As we have previously advised, the British Virgin Islands (BVI) is now implementing anti-money laundering policies passed late last year regarding ultimate beneficial ownership (UBO). The changes add to the jurisdiction’s reputation with the international community and we are hopeful they will result in benefits such as easing the process of opening bank accounts.
UBO Information Storage
When does this have to be completed by?
The Registered Agent in BVI is required to have all UBO information by 31 December 2016.
What sort of information will be stored at the Registered Agent?
Ultimate beneficial ownership of each BVI company is required to be submitted to and kept by its Registered Agent in BVI. The following information is required for each UBO holding 10% or more beneficial interest in each company:
- Full name
- Date of birth
- Residential address
Is this information public?
Even though the BVI has made various changes to its companies’ and AML legislation, the details of directors, shareholders and UBOs of BVI companies will not be publicly available as a result of those changes (unless in the case of a register of members a company elects to file with the Registrar).
What changes can I expect in the incorporation process?
On incorporation, UBO details as listed above will need to be submitted and recorded at the office of the Registered Agent.
Does this change the client due diligence (CDD) process?
No, CDD will be collected in the same manner as before other than that the UBO details listed may need to be provided earlier than was the case before. Delivery of documentation for KYC purposes will continue to operate on the same schedule as before and no new information is required.
What happens if we cannot submit the UBO details by 31 December 2016?
There are consequences better avoided. Under relevant AML legislation and regulation the Registered Agent is liable for a significant fine and other regulatory sanctions, should it not have UBO details on hand. Failure to comply is likely to cause the Registered Agent to resign and it will then be obligated under relevant legislation to report the company as non-compliant to the Financial Services Commission. All BVI companies are required to have a Registered Agent, so when approaching a new Registered Agent, the company would need to comply with the UBO policy in any event.
What is Marbury doing to help clients?
In reality, we have already pre-empted this change as we have always stored UBO information, as required by law. However, we will need to verify that the information is correct over the next few months and so will be checking in with our clients to ensure that the correct information is submitted to the Registered Agent in BVI.
Financial Record keeping for BVI companies
What is the current situation regarding financial records for BVI companies?
BVI companies are not required to be audited, but for some time it has been a requirement of BVI law that the directors have knowledge of the financial affairs of the company in respect of which they act as office holder. The responsibility rests with the company and its directors as one would expect.
What has changed and how does it affect BVI companies?
More recently, in light of Mutual Legal Assistance Treaties with various countries as supplemented by local BVI legislation, the focus is on company records being available to regulators in the event of an enforcement action. Changes to regulations will ensure that the company, or Registered Agent (as the case may be), has knowledge of where regulators can obtain financial information relevant to the company when needed.
What options exist regarding the location of accounting records?
A BVI company or a trustee can elect either:
- to keep the records at the office of the Registered Agent in the BVI; or
- to maintain its own records at a specified location
What if we choose to maintain financial records ourselves?
Where accounting records are not kept by the Registered Agent or trustee, as the case may be, a further obligation is placed on the entities to inform the Registered Agent or trustee of the location where the records are kept and to identify the person responsible for maintaining such records.
For existing companies/structures details will need to be progressively disclosed.
What about new companies, how can we best deal with this?
For new companies/structures, this information will be requested on incorporation and it is best practice to note the details on the First Resolution of the Directors in order to ensure compliance with the law.
What is Marbury doing to help clients?
Marbury will be in touch with our clients where we do not have financial record details and also to permit our clients to make an election of location where not already made.
Why is the BVI making these changes?
Since the global financial crisis at the end of the previous decade, international regulatory and law enforcement bodies have evolved the standards that financial services providers and jurisdictions must meet. Specifically, the requirement for UBO information and the filing of register of director information are both now international standards. In order for the BVI to remain a successful financial services jurisdiction, it is important that its legislation keeps pace with these requirements. The creation of a storage for UBO information was the next step and applies across most offshore jurisdictions.
For more information on any aspect of this briefing please contact any member of the Marbury team.