Ethics and governance in the European Financial centers

Among the Territories of the Crown, the BVI wants commenting. A local professional describes the advantages by underlying a couple of qualities from fraudsters' point of view:
1) Not only are there no currency controls, but with the US$ used as the BVI currency, it is essentially impossible for the government to regulate the money supply and hence to ever impose currency controls.
2) Despite its international popularity as an offshore financial centre, the BVI does not have the high profile, attention getting reputation of other centres. It represents an ideal offshore location for clients seeking confidentiality without the 'red flags' that are often raised through the use of more well publicised centres.
3) IBC formation legislation in the BVI requires only one shareholder and one director (both of which may themselves be other corporations); no corporate officers are required; bearer shares are permitted; there is no requirement for an annual general meeting; the company need only keep such accounts and records as the Director(s) think appropriate.
4) The BVI government need not be informed of the identity of the IBC's shareholders or directors.

An to conclude that many of the benefits of the BVI flow from this combination of a very high level of flexibility and the unquestioned confidentiality.


The BVI are identified as a tax haven by US Senators.

So it is a risk for the reputation of another jurisdiction when its professionals or shareholders choose an auditor from the BVI when such professionals or shareholders are neither competent nor honest, all the more than it is demonstrated in public and official sources and than the jurisdiction is small.

We find such situations in the Corporate Registration in Luxembourg, which is a risk for reputation of the Luxembourg financial center in the context of the hunt against tax havens and of an increasing transparency.

On 25 February, BVI FSC published 3 new documents related to Anti-Money Laundering legislation. The documents were gazetted on February 22, 2008. The largest document, including 127 pages, is Anti-Money Laundering and Terrorist Financing Code of Practice, 2008.

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National Audit Office Report on the Crown Protectorates demonstrates that the enforcement of the legal and regulatory framework is not credible in these financial centers (see p 23 of the report).
The positive thing is the transparency of the Audit Office on the issues. The bad thing is that the political will is missing as british authorities are aware of the situation.


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