BVI Territory Signs TIEA wil Ireland and China

December 7. The British Virgin Islands signed tax information exchange agreement with Ireland. The TIEA is based on a model agreement developed by the OECD, and will allow the British Virgin Islands to send requests to the Revenue Commissioners to obtain and provide information needed in the course of its tax investigations. Also, after this document is signed, the Revenue Commissioners from Ireland may request information from their counterpart in the British Virgin Islands.

The information relevant to Ireland's tax investigation issues in most cases would concern the bank accounts or the beneficial ownership of companies or trusts.

Another TIEA was concluded between the BVI and China, signed by BVI Premier and Minister of Finance, Ralph O’Neal and Chinese Deputy Commissioner of the State Administration of Taxation, Qian Guanlin.

In his statement after signing the agreements, O'Neal remarked that they were a significant milestone in relations between the Governments of the British Virgin Islands, China and Ireland, and expressed the commitment to examine other areas of mutual co-operation and benefit.

Previous TIEA was concluded by the BVI with the Kingdom of Netherlands in September 2009. With signing of these two agreements, total number of tax exchange agreements signed by the BVI Territory reached 17.

BVI and Channel Islands accept Britain's businessmen

Daily Telegraph informed that the UK businessmen and financiers re-register their companies businesses outside the country in order to avoid 50 per cent income tax rate. Many British companies have registered in the Channel Islands offshore jurisdictions like Jersey, Guernsey and the Isle of Man. The British Virgin Islands are among the tax havens where number of registered UK companies has increased in the last year.

There are now 6, 729 UK company directors in the Channel Islands and the Isle of Man, and 615 in the British overseas territory, BVI. Among those company directors there are bankers, hedge fund managers and the owners of health care companies, property firms and luxury travel firms. Some of them consider that the UK tax model is broken, and the 50 per cent rate has become the last straw for them. Now about 10 Britain's entrepreneurs per week are leaving the UK mainly for the three Crown Dependencies and for the BVI.

BVI Premier Attended Eleventh OTCC Meeting

On December 9, the Overseas Territories Minister at the Foreign and Commonwealth Office in the UK Chris Bryant hosted the eleventh meeting of the Overseas Territories Consultative Council (OTCC) in London. The meeting was attended by Premiers, Chief Ministers and other representatives of the UK Overseas Territories - Anguilla, Ascension, Bermuda, British Virgin Islands, Cayman Islands, Falkland Islands, Montserrat, Pitcairn, St Helena, Tristan da Cunha, Turks and Caicos Islands. The BVI Territory was represented by Premier Hon. Ralph O'Neal.

This was the first OTCC meeting hosted by Mr. Bryant, who followed Gillian Merron in the post of Foreign Office Minister. In his statement after the Consultative Council, Christ Bryant said that members of the meeting covered a lot of issues over the 7-9 December, during the discussions that were wide-ranging, open and constructive.

On Monday 7 December, Mr. Bryant met leaders from five Caribbean British Overseas Territories - Anguilla, British Virgin Islands, Bermuda, Cayman Islands and Montserrat. The discussion was focused on the extent and nature of the UK government's liabilities in the Caribbean Overseas Territories and their role in managing them.

Also, at the request of the Territories' leaders, on 8 December - the day before the Consultative Council - a Forum was held to review the 1999 Government White Paper “Partnership for Progress and Prosperity - Britain and the Overseas Territories”. The White Paper established the principles that have guided the relationship between the UK and Territories since 1999, and the Forum became the first stage of a consultation process on the future of the UK/OT relationship.

BVI FSC Issued Advisory Warnings on Financial Services Companies

On November 17, 2009, the British Virgin Islands Financial Services Commission published Advisory Warnings concerning two offshore companies. One of the documents issued under Section 4 (1) (l) of the Financial Services Commission Act, 2001 informs the public that the company named Golden Gate Education Ltd., also known as Golden Gate Ltd. and FinancerzWorld, is not licensed to conduct financial services business in or from within the British Virgin islands.

By the second document the BVI FSC warns the public that another company, FX World Online Ltd, is not licensed to carry on financial services business in or from within the territory.

The Commission advises the public to exercise extreme caution in conducting any transactions with FX World Online Ltd. and Golden Gate Education Ltd (also Golden Gate Ltd. and FinancerzWorld). The Advisory Warnings on these companies are the 23rd and 24th documents of this category in the year 2009.

BVI FSC Issues Advisory Warnings on Two Companies

The British Virgin Islands Financial Services Commission has issued Advisory Warnings No. 21 and 22 of 2009.

One of the documents both dated November 6 concerns Offshore Asset Management Inc. The Commission informs the public that this offshore company is not incorporated in the British Virgin Islands, and is not licensed to conduct any financial services business in or from within the jurisdiction.

The second Advisory Warning provides information that HMNH Capital Management Ltd., also known as HMNH Capital Ltd, is not registered or incorporated in BVI and is not licensed to carry on financial services business in or from within the BVI territory.

Minister Julian Fraser Honoured by the League of BVIslanders in USVI

The Minister for Communications and Works of the British Virgin Islands Honourable Julian Fraser became one of Virgin Islanders honoured by the League of British Virgin Islanders during the 11th Annual Norwell Harrigan Memorial Scholarship Luncheon which was held on November 8, 2009 on St. Thomas, US Virgin Islands. The ceremony was attended by over 200 persons from both parts of the Virgin Islands, including BVI Premier Hon. Ralph O’Neal and Minister for Education and Culture Hon. Andrew Fahie. Premier O’Neal welcomed Fraser’s award.

The League of British Virgin Islanders is a non-profit organization incorporated in 1988 in the U.S. Virgin Islands, with purpose to unite the people of the BVI and the USVI in their social activities.

The Norwell Harrigan Memorial Scholarship provides financial assistance to British Virgin Islanders who have graduated from a secondary school or the H. Lavity Stoutt Community College in the BVI to attend the University of the Virgin Islands in the USVI.

The BVI Minister was honoured by the League for his accomplishments in many fields. While living in the U.S. he was involved in many architectural projects; on his return to the BVI, he actively participated in community activities. In 2007, Hon. Fraser was re-elected already to a third term as a Member of the House of Assembly, and became the Minister for Communications and Works.

Next day after the ceremony, the Minister for Communications and Works gave opening remarks at the 49th Session of Caribbean Meteorological Council. During the interview with the Department of Information and Public Relations, Hon. Julian Fraser spoke about the need to implement a local meteorological office, having admitted that meteorology is one of the subjects which has not been at the forefront of his responsibilities. He expressed hope that the presence of the Caribbean Meteorological Council will help to improve the situation.

Britain advices BVI and other tax havens to implement more taxes

On October 29, 2009, an independent review commissioned by the UK Government was issued, led by Michael Foot, former managing director of the UK's Financial Services Authority. The main concern of the report is the analysis of the situation in the offshore financial centres that are British Crown dependencies. These are Guernsey, Isle of Man and Jersey (where the situation is more favorable than in remote jurisdictions), and offshore territories Anguilla, Bermuda, British Virgin Islands, Cayman Islands, Gibraltar, Turks and Caicos. All these countries have suffered from the global financial downturn, because their economy was to a much extent based on international finances, and, as Mr. Foot noted in the report, they must review their taxation policy to improve the situation.

Foot argued that the Caribbean offshore centres, including the British Virgin Islands, needed a diversified tax base. By his words, there is a need for value-added taxes, as well as corporate taxes, levied on companies' profits. These new taxes may be of great impact for the Caribbean tax havens, which have attracted international businesses by their low tax rates: the report states that the BVI and other British territories comprise nearly two-thirds of the offshore market.

