The Financial Infrastructure Of The British Virgin Islands Finance Essay

The British Virgin Islands ( BVI ) , besides called the Virgin Islands, were foremost settled by the South America Arawak around 100 BC ( through there is some grounds of Amerindian presence on the islands as far back as 1500 BC ) . The Arawak stayed in the islands until the 15th century when they were displaced by the more aggressive Caribs, a folk from the Lesser Antilles islands, after whom the Carribbean Sea is named. The first European sighting of the Virgin Islands was by Christopher Columbus in 1493 on his 2nd ocean trip to the Americas. Columbus gave them the fanc notional name Santa Ursula y las Once Mil Virgenes ( Saint Ursula and her 11,000 Virgins ) , shortened to Las Virgenes ( The Virgins ) , after the fable of Saint Ursula.

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The Spanish Empire captured the islands by find in the early 16th century, but ne’er settled them, and subsequent old ages saw the English, Dutch, French, Spanish and Danish all jostle for control of the part, which became a ill-famed hangout for plagiarists. There is no record of any native Amerindian population in the British Virgin Islands during this period, although the native population on nearby St. Croix was decimated.

The Dutch established a lasting colony on the island of Tortola by 1648. In 1672, the English captured Tortola from the Dutch, and the English appropriation of Anegada and Virgin Gorda followed in 1680. Meanwhile, over the period from 1672 to 1733, the Danish gained control of the nearby islands of St. Thomas, St. John and St. Croix.

The British islands were considered chiefly a strategic ownership, but were planted when economic conditions were peculiarly favorable. The British introduced sugar cane which was to go the chief harvest and beginning of foreign trade, and slaves were brought from Africa to work on the sugar cane plantations. The islands prospered economically until the center of the 1800s, when a combination of the abolishment of bondage in the Territory, a series of black hurricanes, and the growing in the sugar Beta vulgaris harvest in Europe and the United States significantly reduced sugar cane production and led to a period of economic diminution.

In 1917, the United States purchased St. John, St. Thomas and St. Croix from Denmark for US $ 25 million, renaming them the United States Virgin Islands. The British Virgin Islands were administered diversely as portion of the British Leeward Islands or with St. Kitts and Nevis, with an Administrator stand foring the British Government on the Islands. Separate settlement position was gained for the Islands in 1960 and the Islands became independent in 1967. Since the 1960s, the islands have diversified off from their traditionally agriculture-based economic system towards touristry and fiscal services, going one of the wealthiest countries in the Caribbean.

2. Location and substructure

The British Virgin Islands ( BVI ) is a British Dependent Territory which comprised of the chief islands of Tortola, Virgin Gorda, Anegada and Jost Van Dyke, along with over 60 other smaller islands, stones and keies, of which merely 16 are inhabited. BVI is located about 60 stat mis east of Puerto Rico in the northeasterly Caribbean Sea and next to the United States Virgin Islands in the Caribbean Sea. The territorial sea of the BVI covers an country of 1,489 sq. kilometer ( 575 sq. stat mis ) and extends 5.6km from the low H2O line along the seashore. The entire land and sea countries are 634 square stat mis and the Exclusive Economic Zone ( EEZ ) extends 200 stat mis north and nor’-east of BVI. The BVI is besides portion of a shelf that includes the United States Virgin Islands and Puerto Rico.

Most of the islands are cragged and of volcanic beginning, the coralline island of Anegada is the lone exclusion of any size. They lie about 100km to the E of Puerto Rico and border the US Virgin Islands. Road Town is the capital metropolis and fiscal centre of the British Virgin Islands, located on the island of Tortola. The population of the islands is about 24,500 in the country of 153 square kilometres with an cultural diverseness of Afro-Carribean, European, American and Asian.

There are 29 primary schools on four islands, three secondary schools and a community college in Road Town. An estimated 98 per centum of grownups are literate. The labour force of 12,200 is engaged chiefly in touristry ( 25 % ) , authorities services ( 21 % ) and building ( 10 % ) . unemployment is negligible.

