulatory development is another vital strand of our contribution to the “global village”. We are steadfast in our commitment to meeting global standards through mutually beneficial collaborations with global regulators. For instance, we are a longstanding member of the OECD’s Global Forum on Tax and Exchange of Information and the Financial Action Task Force (FATF). In the wake of the global pandemic, the role of the BVI as a leading IFC has never been more critical and we are continuing to evolve our range of financial services in line with the challenges of today’s global business environment. In a world of globalised trade and capital investment, there will be an ever-increasing demand for financial services that facilitate efficient and secure cross-border transactions. And our commitment to the highest regulatory standards safeguards the integrity of our jurisdiction, BVI companies and their employees, and the benefits reaped by developing nations and the wider global economy through the services the BVI provides.
Simon is a senior financial services’ professional with strong GCC and international background and major experience in both public and in private sectors with an established track record of success in both regulator and regulated. He has significant experience in corporate governance and in turning around compliance and risk functions amidst increasing regulatory scrutiny. Combining an investigative background with 20+ years of first-hand experience of corporate governance, compliance, AML / CTF and risk management within the diverse international financial services sector, including designing and running comprehensive training programs. Significant policy and educational experience. Accountable executive for new regulatory implementation with close board level liaison. His remit has included the supervision of Islamic Financial Institutions as well as conventional Firms offering Islamic Windows.