Some of the offshore centres refused the implementation of new taxes, but Foot said that keeping tax rates too low might be harmful in the long-term and contribute to the increase of international pressure on tax havens.

Foot also said in the report that many of the territories received lower revenues as the sectors of tourism and finance which were of main importance for their economy suffered very much because of the worldwide economic crisis.

The report received the support of Government of Great Britain, which has varying degrees of control over the territories' domestic and foreign policy. By words of Stephen Timms, the Financial Secretary to Britain's Treasury, this report “sends a strong signal to overseas financial centres that they must ensure that they have the correct regulation and supervision in place.”

BVI FSC Issued Fifteenth Volume of Statistical Bulletin

On October 20, BVI FSC published fifteenth volume of its regular Statistical Bulletin, including statistics and analysis of financial services industry in BVI for the second quarter of 2009. The Statistical Bulletin for Q2 ended 30 June 2009 comprises following information:

The Registry of Corporate Affairs reported that the number of newly registered business companies in this period was 9,871, compared to 12,307 in the first quarter of 2009 (fourteenth volume of Statistical Bulletin) and 15,831 in the second quarter of 2008. Cumulative number of company registrations by the end of Q2 2009 was 405,873. The Registry informed of 24 Limited Partnerships established in the reported period, compared to 14 and 26 established in Q1 2009 and Q2 2008 respectively. In general, there is a significant fall in the number of BVI business company incorporations in the first half of 2009, against the statistics for the corresponding periods of 2008, 2007 (when the largest number of incorporations was fixed) and even 2006.

Banking and Fiduciary Services statistics includes financial results of the banking sector of BVI for the second quarter of 2009: total assets for the commercial banks were reported in the amount of US$2480mln, the number of total cash items made US$967,4mln. Total shareholders equity in this period was US$339,59mln. Net income in the banking sector was US$33,44mln. The level of liquidity was higher than in the first quarter of 2009: liquid assets made 29.32% of the total assets and 46.48% of the total deposits (compared to 25.25% and 35.73% respectively in Q1 2009), and loans made 61.75% of total assets and 98.71% of total deposits in the second quarter (compared to 68.41% and 103.93% respectively in Q1).

According to the Investment Business Statistics, in Q2 2009 46 new licenses were granted to mutual funds (33 of which are professional funds, 12 are private funds and 1 is public fund), compared to 61 licenses issued in Q1 2009 and 100 licenses in Q2 2008. As to Insolvency Services Statistics, the number of Insolvency practitioners did not change from the previous reported period. Legal and International Co-operation Statistics figures for the reported period show that there were 45 international co-operation matters, including formal and informal requests, 53 enforcement matters and 9 advisory warnings issued.

Other information related to the regulation of financial services activities in the period ended 30 June 2009, including legal and international co-operation, on-site compliance inspections, ongoing supervision by the Licensing and Supervisory Committee and other matters can be found on the home page of BVI FSC.

BVI Government to Give Regulatory Approval to CFC

The Minister for Communications and Works of the British Virgin Islands and the Telecommunications Regulatory Commission have approved the application of National Rural Utilities Cooperative Finance Corporation (CFC) to acquire BVI Cable TV Ltd.

National Rural Utilities Cooperative Finance Corporation is a cooperative that serves BVI rural utility systems, providing its members with an assured source of market-priced capital and financial products and services. The company has more than $20 billion in assets. Last January, CFC announced that it would make a credit bid to acquire the outstanding stock of BVI Cable and other companies owned by the Innovative Communication Corporation (ICC).

The credit bid is conditioned on approval of regulatory authorities in the jurisdictions where ICC's companies are operating. Prior to receiving the approval of BVI authorities, CFC had already received interim bankruptcy court approval and U.S. antitrust clearance approval. After receiving the remaining approvals, CFC will apply to the bankruptcy court for authorization to proceed with the transfer of control process, acquire and rehabilitate BVI Cable and other ICC-owned companies in the U.S. Virgin Islands and Dutch St. Maarten.

BVI and Other Jurisdictions Protest Against Blaming Them

After the summit of the G-20 leaders, which was held on September 24-25 in Pittsburgh, Pennsylvania, offshore jurisdictions in the Caribbean and Atlantic regions started to protest against the attempts of the countries of the Group 20 to penalise them for not complying with taxation and transparency standards, which only become stricter, and take other steps that make the offshore centres the image of shady tax havens.

The leaders, policymakers and business chiefs of the offshore centres, including the Cayman Islands, the British Virgin Islands, Bermuda, Belize and many others, expressed the common opinion that their countries are used as the scapegoats for the global financial crisis and downturn. By their words, it is not fair that they are treated as hide-outs for tax evaders and crooks, and this anti-tax haven “finger pointing” is just the attempt to shift blame away from the policies and tax regulation methods of the world's economic leaders.

In April 2009, the leaders of G20 group and the OECD issued the “grey list” of offshore countries which did not fully comply with internationally agreed tax standards. There were more than 12 Caribbean jurisdictions on the list, including BVI and Bermuda. The governments of these countries made efforts to get themselves out of this list, and most of them succeeded in it, signing 12 bilateral tax agreements. BVI and the Caymans were excluded from the “grey list” in July 2009, Bermuda was moved to the “white list” in June, and other Caribbean states are signing tax treaties.

BVI Premier Supports New OECS Chairman

BVI Premier Honourable Ralph T. O’Neal has expressed full support to the Prime Minister of St. Kitts and Nevis Dr. Denzil Douglas, after he was appointed the chairman of the OECS Authority, and to the work of the OECS Secretariat under his leadership.

Dr. Douglas should have assumed this post in November 2009, but the OECS Director General Dr. Len Ishmael asked him to take up the chairmanship a month earlier. The decision of the new Chief Minister Honourable Reuben Meade not to assume the chairmanship of the OECS Authority to the Prime Minister of Montserrat followed the recent change of its Government.

Subject to approval by all members of the OECS Authority, Dr. Douglas will assume the chairmanship at the 50th Meeting of the OECS Authority which will take place in Anguilla in November 19-20. The previous 49th Meeting of the the highest decision making body of the Organisation of Eastern Caribbean States was held in the British Virgin Islands in May 20-22.

BVI Joins the Observance of Caribbean Statistics Day

The British Virgin Islands Government will observe Caribbean Statistics Day on October 15, along with other Caribbean Community (CARICOM) countries. This became the result of discussions during the 33rd Meeting of the Standing Committee of Caribbean Statisticians (SCCS), which was held in October last year and attended by representatives of CARICOM member countries’ statistical offices.

The themes of the Statistics Day will be Better Statistics, Better Management and Better development Outcomes. The Development Planning Unit (DPU), which is the Government agency responsible for acquiring and analyzing statistics, will coordinate the activities of the day. Ms. Patlian Johnson, the Acting Director of the Unit, explained the main idea of the observance of this day as highlighting “the role of statistics in decision making and in facilitating economic planning and analysis.”

Central activity of the Caribbean Statistics day in BVI will be a discussion focusing on the Importance of Statistics for the development of the territory. According to the Acting DPU director, the discussion board will include experts in the areas of statistics, economic development, finance and socio-economic research.

