British Virgin Islands: have they cleaned up since the Panama Papers?

British Virgin Islands: have they cleaned up since the Panama Papers?

Half a year has passed since the corruption story of the year – the Panama Papers – revealed the real owners behind thousands of shell companies.

Over 50 per cent of the shell companies uncovered in the Panama Papers were set up in the British Virgin Islands (BVI). As of June this year, BVI hosted 430,000 companies: 15 for each of their 28,000 inhabitants.

The Panama Papers showed that over 140 politicians and public officials around the world – as well as tax evaders, drug traffickers and fraudsters – had links to secret companies.

Have these revelations led to any changes in the way BVI does business? 

Any progress fighting shell companies?

The British Virgin Islands Financial Services Commission (Motto: “Vigilance. Integrity. Accountability”) is the official body charged with overseeing the corporate service providers that set up and manage shell companies. Those service providers are the equivalent of Mossack Fonseca, the law firm at the heart of the Panama Papers.

The most recent edition of the Commission’s statistical bulletin, published at end of September, shows that the shell company business in BVI has clearly taken a hit. The 16,000 new companies registered in the first half of 2016 represent a 30 per cent drop compared to the same period last year.

However, the Panama Papers seem not to have led to a sustained increase in the enforcement actions authorities are taking.

In April this year – the month the Panama Papers were published – BVI authorities took 16 enforcement actions, including eight administrative penalties and two “strongly worded letters”. By June enforcement actions had fallen back to seven, in line with enforcement activity in previous years.

A separate section of the Commission’s website has further details for a number of those enforcement actions (the list only runs until May). The highest penalty of the year, for US$31,500, was applied to Mossack Fonseca’s BVI branch on 11 April, just a week after the Panama Papers story broke.

According to this service provider’s website – one of the dozens offering BVI incorporation online – a basic incorporation package in BVI starts at US$1,375, and can cost up to US$5,325 for a “BVI premium International Business Company owned by a Belize trust”. With those kinds of fees, the average offshore provider in BVI can recover from a US$31,500 administrative fine within a few days.

There is also little evidence of a change in attitudes on the part of the country’s leadership. A judge in BVI’s Commercial Court recently attributed the popularity of BVI company incorporations to BVI’s “stable, reliable society” and “honest, independent and impartial ‎justice system”, denying it had anything to do with “the false reasons we have heard so much in the past year”.

Since the Panama Papers, international anti-corruption commitments have been made and committees have been set up in many parts of the world. The policies needed to tackle the problem of secret company abuse have also become increasingly well-known and are being widely endorsed. These include the establishment of central, public registers disclosing the real owners of companies, and the effective oversight of professional enablers.

Meanwhile, aside from a drop in company incorporations it looks like business as usual in the British Virgin Islands.

For any press enquiries please contact press@transparency.org

Latest

Support Transparency International

Apply Now for Transparency International School on Integrity!

Apply today for the Transparency School 2018 and spend an insightful week with anti-corruption enthusiasts from all over the world!

Blog: Making Summits Meaningful: A How to Guide for Heads of Government

Heads of Government spend a lot of time in glitzy international summits. World leaders shouldn't fly around the world just for a photo op or to announce new commitments they have no intention of keeping. Here's is a how-to guide for Heads of Government to make summits meaningful.

While the G20 drags its feet, the corrupt continue to benefit from anonymous company ownership

The corrupt don’t like paper trails, they like secrecy. What better way to hide corrupt activity than with a secret company or trust as a front? You can anonymously open bank accounts, make transfers and launder dirty money. If the company is not registered in your name, it can't always be traced back to you.

Urging leaders to act against corruption in the Americas

The hot topic at this week's Summit of the Americas is how governments can combat corruption at the highest levels across North and South America.

The impact of land corruption on women: insights from Africa

As part of International Women’s Day, Transparency International is launching the Women, Land and Corruption resource book. This is a collection of unique articles and research findings that describe and analyse the prevalence of land corruption in Africa – and its disproportionate effect on women – presented together with innovative responses from organisations across the continent.

Passport dealers of Europe: navigating the Golden Visa market

Coast or mountains? Real estate or business investment? Want your money back in five years? If you're rich, there are an array of options for European ‘Golden Visas’ at your fingertips, each granting EU residence or citizenship rights.

How the G20 can make state-owned enterprises champions of integrity

For the first time in its presidency of the G20, Argentina is hosting country representatives from across the globe to address the best ways of curtailing corruption and promoting integrity in state-owned enterprises (SOEs).

Europe and Central Asia: More civil engagement needed (Part II)

As follow-up to the regional analysis of Eastern Europe and Central Asia, additional examples from Albania, Kosovo and Georgia highlight the need for more progress in anti-corruption efforts in these countries and across the region.

Lutte contre la corruption en Afrique: Du bon et du moins bon

La publication de la dernière édition de l’Indice de perception de la corruption (IPC) offre un bon point de repère pour situer les efforts de lutte contre la corruption que l’Union africaine (UA) poursuivra tout au long de 2018

Social Media

Follow us on Social Media

Would you like to know more?

Sign up to stay informed about corruption news and our work around the world