Fair Tax Foundation call on British Virgin Islands to overhaul beneficial ownership disclosure
The British Virgin Islands have, after much delay and prevarication, drafted proposals for access to their database of corporate beneficial ownership. However, their current proposal is woefully inadequate.
We would like to see the British Virgin Islands significantly enhance transparency and improve access to their beneficial ownership register.
Last week, we submitted a response to the government of the Virgin Islands’ consultation about providing more access to their beneficial ownership data.
A beneficial owner is the person or people who directly or indirectly own, control or benefit a business. At the Fair Tax Foundation, we believe publicly accessible beneficial ownership information is a key tenet of tax transparency. It prevents money laundering, tax evasion and corruption by identifying who is benefitting from company activities.
Our Fair Tax Mark standards require companies to clearly identify each person owning more than 10% of their business. If the owner is a company or trust, the ownership must be traced through that company or trust to the real people who benefit from those entities until the beneficial ownership of the business is made clear.
The British Virgin Islands’ proposal suggests a framework in which people with ‘legitimate interest’ – defined as those investigating financial crime or assisting with legal proceedings – can enter an arduous application process for beneficial ownership information. They must already know the ownership information they are seeking and can be refused. They cannot publish the information once they have it.
A move to grant access to beneficial ownership information to those with ‘legitimate interest’ is a step in the right direction. But we do not think this proposal is adequate in enhancing transparency, and may in fact be harmful.
Our response supports the recommendations of Transparency International UK, which are to:
- Broaden the register’s policy purpose and ensure those with a legitimate interest can access beneficial ownership data in line with the British Virgin Islands’ legal definition.
- Ensure generalised access to beneficial ownership information by recognising legitimate interest for a wide range of categories of the public. The restrictive circumstances under which legitimate interest can be claimed should be removed.
- Streamline the application process by reducing financial, administrative, and time-related burdens on applicants. Clear and concise guidance should be provided to ensure transparency and efficiency.
- Protect user confidentiality and freedom of expression by removing the tipping-off clause and gagging clauses and introducing safeguards to keep user identities confidential. Protections should be in place for those publishing data in the public interest.
- Enhance data usability by ensuring data accuracy and retention, allowing bulk downloads, and introducing lightweight terms and conditions that do not restrict activities related to the prevention, detection, investigation and prosecuting of money laundering, its predicate offences or terrorist financing.
- The Fair Tax Foundation response adds the British Virgin Islands should verify information inputted into the register.
Read our response here.
Read Transparency International UK’s response in full here.