New Appointments to BVI Boards

The Premier of the British Virgin Islands and Minister of Finance and Tourism Hon. Ralph T. O’Neal, OBE announced the appointment of five persons to three boards in the territory. On September 23, 2009, BVI Financial Secretary Neil Smith was appointed the Deputy Chairman of the Social Security Board. His appointment to this position is effective May 1, 2009 to August 31, 2010.

Mr. Anselmo Stevens and Mrs. Myrna Todman-Herbert were appointed to the Planning Authority. Their appointment is effective June 10, 2009, Mr. Stevens will serve for three years and Mrs. Myrna Todman-Herbert is appointed for a period of two years.

Also, Mr. Mike Rowe and Mr. Ajit George were appointed to the BVI Tourist Board, and will serve during four years effective June 15, 2009.

BVI Signs TIEAs with the Kingdom of Netherlands, the Netherland Antilles and Aruba

In the mid of September, the Premier and Minister of Finance of the British Virgin Islands, Hon. Ralph T. O’Neal, OBE , signed additional Tax Information Exchange Agreements with the Kingdom of the Netherlands, the Netherland Antilles and Aruba. After signing these TIEAs, the number of agreements signed by the BVI achieved 15.

The BVI and the Netherlands already have legislation providing for co-operation and the exchange of information in tax matters. The new TIEA between the British Virgin Islands and the Netherlands will allow the exchange of information by request on civil and criminal tax matters.

The Netherlands State Secretary for Finance welcomed the signing of the Agreement. Both jurisdictions expressed common intention to pursue other areas of mutual co-operation to further develop their relations. The Kingdom of the Netherlands also further recognised the BVI Government's reputation as a constructive and co-operative member of the international community.

The 12 TIEAs standard set, that was required by the OECD, for the British Virgin Islands consisted of
the United States of America,
the United Kingdom,
Australia,
New Zealand,
France
and the Nordic Alliance including
Sweden,
Norway,
Finland,
Denmark,
Iceland,
The Faroes and
Greenland.

Premier O'Neal stated in his comments that the BVI is close to signing further TIEAs with other OECD countries with which they have not signed the agreements yet.

BVI FSC Issues Advisory Warnings on Financial Services Business Companies

On September 8 2009, the British Virgin Islands Financial Services Commission issued two Advisory Warnings concerning the following companies:

Exto Capital S.A.;
Sky Way Monetary Limited;
and Gulf International Investment Group Limited (GIIG 1982).

According to the documents published under Section 4 (1) (l) of the Financial Services Commission Act, 2001, these companies are not licensed to carry on financial services business in or from within the territory of the British Virgin Islands. The Commission advised members of the public to exercise extreme caution in conducting any transactions with these companies.

Members of the public are advised to exercise extreme caution in conducting any transactions with Exto Capital S.A.

The documents are signed by CEO of the BVI FSC Robert A. Mathavious.

Director of BVI European Office Returns to Conyers Dill & Pearman

Practicing lawyer Dawn Smith, which was appointed as the Director of the BVI London Office, has returned to the British Virgin Islands to rejoin the offshore law firm of Conyers Dill & Pearman. Before her appointment in August 2006, she was engaged in Conyers Dill as an associate attorney specialising in advising clients on the issues of commercial litigation and corporate law.

Dawn Smith graduated from Middlebury College, also she holds an LLB from the University of the West Indies in Barbados, a Certificate of Legal Education from Norman Manley Law School in Jamaica. She has the experience of work in various committees within the financial services industry.

In the post of Director of the BVI London Office, Smith served as the official representative of the British Virgin Islands in the UK and the whole European community, supporting the interests of the jurisdiction with various government agencies, departments, parliament and in diplomatic circles. In co-operation with the BVI International Finance Centre and Financial Services Commission, Dawn Smith worked on promotion of the jurisdiction's financial services industry.

According to press release issued by the Conyers Dill & Pearman, Dawn Smith was included into its BVI Litigation practice, along with Tameka Davis who specialises in commercial and corporate litigation and earlier worked with Anguilla law firm. Mark Forté, Head of Litigation in Conyers’ BVI office, in his comments on the new hires, noted that they have doubled their litigation team in BVI in the past months, and the return of Dawn Smith to the BVI legal community will add to the BVI high reputation in dispute resolutions.

Orlando Smith Speaks on Government's Achievements

The Leader of the Opposition Dr. Orlando Smith, in his interview on the Virgin Islands Party (VIP) mid term in office and their achievements, stated that one of the major branches of economy of the BVI territory, tourism, is neglected to some extent.

By words of Orlando Smith, the administration of Hon. Premier Ralph O’Neal is not putting enough emphasis on tourism, even taking into account the global economic situation. Dr. Smith stated that the government has not done enough for tourism industry, and the financing of the promotion of the BVI territory was not sufficient.

The Leader of the Opposition also talked about the development of financial services industry, which is as important for BVI as tourism, and which is becoming more challenging with the implementation of new international rules. He named some major achievements of the BVI government in the past year, among them the signing of the Territory's 12th Tax Exchange Information Agreement; he highly appreciated it as a real achievement, and reminded efficient work of the previous administration in establishing an International Affairs Secretariat.

Other successful accomplishments of the Government, in the opinion of the Opposition, were the successful hosting of the 49th Meeting of the OECS Authority, and the construction of the Commercial Court. However, Dr. Smith noted some troubles existing in the British Virgin Islands.

The administration of the Virgin Islands Party was elected exactly two years ago, in August 2007, and now Hon. Ralph O'Neal is to deliver a full speech highlighting Government's achievements. Further comments of the opposition are expected after it.

FSC Amendment Bill Passed by the House of Assembly

On August 11, 2009, the House of Assembly passed the Financial Services Commission (Amendment) Bill, 2009 with significant amendments to certain provisions in the Financial Services Commission Act, 2001. One of the important issues addressed by the Bill is the independence of the Financial Services Commission as a regulatory body, in response to the concerns of the financial services sector about the new duties imposed on authorized or registered agents.

The Bill addresses a loophole in the current legislation which did not allow the BVI FSC to take enforcement action against defaulting licensed entities, due to the inadvertence of their registered agents. However, the House of Assembly passed the final Bill without strict liability provisions for registered agents. When the agents report a breach or offence committed by their licensees to the licensee or the FSC, they are provided immunity. If they fail to comply, they may be subject to a fine not exceeding $25,000.00.

Also, the Bill requires that the reasons should be provided by the Cabinet for removing members of the Board and the Managing Director of the Commission. It should be said that under BVI law there is no requirement that reasons should be given for administrative decisions, and this amendment would bring greater transparency to the decision-making process by the FSC and greater independence to the FSC in conducting its regulatory functions.

When assented by the Governor, the Bill will require the Commission to publish its estimates, work plans, audited accounts and financial statements, and annual reports to ensure greater accountability.

Regular Volume of Statistical Bulletin Issued by the BVI FSC

On July 31, the BVI Financial Services Commission published the fourteenth volume of its Quarterly Statistical Bulletin providing information on financial services activities in the first quarter of the year (ended with March 2009). By the data of the Registry of Corporate Affairs, the number of new offshore company incorporations in this period made 12,307 - meaning there is quite a significant increase compared to the fourth quarter of 2008, but not a very large number compared to the first quarter of 2008, and especially to the same period of 2007. Also, in the first quarter of 2009 just 14 Limited Partnerships were established. The cumulative number of company incorporations as of March 31, 2009 was 435,679, and the number of limited partnerships was 596.