The systems of conveyance in the British Virgin Islands include 113 kilometers of main road and a seaport at Road Town. The chief airdrome is the Terrance B. Lettsome International Airport, besides known as Beef Island Airport. It is located on Beef Island, which lies off the eastern tip of Tortola and is accessible by the Queen Elizabeth II Bridge. Virgin Gorda and Anegada have their ain smaller airdromes. Sea conveyance assumes a different degree of importance because it is a major agencies of conveyance for occupants within the district, separated as it is by H2O. The chief seaport is at Port Purcell in Road Town that is a deepwater port and shoal bill of exchange installations at Sopers Hole at the West End, The Valley in Virgin Gorda, and Jost Van Dyke. There are besides ferries that operate within the British Virgin Islands and to the neighbouring United States Virgin Islands. Ferry services play a critical function in sea transit for both occupants and tourers among the islands of BVI. As in the UK, autos in the British Virgin Islands thrust on the left side of the route. The BVI does non hold a public transit system. There are in private owned and operated minibuses, taxis, circuit, and vehicle lease services that have developed specifically around the tourer trade, but which besides cater to occupants.

The BVI serves as the telecommunications gateway to the Caribbean and offers State-of-the-art installations. These installations include fibre ocular communications, picture conferencing and broad-band cyberspace or e-mail entree every bit good as the ‘standard ‘ telephone, facsimile and teletypewriter services. There is still need, nevertheless, for an upgraded service to ease cheap and efficient written communicating among occupants and between occupants and the remainder of the universe. Cable telecasting is available throughout the chief islands and satellite telecasting is available elsewhere. Further, the islands have two hebdomadal newspapers which are the Island Sun and the BVI Beacon, and a monthly magazine.

The state-owned statutory corporation, BVI Electricity Corporation ( BVIEC ) , provides electricity. The chief installation is located at Pockwood Pond, with backup at Long Bush. The entire system capacity is about 19.58 megawatts ( MW ) , and there is a reasonably extended coverage of all the inhabited islands. A 60 kV ( kilovolt ) generator serves Anegada. Approximately 98 per centum of families are connected to the web. The proactive spirit of the Territory is exemplified by the rapid recovery of electricity and indispensable services following each of three major hurricanes which passed over the BVI in 1996. In July of 1996, for case, the oculus of Hurricane Bertha passed straight over Tortola where the Financial Services Sector is located, and within 24 hours full electricity had been restored. Furthermore, waste heat is used in a desalinization works, which has a capacity of 1,000 metric tons per twenty-four hours.

An estimated 95 per centum of places have either infected armored combat vehicles, or are connected to sewerage systems in Road Town and Cane Garden Bay. These systems besides have pump-out installations for yachts. There remains, nevertheless, the environmental job caused by unequal effluent intervention that consequences in the discharge of untreated wastewater into the marine countries.

3. Servicess and specialisation

British Virgin Islands has the largest figure of seaward companies. Over 700,000 offshore companies have been formed in the British Virgin Islands, although merely about 450,000 remain active. This would account for about 42 per centum of the estimated 1.1 million offshore companies incorporated worldwide. British Virgin Islands offers fast and confidential offshore company formation and bank history opening services in BVI at a low cost.

British Virgin Islands corporations or BVI International Business Companies ( BVI IBC ) incorporated under the International Business Companies Act No.8 of 1984 shows steady growing, conveying the figure of companies registered under the act to over 450,000. The BVI IBC Act No. 8 of 1984 ‘s object is to supply the legislative model for companies wishing to transact international activities from a revenue enhancement exempt, secure and confidential environment.

In add-on, the most of import offshore activities are trust direction, common financess and confined insurance. Yet, banking has non been encouraged, as an seemingly successful defense mechanism against money-laundering.A

Private Trust Companies ( PTCs ) have become progressively popular in Offshore Financial Centres ( OFCs ) in recent times, and the BVI enacted particular commissariats for PTCs in January 2007 that farther heighten its world-renowned trusts and estate-planning merchandises. Virgin Islands Special Trusts Act 2003 ( VISTA ) and the BVI ‘s Trustee Act 2003 ( the Amendment Act ) , on 1 March 2004 were important developments for the sector and legal power likewise.

Both VISTA and the Trustee Amendment Acts were based on proposals which were made to the BVI authorities by the BVI subdivision of the Society of Trust and Estate Practitioners ( STEP ) , showing the effectivity of a close coaction between authorities and the private sector that consequences in the development of the industry in ways that respond to the demands of the legal power ‘s international client base.

