Sun, Sand, and the $1.5 Trillion Dark Offshore Economy
05 Jul 2019

The British Virgin Islands is home to more than 400,000 companies that hold $1.5 trillion in assets. You wouldn’t know it if you walked through Road Town, the capital of this Caribbean archipelago. Hens and roosters compete brazenly with cars on the single narrow lane of Main Street. Law firms that set up and serve thousands of offshore companies occupy modest buildings next to brightly painted wooden houses that host cheap beauty salons and clothing shops with names like Goodfellas.

Besides a few mangled green street signs on Main Street, few roads are marked. The BVI doesn’t have mail delivery; its businesses and 32,000 residents use post office boxes as their addresses, which is why one P.O. box in Road Town can be the nominal home to thousands of companies from around the world. Hundreds of lawyers, accountants, and company agents work from buildings dotted around the main island of Tortola. In some tax havens—Luxembourg, Monaco, or even parts of the Cayman Islands—money is dripping off every corner. In the BVI, the wealth passes through almost without a trace.

When I visited in April, my first stop was Tobacco Wharf, a collection of anonymous-looking houses tucked off the main road, where the global accounting company BDO Ltd. occupies a four-story green-and-beige building surrounded by palm trees. Inside I was greeted by Ryan Geluk, a lanky, bearded accountant who serves as the company’s deputy managing director on the island, and Neil Smith, the BVI’s director of international business. Geluk started tapping away on a keyboard to show me the database he’s so proud of: the Beneficial Ownership Secure Search System, or BOSS, which the BVI started using in 2017 to satisfy international demands that it keep track of the owners of its companies. A screen on the wall showed a dataset. He clicked on Almighty Dollar, a company registered to P.O. Box 9272 in Road Town in December 2007, with a passport number and date of birth for its owner, John Zykov-Wumu.

Almighty Dollar isn’t a real company but rather a prototype, which is all Geluk could show me. Even though he helped get it up and running, Geluk doesn’t have permission to scan the whole database. In fact, only two people, a pair of unnamed employees of the BVI’s Financial Investigation Agency, are able to search the entire system, which holds details on about 600,000 owners who have directly or indirectly controlled companies here. It’s thought that roughly a third of all offshore companies globally are registered in the BVI.

Geluk said BOSS uses encryption that’s never been hacked. “If someone accesses it from somewhere unusual like North Korea, it will be shut down immediately,” he told me, adding that the data are housed in a secret location known only to him and his team. “All I can say,” he said, “is it’s held in a G-7 country, and it’s not the U.S.”

Change is coming to the BVI, though not if the politicians and businesspeople here—as well as plenty of less-connected people—can help it. Last year the U.K. Parliament voted to force transparency on the BVI and the 13 other British Overseas Territories, a collection of former colonies where the flags display the Union Jack, the queen appoints a governor to control foreign affairs and law enforcement, and the judicial system is based on English common law. It was a rare moment of cross-party consensus among British members of Parliament, who have been in gridlock since 2016 over the terms of leaving the European Union. The crucial part of the transparency legislation is a requirement that each Overseas Territory produce something like BOSS and make it public.

By Stephanie Baker, Bloomberg Businessweek, 3 July 2019

Read more at Bloomberg

Photo: Kevin Stroup [CC BY 3.0], via Wikimedia Commons

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2 Responses to “Sun, Sand, and the $1.5 Trillion Dark Offshore Economy”
Donnell Crippen

Donnell Crippen July 4, 2019

Make sure to read the full article at Bloomberg, very informative.

Cynthia Soares Penn

Cynthia Soares Penn July 5, 2019

I found it very disparaging. I work at a Trust Company in the BVI and the things said here only highlight what can be perceived as bad and none of the Good which out-weights the bad have been touched. Things are not as bleak as she has portrayed them.

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