In the first quarter 2009, Banking & Fiduciary Services sector reported total assets of $2,362,258,000 and investments of $4,229,000. Total shareholders equity made $327,500,000. Banking sector reported net income in the amount of $20,060,000, and operating income of $29,463,000. Liquid assets made 25.25% of the total assets, and 35.73% of total deposits; loans made 68.41% of total assets and 103.93% of total deposits.

Investment Business statistics showed 10 licenses were newly issued to investment managers (cumulative number 504), and 61 Certificates of Recognition and Registration. Also, in the first quarter 2009 four Public Mutual Funds (bringing total number to 69) and one Private Mutual Fund (total number 20) were registered. According to the Insurance Services sector, in Qtr1 2009 1 new Captive Insurers license was issued and 265 renewed.

Legal and International Cooperation statistics showed that there were 42 International Cooperation matters, 27 of them requiring the disclosure of public information, 38 Enforcement Matters and 2 Advisory Warnings issued.

BVI Moves Out of OECD “grey list”

After the British Virgin Islands signed tax information exchange agreement with New Zealand, which became its 12th pact, it came in line with OECD standards for moving it to the “white list” of jurisdictions. So, last week BVI and the Cayman Islands joined the list of countries using internationally recognized tax standards, as it was said by the Organization for Economic Cooperation and Development.

Since April 2009, when the G20 group of countries in co-operation with the OECD published a “grey list” of more than 30 countries, including BVI, that had agreed to move towards tax transparency standards but had not signed the necessary international records.

To get off the list, governments of these financial centres had to sign at least 12 bilateral tax agreements in line with OECD standards. Both the British Virgin Islands and the Cayman Islands signed pacts with New Zealand to provide the needed amount of bilateral treaties.

By words of the head of the OECD's Center for Tax Policy and Administration, Jeffrey Owens, the British Virgin Islands and the Cayman Islands took their place “alongside other countries that have substantially implemented the internationally agreed tax standard." He added that since April, six jurisdictions have moved to the “white” list.

By signing the 12th agreement and moving from the “grey list” of jurisdictions, BVI can avoid the accusations of being non-cooperative center favouring tax evaders and harboring those who hide billions of dollars out of reach of their home authorities.

BVI FSC Issues Anti-Money Laundering Code of Practice

In July, the BVI Financial Services Commission published a document relevant to the Anti-Money laundering legislation. The Anti-money Laundering and Terrorist Financing Code of Practice, 2008 is consolidated by the Financial Services Commission on 17 February, 2009, in accordance with section 27 (1) of the Proceeds of Criminal Conduct Act, 1997, and after consultations with the Anti-Money Laundering and Terrorist Financing Advisory Committee.

As it is set in the Code, the objective of the supplementary legislation document is to provide greater understanding and appreciation of “ the current legal, regulatory and enforcement regimes with respect to compliance with anti-money laundering and terrorist financing measures.” The provisions of the Code establish the proportionate duties of the Financial Investigation Agency and the FSC, establish the internal control systems and requirements to customer due diligence, provide information on shell banks and correspondent banking relationships, wire transfers, record keeping and employee training.

The Schedules of the document include: best practices for charities and other non-profit associations, the list of recognized jurisdictions, the types of suspicious activities, and the table of offences and administrative penalties.

The BVI, as one of the major financial services providers, has to ensure compliance with internationally established standards of regulation and enforcement relating to anti-money laundering and countering terrorism financing. The BVI is required to fully comply with the requirements of the 49 FATF Recommendations, and it fully observes the established standards of international organizations of which it has membership - International Organisation of Securities Commissions (IOSCO), International Association of Insurance Supervisors (IAIS), Offshore Group of Banking Supervisors (OGBS) and Egmont group. The Code is aimed at achieving good corporate governance and the promotion of international co-operation to ensure financial stability; the document is setting down minimum standards of compliance, which will assist to develop and implement systems that effectively combat abusing the legitimate tools of business transactions through criminal conduct.

The Code in fact supplements the provisions of the following documents: the Drug Trafficking Act, 1992, Proceeds of Criminal Conduct Act, 1997, Financial Investigation Agency Act, 2003, the Terrorism (United Nations and Other Measures (Overseas Territories) Order 2001, the Anti-terrorism (Financial and Other Measures) (Overseas Territories) Order 2002 and Antimoney Laundering Regulations, 2008.

New Warnings Published by the Commission

On July 10 - 13, 2009, the BVI FSC published several documents warning the public on firms that are not licensed to carry on business in or from the territory of the British Virgin Islands. Among the firms that are not authorized to carry on financial services business in BVI there are:
- SP Trade Investments Capital Ltd.
- SP Trader Management Company Ltd.
- Taurus Global Markets Ltd.
- iTrade Capital Markets Ltd.
- Marketiva Corporation
- Pro Finance Group Inc. (PFGFX)

The Commission advised the public to be cautious in transactions with the following companies which are not licensed to carry on banking or financial services business in BVI:
- MBC Financial Services Ltd.
- Multiple Banks Clearing (MBC FX)

The companies that are not licensed to carry on registered agent services business in the British Virgin Islands, and are not incorporated in the British Virgin Islands are:
- Gold-Tech (GT) Services Limited
- Kaizen Corporate Services Limited
- CC Logic LLC

Also, the FSC informed the public that European Direct International Insurance Limited is not licensed to carry on insurance business in or from within the territory, and is not registered or incorporated in the British Virgin Islands.

Advisory Warnings No. 10 - 18 of 2009 were issued under Section 4 (1) (l) of the Financial Services Commission Act, 2001, and signed by Robert A. Mathavious.

Financing and Money Services Act Published by the FSC

On July 13, 2009, the BVI FS Commission published Financing and Money Services Act, 2009. The document which was finally passed on May 26 2009 and signed by the BVI governor David Pearey includes provisions on licensing, registration and supervision of financing business and money services business carried in or from the jurisdiction. The purpose of the Act is to fully comply with the FATF recommendation for all physical and legal persons who provide money or value transfer services to be licensed or registered.

The Act concerns the BVI business companies and foreign companies engaged in financing business or money services business; it does not apply to companies licensed under the Banks and Trust Companies Act, 1990 (for them there is a separate statutory licensing regime).

The Act makes it a criminal offence for a person to carry on a non-bank financial business or money services business unless it is a BVI business company or foreign company licensed under the Act. Also, according to this document, a licensee is required to comply with certain imperatives especially related to the preparation of financial statements and audit. These requirements are stated in the Act.

Further provisions of the document are related to general supervisory matters - professional indemnity and other insurance, submission of returns and reporting of information to FSC, requirements on market conduct and change of name. The Commission may require licensee to change name under which it carries on business.

The final part of the Act includes miscellaneous provisions which outline the manner of submitting applications for licences, maintenance and inspection of a register of licensees, electronic filing, etc. The two Schedules of the Act are dealing with modifications to the Act and the Financial Services Commission Act, 2001, and the applicable penalties to the offences outlined in the Act.

The Commission Warns Investors on Forex Currency Trading Frauds

The BVI FSC has issued an advisory warning to investors to beware them of Foreign Exchange Currency Trading Frauds. The warning issued under Section 4 (1) (1) of the Financial Services Commission Act, 2001, informs the public that the entities professing to offer high yield and low risk investment opportunities from investments in foreign currency contracts “are normally scams”. In the opinion of the Commission, these entities may look like a new sophisticated form of investment opportunities, but in reality these are financial frauds “especially perpetrated on retail customers”.

The Commission explains that Forex scams may be widely advertised, and the customers are told that they will obtain tens of thousands of dollars in a few weeks or months. After the currency trading firms tell the customers that they can or should trade in the interbank market, or that they will do so on their behalf, customers' money is diverted or simply stolen.

It is noted in the document that the interbank market does not usually include individual or retail customers, and the claims on the possibility of trading in this market should therefore be treated with extreme caution. The public is asked to note a number of warning signs that can point at foreign exchange scam, and not to invest in them.

The BVI FSC warns that if the companies do not inform customers on the risks involved, or even mislead them, then they would be involved in illegal schemes.

Ralph O'Neal Signs TIEA with France, BVI having talks with Netherlands

Last week, the Prime Minister of the British Virgin Islands Ralph O'Neal signed Tax Information Exchange Agreement with France. The signing of this TIEA which had been already announced in the beginning of June brings their number for BVI to eleven, while twelve are required by OECD in its report on tax transparency and information exchange standards.

The tax agreement with France was signed by BVI Prime Minister and French Budget Minister Eric Woerth who commented that the signing of the agreement was “further evidence of the British Virgin Islands' willingness to implement the OECD principles of transparency and information exchange.”

It is worth saying that in a press conference before the document signing O'Neal talked on territory's intention to be removed from the OECD grey list. He said that the last needed agreement will be signed soon, but BVI will continue negotiations with other countries like Germany, Austria, Brazil, Mexico, Argentina, Canada and as many countries as they will make contact with.

Another related information from Europe: The tax minister of Netherlands Jan Kees de Jager said on June 25, 2009 that his country has reached agreement with Switzerland on exchange of tax and banking information. He also mentioned that he already agreed deals with Belgium and Luxembourg, Bermuda, Guernsey and Jersey. Currently the talks are ongoing with the authorities of the British Virgin Islands, Cayman Islands and Singapore.

The Dutch minister commented the already signed tax agreement with Switzerland saying that “the measure on exchanging financial information is part of a revision of the tax treaty between the Netherlands and Switzerland.”

The Commission Issues Consultation Draft on Mutual Funds

On June 16, the British Virgin Islands Financial Services Commission has published Mutual Funds Regulations, 2009. This consultation draft document issued under the Securities and Investment Business Act, 2009, concerns private and professional funds, public funds, and their administration.

In the first part of the document, related to private and professional funds, the obligations on them are stated by the Commission, including directors, functionaries of private and professional fund, and investment warning; also, regulations and notifications on preparation and audit of financial statements for private and professional funds.

The second part of the document contains application for registration of public funds, content of prospectus of public fund,and other requirements for this type of mutual funds. The last part of the document is devoted to administration of the funds, and includes requirements for the registers. Schedule in the end of the document concerns information to be contained in Prospectus of a Public Fund in respect of the Manager, the Administrator, the Custodian, the Investment Adviser, the Director and other relevant persons of the fund.

Other points of the Schedule are the Constitution and Objectives of the fund, the Characteristics of Fund Interests in the fund, Valuation of fund property and fund interests, fees, distribution of income, issue and redemption of fund interests, some general and additional information.

BVI Financial Services Statistics for Q4 2008

In the end of May 2009, the Commission issued the thirteenth volume of Quarterly Statistical Bulletin, describing the situation in the financial services industry of the British Virgin Islands in the fourth quarter of 2008 and covering changes and progress in its different sectors.

The Registry of Corporate Affairs provided following statistical data for this period:
9,000 new companies were incorporated in the fourth quarter of 2008 – a decrease compared to 16,133 in Quarter 3 2008, and 17,513 in the fourth quarter of 2007. Cumulative amount of companies by the end of December 2008 was 414,620. In the reported period, 30 new Limited Partnerships were established – that is more than in Quarter 3 2008. Cumulative number of Limited Partnerships made 558.

If we have a look at the chart of company incorporations in the years 2005-2008, where statistical data are divided by quarters of the year, we can see that the most effective year by number of new incorporations was 2007, while this year was not so effective. This decline is certainly connected with global tendencies and the impact of financial crisis on the financial services industry of the British Virgin Islands.

Concerning the Banking & Fiduciary Services, 1 class I Trust licence was issued, bringing the cumulative number of this category of trust licences to 98 by the end of 2008. The Banking sector reported total assets of $2,363,702,000, total investments of $4,681. By commercial banks statistics, liquid assets made 46.48% of total deposits, return on assets made 2.16%, and average risk asset ratio was 27.82%.

Also, in the fourth quarter of 2008 11 new licenses were issued to investment managers and administrators, bringing the total number of licenses to 581.The number of professional mutual fund entities registered has grown to 1,894, compared to the same period of 2007. There were 831 private mutual funds and 228 public funds newly registered in the BVI.

The Insurance statistics showed that there were 11 new captive insurers licenses issued (4 in Q3 2008), 308 renewed and 68 cancelled. The reported insurance post licensing transactions: 6 directors appointments, 6 cases of shareholding change, 5 mergers and 5 liquidations. Also, 5 captive insurers and 1 domestic insurer received approvals for licensing.

In the sphere of Legal and International Co-operation, it was stated that just 12 co-operation matters were started – compared to 26 in the previous quarter; there were 12 onsite inspections held on trust companies and 4 inspections of investment businesses.

BVI premier going to France to sign tax agreement

On June 9, the Premier of the British Virgin Islands Ralph O'Neal reported during press conference about his plans to make visit to France, in order to sign Tax Information Exchange Agreement with French government. After the agreement with France will be signed, the number of TIEAs signed by the Territory will be already 11. So, the British Virgin Islands will come closer to the recommendations stated in the report issued by the Organisation for Economic Cooperation and Development and concerning tax transparency, and the new international tax standard of 12 tax treaties signed by each jurisdiction, established during the G-20 summit in April.

Ralph O'Neal stated in his comments that, after negotiations with France are complete and the TIEA signed, the BVI will continue to pursue similar agreements with other OECD countries in order to fully comply with the new standards, and be moved from the “grey” to the “white” list of jurisdictions. Some weeks ago, BVI Government signed tax treaties with the group of Nordic countries.

During the same press conference Premier was asked by media on the effects of the global financial crisis of the financial sector of the territory. He answered that the BVI Government is still “keeping a close eye on the Financial Sector”, but he did not say how many companies have been removed from the BVI IBC Register. He explained that the number of companies to be liquidated seems not to increase, but added that liquidation statistics solely cannot give information on how many companies in the industry have been affected.

BVI Business Companies Order Published by the Commission

On May 26, 2009 the Registry of Corporate Affairs of the British Virgin Islands issued BVI Business Companies Order, which is an amendment of Schedule 2 of the BVI Business Companies Act, 2004. The Order, which will be cited as the BVI Business Companies (Amendment of Schedule 2) Order, 2009, was made by the Cabinet on the advice of the Financial Services Commission.

The document adds some sub-paragraphs to the Part III of Schedule 2 of the Act, that comprise the following issues:

- Where a CapCo that is automatically re-registered was liable to file an annual return prior to this procedure, the requirement for such filing shall continue to apply for the period up to 31st December 2008, and any fee for the filing of the annual return shall not be applied or required by the Registrar.

- The annual return required to be filed for the year 2008 shall be filed by the new registered agent of the CapCo that is automatically re-registered, and all obligations relating to the filing of the annual return shall apply anyway.

- Registered agent will mean the person that is named so in the memorandum of the re-registered CapCo, or appointed by a resolution of directors or members of CapCo.

Part VI of Schedule 2 is amended in paragraph 40 by inserting some formulations, and paragraph 46 by replacing “two months” term by “six months” term, and by adding the new sub-paragraphs informing that, in case the company 'to which this Division applies' fails to comply with the requirements of sub-paragraph (2) within the specified period, the Registrar may strike it off the register. Also, this striking off of a company by the Registrar “shall be treated as if the failure by the company to appoint a registered agent or file a notice of appointment of a registered agent were in accordance with section 213 (1) (a).”.

The document was made by the Cabinet on 24th April, 2009, and signed by Cabinet Secretary Otto O'Neal.

OECS Heads Talk on the Results of the Meeting

OECS Heads of Government have summarized the results of the 49th OECS Meeting in BVI, which was named a watershed in the historical evolution of the organisation. The leaders of the countries of the organization stated its enhanced international profile: in recent times, new relationships have been or are formed, including that at the regional level with Brazil, Venezuela, Austria, Turkey, Spain, Mexico, Cuba, France, the US Virgin Islands, the EU organisation, Puerto Rico and Trinidad and Tobago.

During the meeting, the Governor of the US Virgin Islands was engaged in discussions on closer functional co-operation with other countries of the organisation. The Heads of Governments have mandated the OECS Secretariat to work along with the USVI Administration to complete a Memorandum of Understanding in order to facilitate the closer ties.

OECS Heads of Government confirmed their commitment to the ongoing process of deepening the regional integration movement, and stated that the inauguration of the OECS Economic Union will take place on June 18 2010. The Economic Union public education campaign, which has already been started in several countries, will give OECS nationals an opportunity to comment on and make inputs into a draft OECS Economic Union Treaty. The amended draft Treaty will go before national parliaments in Member States for ratification.

Results of OECS Meeting Held in BVI

After the 49th meeting held in Tortola, BVI, on May 20-22, the Organisation of Eastern Caribbean States (OECS) issued a release concerning the matters discussed, and decisions taken during the meeting.

One of the decisions taken was that the former chairman, Tillman Thomas, the Prime Minister of Grenada, was replaced in his post by Montserrat Chief Minister, Dr Lowell Lewis. The new OECD chairman spoke on the importance of regional collaboration to tackle the global financial crisis, and confirmed the commitment of Montserrat to deepen the integration process as an Overseas Dependent Territory.

During the meeting, the Declaration of Intent was signed by Spain's Ambassador to the Caribbean, Jesus Silva, with the OECS which includes exchange of information and training.

The leaders of the territories of the region talked on the future of the financial services, and discussed that it was necessary to have legislation for greater transparency. Other issues discussed include tourism, social safety, functional co-operation, economic development and the Eastern Caribbean Supreme Court (ECSC). In his speech on the opening of the conference, BVI Premier Ralph O'Neal said that the territory was pleased to accomodate the Commercial Division of the Court.

BVI Premier Ralph O'Neal speaks on the BVI role in the OECS

During the opening ceremony of the 49th meeting of the OECS, BVI Premier Ralph O'Neal made a presentation where he spoke about the organisation as one of the ways to establish “strong and durable regional affiliations”. He said also that he was pleased with the operations of the OECS which made the great job to raise the profile of the organisation as an effective functional institution.

Premier Ralph O'Neal said that BVI has been playing a very important role in the OECS, and referred to the Commercial Division of the Eastern Caribbean Supreme Court headquartered in Tortola, and to the fact that the territory has committed US$3.76 million to the Commercial Court project. He said that BVI is pleased to be part of the restructuring of the Eastern Caribbean Supreme Court, which will deal with major commercial cases, and that a Halls of Justice will be located in Tortola.

Advisory Warnings Issued by BVI FSC

On May 21, 2009, the British Virgin Islands Financial Services Commission has issued advisory warning concerning NATF Corporation. In the public document issued under Section 4 (1) (l) of the Financial Services Commission Act, 2001, the Commission informed that NATF Corp. is not licensed to carry on financial services business in or from within the BVI territory.

Some days later, BVI FSC issued several new advisory warnings concerning the following companies:

- Reality Funds Ltd.
- MoneyForex Financial Ltd.
- Golden Forex
- IFC Markets Corp.

The Commission informed that these companies are not licensed to conduct any financial services business in or from within the British Virgin Islands. Concerning the companies Reality Funds Ltd. and Golden Forex, they are NOT incorporated or registered in the territory.

The documents were signed on May 26, 2009 by Robert Mathavious, the Managing Director and CEO of the Financial Services Commission.

BVI Government Signs Tax Treaties with Nordic Countries

On May 18, 2009, the British Virgin Islands has signed bilateral tax information exchange agreements (TIEAs), as well as the series of commercial agreements, with the Nordic group of countries at Iceland's Embassy in Denmark. The agreements require the BVI to make available information relating to criminal or civil tax matters, and are said to reflect all governments' shared commitment to implement the Organisation for Economic Co-operation and Development principles of transparency and effective exchange of information. On behalf of the government of the BVI, the agreements were signed by Minister of Health and Social Development Dancia Penn, and Kristian Jensen, the Danish Minister of Taxation, and Ambassadors and senor representatives of Faroes, Finland, Greenland, Iceland, Norway and Sweden signed the agreements on behalf of their respective countries.

Now it can be assumed that the territory has become closer to getting off the “grey” list of international offshore centres, issued by the OECD - the list of countries that have not yet fully complied with rules on sharing tax information. BVI Premier Ralph O'Neal has said in his comments that the country will sign tax agreements with France and New Zealand, and then move to the so-called white list of fully compliant offshore jurisdictions.

Also, the BVI and the Nordic countries have signed commercial agreements concerning the avoidance of double taxation for enterprises operating ships or aircraft, and mutual agreement procedures and agreements for the avoidance of double taxation with respect to individuals. The governments of all countries which have signed the agreements have also stated that, while the TIEAs are in force, neither party will introduce any discriminatory, prejudicial or restrictive measures based on harmful tax practices.

49th OECS Meeting held in the British Virgin Islands

On May 20 - 22, the 49th Meeting of the OECS Authority will be held in Tortola, British Virgin Islands. The heads of the countries of the Organization of Eastern Caribbean States will discuss the matters of the global and regional financial crisis for their economies, and the effects of the financial crisis on the main sectors including tourism and construction. They will also examine social safety net provisions for certain groups of population.

The 48th Meeting of the OECS Authority where the British Virgin Islands delegation also participated, was held in November 2008 in Montserrat. Currently, one of the main issues for discussion are international developments for the OECS regarding tax havens; the participants of the meeting will be also updated on efforts by the region to strengthen functional co-operation with other areas of the world, including Spain, the US Virgin Islands, Puerto Rico and South East Asia.

Also, during this meeting the status report will be presented on the OECS Economic Union process, and actions connected with its development. Currently, the Member States of the Organization are rolling out national public consultation exercises which are providing their people with an opportunity to comment on and make inputs into a draft OECS Economic Union Treaty. The target date for the establishment of the OECS Economic Union is set on December 2009.

The chairman of the 49th Meeting of the OECS Authority will be the incoming chairman of OECS, Lowell Lewis, the Chief Minister of Montserrat. The OECS Member states are Antigua and Barbuda, Dominica, Grenada, Montserrat, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Anguilla and the British Virgin Islands.

BVI FSC Issues Advisory Warning No. 4 of 2009

Yesterday, the British Virgin Islands Financial Services Commission has issued an advisory warning No.4 of the year 2009. By this document, the Commission informed that A.M.B Ltd., A.M.B. Amerbank Limited, AMERBANK LIMITED and Antilles Merchant Offshore Bank are not licensed to conduct banking or offshore banking business or any financial services business in or from within the territory of the British Virgin Islands. Also, the named entities are not incorporated or registered in the jurisdiction.

The Commission advised the public to exercise caution in conducting any transactions with these entities, and reminded that they should always be contacted to verify the regulated status of any company, trying to be registered or authorised for work in BVI.

The document is issued under Section 4 (1) (1) of the Financial Services Commission Act, 2001, and signed by Managing Director/CEO of the Commission Robert Mathavious.

Public Announcement Issued by the Commission on Stanford Fund

Recently two public statements were published by the BVI FSC, concerning Stanford International Management Limited (Licensee) and International Fixed Income Stanford Fund Limited. The statements issued by the Commission on these two companies belonging to the Stanford Group, followed a directive issued on 3 March 2009 by the Commission to the BVI-registered Fund and to the Licensee.

The directive issued to the Stanford company required, until further notice of the Commission, to suspend all activities relating to the management of assets of the Stanford Fund, and all activities relating to the management of assets of any mutual fund or other entity for which the Licensee provides management services; and to provide reports to the BVI FSC concerning total assets under management of the company, fees earned or charged to the Licensee for any kinds of activities, and the details of all litigation involving or affecting the Licensee.

The directive issued to the Stanford Fund required it, until further notice of the Commission, to suspend the subscription of shares by new and existing investors, redemption of shares by investors, and the payment of the proceeds of the redemption of shares. Also, the Fund was obliged by the Commission to submit reports on the details of its total assets, number of investors, and details of investments in the Fund, as well as details of all litigation involving or affecting it.

$279 Mln Budget Passed by the BVI House of Assembly

The record budget of $279,8 mln which was presented by the Premier in March, has been passed by the British Virgin Islands House of Assembly. This was preceded by some weeks of intensive deliberation at Standing Finance Committee and two days of debate in the House.

The projected revenue outlined by the Government for 2009 is $279,841,000, and its operational expenses are $253,593,100, with an estimated surplus of $26,147,900. By words of the Premier and Finance Minister Ralph O'Neal, the budget was estimated considering the factors of global financial crisis and the G20 summit in London.

BVI Premier noted that 63% of BVI's revenue comes from financial services, and that is why they have to work on legislation and to make all possible efforts to protect the financial services industry in the jurisdiction, and to protect and enhance its status in the financial world. By his words, the country has opportunities for this.

BVI Visit of British Foreign Office Minister

Gillian Merron MP, Parliamentary Under-Secretary of State of Britain's Foreign and Commonwealth Office with responsibility for the Overseas Territories, made a two-day visit to the British Virgin Islands. She had talks with Premier Ralph O’Neal, Deputy Premier Dancia Penn, other ministers of government as well as Opposition leader, Dr Orlando Smith. The result of the visit which was concluded on April 10, became a statement issued before her departure.

Among other issues, she spoke on the impact of the global economic downturn on the BVI economy, which relies upon international financial business and tourism. She expressed confidence that the announcement of the US$1.1 trillion support to the global economy during the G-20 summit in London will help everyone. She said, "BVI were right to recommit to the OECD standard on tax exchange of information in advance of the Summit. I welcome the Premier's further commitment not only to meet that standard, but go beyond it - and go beyond it in the very near future."

Gillian Merron was appointed to the post of UK Overseas Territories Minister in October 2008, and this was her first visit to the BVI.

BVI Listing in OECD Report: Statement of BVI Premier Ralph O'Neal

The report published by OECD after the G-20 summit, which classified financial centres by their progress towards the “internationally agreed tax standard”, gave rise to the sharp reaction of some countries, which were included on the “grey list” - among them Switzerland, Luxembourg and Belgium.For BVI, which was expected to pass through the international inspection, it also became somehow disappointing to get into the grey category.

This was told by BVI Premier Ralph O'Neal in the press release issued on the G20 Summit and an Organisation for Economic Co-operation and Development (OECD) Progress Report. By his words, the BVI is disappointed that the format of the listings does not recognise its long standing commitment and implementation of international standards.

Yet, the Premier said that the business in BVI will be as usual, regardless of the ranking, and said the territory would provide continuing support in promoting transparency. Ralph O'Neal said, "We are aware that the G-20 Leaders intend to develop further proposals on financial regulation and we will also be monitoring these closely ... As a co-operative member of the global community, the BVI will continue to adopt international regulatory standards of best practice as they emerge."

BVI are planning to continue negotiations with OECD countries for conclusion of Tax Information Exchange Agreements. Currently, there are three TIEAs signed by the territory with the US, the UK, and Australia. In his statement, the Premier announced that the number of TIEAs will come to ten on May 18, when it signs seven agreements with “the Nordic countries.”

Results of G-20 Summit: Further Implementation of Tax Standards Recommended to BVI

On April 2, 2009, during the economic summit of G-20 leaders, which took place in London, the G-20 and the OECD adopted its strategy of tax havens blacklisting. Other areas which experienced tougher regulations were hedge funds and banking industry. As regards offshore industry, the report published by the OECD includes the assessment of 82 financial centres concerning their progress towards the “internationally agreed tax standard.”

The G-20 summit did not single out any specific plans for further regulatory implementation, and leaders at the summit agreed to recognise OECD guidelines. One of the main criteria how the jurisdictions are classified is exchange of information on request in all tax matters for the purposes of administering and enforcing domestic tax law. So, it is important how many Tax Information Exchange Agreements are signed by the countries.

OECD recognized the strong position of the Cayman, the British Virgin islands, and Jersey, as countries committed to the internationally agreed tax standards. However, the BVI and the Cayman Islands, among other jurisdictions, were included in the “grey list”, as those which have not yet substantially implemented them. The most familiar and most popular offshore financial centres have been put on the “grey list”, among them Luxembourg, Switzerland, Singapore, Bermuda, Gibraltar, the Turks and Caicos, Monaco, Andorra, and others.

Later on, the seven British crown ependencies, including BVI, were set by the Prime Minister a September deadline to sign up the missing number of TIEA's (which should be twelve). Gordon Brown has written to all of them that he expects them to move beyond meeting the OECD's minimum standards on co-operation, and come to the maximum transparency.

Twelth Statistical Bulletin Published by the BVI FSC

The BVI Financial Services Commission has issued the twelfth volume of its Quarterly Statistical Bulletin, which includes information on the situation in the BVI financial services industry in the third quarter of 2008. The Commission reports on the progress made in different sectors of the BVI financial services industry, and provides new statistical data and analysis.

By the information of Registry of Corporate Affairs, in the third quarter of 2008 there were 16,133 new incorporations. This is less than 20,595 companies incorporated in the third quarter of 2007, but a little more than the number of new BVI companies registered in the second quarter of 2008. Cumulative amount of active companies as of 30 September 2008 was 461,998. This chart below shows the number of new companies incorporated in BVI through the third quarter periods of 2002-2008:
Banking and Fiduciary Services sector showed little changes compared to the second quarter of 2008, and to the third quarter of the previous year. Banking Sector statistics showed the percentage of liquid assets as 44.78% of total deposits, the number of non-performing loans made 3.12% of the total amount of loans, and total assets amount made more than 2 million USD.
Among other data shown in the Bulletin, there is Quarterly Post Incorporation Transactions Statistics for the period, showing the volume of activity of the BVI companies. The Quarter 3 2008 Post Licensing Transactions Statistics included information on the activities of the newly incorporated entities, i.e. the appointment of directors (39), change of authorised agent number, change of auditor (3), change of shareholding/ownership (1).

The Investment Business/Mutual Funds Sector provided information on new licences and certificates issued in the third quarter 2008, according to which 14 new licences were issued in this period (compared to 26 in the same period of 2007 and 10 in Q2 2008). Cumulative number of licences as of September 30 2008 was 576. Also, at the end of this period the share of Professional Active Mutual Funds was 64%, Private Mutual Funds making 28%, and Public Funds making 8% of the total amount.

In the field of Legal and International Co-operation, following figures were reported:
25 formal requests for international co-operation matters (requiring non-public information disclosure) – compared to 15 formal requests in Q2 2008, and 14 requests in Q3 2007. There were 39 enforcement matters in the reported period (27 in the second quarter of 2008, and no as such in the third quarter of 2007).

The Commission Issues Advisory Warning on three Insurance Companies

On March 24 2009, Advisory Warning No. 2 of the year 2009 was published by the British Virgin Islands Financial Services Commission. By issuing this document, the Commission informed the public that Colonial Life Insurance Company (Trinidad) Limited, British American Insurance Company Limited and the CL Financial Limited are not licensed to carry on financial services business in or from the territory of the British Virgin Islands.

The Commission also asked the public to inform them of the facts when they at any time had any transactions with the above-mentioned companies, or purchased any kinds of financial products from them, including insurance or investment type products.

BVI premier announces that the territory will comply with G-20 rules

The Premier of the British Virgin Islands Hon. Ralph O'Neal has made some comments during the news conference which took place in the BVI territory on March 24, with participation of thousands of corporations, insurers and offshore trusts which are established to avoid taxes and regulation in their countries.

Premier Ralph O'Neal has said the British Caribbean territory as a popular offshore corporate domicile will comply with any new financial rules that come out of the Group-20 summit of rich and developing countries. He also said that the British Caribbean territory is compliant with all requests from international regulators, and is ready to adapt to any new financial regulations that may emerge from the G-20 London summit which will take place next week.

UK Financial Team Visits the BVI Territory

The team from the UK Treasury, led by the Head of the UK Government Independent Review of British Offshore Financial Centres, has come to the territory with the aim to hear first-hand the BVI government's opinions on the review, and the importance of the offshore financial services to the BVI territory. During its visit, the UK team is going to hold talks with the Premier O'Neal, with Deputy Premier Dancia Penn, with Robert Mathavious - the Managing Director of the Financial Services Commission; also with Kathleen Quartey - Attorney General, and Neil Smith - Financial Secretary.

Hon. Ralph O'Neal, the Premier of the British Virgin Islands, welcomed the delegation, and expressed confidence of the BVI Government that “the BVI (financial) centre and its regulatory system will perform well under any international scrutiny." By words of the Premier, the review would also give the opportunity to demonstrate that they have a robust finance centre of the highest reputation.

Actually, the purpose of the UK Government Independent Review of British Offshore Financial Centres is to identify opportunities, current and future risks in financial supervision, transparency and taxation, in relation to financial stability, sustainable future competitiveness, financial crisis management and international co-operation. The Review was announced as part of the British government's budgetary process.

Before traveling to Tortola, the UK team had discussions with financial services officials in the Cayman Islands and Bermuda.

Premier Evaluates BVI Financial Services Sector

On February 25, Honourable Ralph T. O'Neal, Premier and Minister for Finance for the territory, talked about concerns that the Virgin Islands (UK) will become target for new regulations. These concerns followed statements by leaders of major EU countries, including the Prime Minister of the United Kingdom, about the need to list un-cooperative financial centres and tax havens and to impose sanctions against them.

Ralph O'Neal said that the BVI is recognized as a well-regulated, transparent and co-operative financial centre. He also noted that following the signing of the BVI's Tax Information Exchange Agreement (TIEA) with the UK in October 2008, the UK's Financial Secretary “commended the BVI for the leadership demonstrated in the area of tax policy and its potential to strengthen their reputation for good governance in financial matters”.

The Premier also mentioned that the BVI territory received positive references from the OECD's Director of Tax Policy Administration, Mr. Jeffrey Owens, who included the BVI in the list of the offshore jurisdictions fully compliant with the organisation’s transparency standards, and from the Caribbean Financial Action Task Force, which recognised the BVI Territory's compliance with recommendations designed to fight money laundering and terrorism.

Ralph O'Neal confirmed Government's commitment to co-operate with international regulatory bodies and to work together with the Financial Services Commission to ensure the BVI retains the balance between the support of financial services community, and co-operative regulatory framework.

$279.8 Million Budget Presented by the BVI Premier

Last week, Premier and Finance Minister of BVI Ralph O'Neal presented Territory's Budget for 2009. He outlined the projected revenue in the amount of $279,841,000, and operational expenses $252,485.400. The Development Fund allocation is $23,875,600.

Ralph O'Neal said that there is 1.7 percent decline over last year's estimates because of the anticipated reduction in revenue linked to the ongoing turmoil in the global economy. He also anticipated a reduction of revenue from the financial services sector and from tourism industry.

The Premier said that the government will stimulate local economy through various policy and programme implementations, and the projects which will create jobs for BVIslanders.

The Budget projection will be referred to the Standing Committee before the commencement of the debate.

BVI Among Top Investors According to Chinese FDI Statistics in 2008

The Ministry of Commerce of China said that the growth of foreign direct investment (FDI) into the Chinese economy fell for the third month of 2009. For the whole year 2008, FDI however grew 23.58 percent and made $92.4 billion (compared to 13.59 percent to $74.8 billion of actually used FDI in 2007), due to the intense growth in the first three quarters of the year.

According to the data reported by the Ministry of Commerce, the major source of FDI for China in year 2008 was Hong Kong, which provided the country with $41 billion for a 48 percent annual increase. The second big FDI source was British Virgin Islands, which invested $15.95 billion. However, the percentage of funds invested by the BVI is just 3.62 - that is less than in 2007, reflecting the general trend.

The level of foreign direct investments from Japan rose 1.76 percent and made $3.65 billion in 2008, followed by South Korea with $3.14 billion (14.76 percent), and the US with $2.94 billion – the rise of 12.54 percent.

The industries which received most of all FDI were banking, insurance and securities, which drew $38.1 billion, or 24.23 percent more than in 2007. Actually, in the past decade China has been one of the biggest FDI recipients, but some experts guess that the global financial crisis could change this trend. For example, Mei Xinyu, a senior researcher with the Ministry of Commerce, said he was not optimistic about this year FDI level. Some experts even say that FDI could fall by 5-10 percent in the first half of the year, but positive turn is also expected – in the second half of 2008.

Advisory Warning on BVI Insurance Company issued by the Commission

On 17 February 2009, the British Virgin Islands Financial Services Commission issued Advisory Warning No. 1 of 2009 concerning insurance company Source One Insurance Ltd. The Commission informed the public that the company is no longer licensed under the Insurance Act, 1994, to carry on insurance business from the BVI territory, based on the fact that the licence granted to Source One Insurance Ltd. expired on 31 December 2007 and has not been renewed since that time.

The BVI company tried to continue its operations into another jurisdiction but could not because it has failed to comply with the BVI's laws and requirements to do so.

The BVI FSC advised public to exercise extreme caution in conducting any transactions with Source One Insurance Ltd., as it has no licence to carry on insurance business in or from within the British Virgin Islands.