The BVI ‘s confined insurance sector has continued to demo significant success and can now proudly boast 14 uninterrupted old ages of growing since the debut of the BVI Insurance Act in 1994. The legal power now has the fourth-highest figure of confined insurance enrollments in the universe, with some 400 prisoners licensed in the legal power by the terminal of last twelvemonth. The Segregated Portfolio Companies statute law has doubtless attracted more confined concern to the BVI. It provides an option for administrations with similar concerns and hazards to organize joint ventures while segregating their several hazards, assets and liabilities.

The aforesaid Business Companies Act enables constructions to be created that combine both the insurance and capital markets. Sophisticated constructions such as calamity bonds and recognition derived functions are progressively being used to offer insurance-linked solutions to big and complex hazards. In add-on, the Segregated Portfolio Companies statute law has doubtless attracted more confined concern to the BVI. It provides an option for administrations with similar concerns and hazards to organize joint ventures while segregating their several hazards, assets and liabilities.

The BVI is the lone Caribbean legal power to tout the presence of six of the largest offshore jurisprudence houses in the universe. The universe ‘s top accounting and auditing houses are besides present in the BVI. Their professional services include non merely the traditional accounting, audit and hazard direction patterns ; specialist countries such as forensic accounting, corporate restructuring and insolvency direction services are besides being offered from within the BVI. In add-on, there are many taking international trust and corporate service suppliers who, through their efficient systems, processs and people, have helped construct the BVI into the universe ‘s seaward corporate legal residence capital.

All this growing and success has been supported by the British Virgin Islands International Finance Centre ( BVI IFC ) , which has played a polar function in the publicity and selling of the BVI as a taking fiscal Centre.

4. Regulation, supervising and statute law

The British Virgin Islands ( BVI ) is a British Overseas Territory headed by a British appointed Governor. The authorities and fiscal service sector in the BVI are united in their committedness to keep and heighten the district ‘s repute as a responsible and reputable fiscal centre, acknowledging that this represents an indispensable plus for the legal power ‘s continued growing. The BVI self-praises of progressive statute law along with ordinances and Supervisory maps which has provided for a universe category offshore environment.

In close audience with the private sector, the authorities has set up a sophisticated and efficient government of supervising and ordinance to safeguard the unity of the legal power without enforcing undue or unneeded limitations on qualified participants. It systematically ensures that all its policies and patterns are to the full in line with internationally accepted criterions.

The duty for the overall licensing, ordinance and supervising of fiscal activities in the BVI is vested in the Governor in Council ( that is, the Governor moving with advice of the Executive Council of the Territory save as is otherwise provided under the Constitution ) and the Minister of Finance. The Governor in Council is responsible for all licensing, annulment of licences and enforcement determinations associating to regulated houses. In the instance of common financess, the Governor in Council is responsible for licencing public financess and the Minister of Finance for acknowledging non-public financess. The section follows a consistent policy of selective licensing, concentrating on promoting merely service supplier of undoubted and stainless stature to run within the legal power.

British Virgin Islands ( BVI ) are modulating all fiscal services activities conducted in and from within the BVI pursuant to relevant BVI Torahs to guarantee conformity with the relevant international criterions and best behavior of concern patterns. BVI ‘s remit includes banking and fiducial concern, investing concern, insolvency services, insurance concern, company direction, company enrollment, and rational belongings.

The BVI legislative assembly consists of the Legislative Council of the British Virgin Islands, and is headed by the Monarch. The legislative Council consists of 13 elective members, 9 tied to electoral territories, and 4 “ at big ” seats. Belonger position is a demand to be elected to the Legislative Council.

British Virgin Islands Legislation Acts include:

aˆ? British Virgin Islands Constitution

Legislative papers functioning as the footing for British Virgin Islands domestic and seaward statute law includes commissariats modulating BVI Governor ‘s and Executive ‘s maps, BVI legislative assembly, working of Public service, Judicial and Legal Service, Pensions, Financial systems.

aˆ? The Company Management Act, 1990

Legislative act that regulates company licencing, disposal, fees, every bit good as transferability of portions and alterations in managers. Other related affairs include power of inspector, licencee responsibilities, and one-year returns.

aˆ? BVI Banks and Trust Companies Act, 1990

Legislative act modulating enrollment and licencing of BVI Bankss and trust companies. Includes demands and freedoms for licenses, disposal and review issues.

aˆ? BVI Partnership Act, 1996

Legislative act modulating creative activity and operation of BVI partnership, nature of spouse ‘s involvement in the partnership, dealingss between spouses, disintegration of partnership and its effects ; provides legislative footing for limited partnerships.

aˆ? BVI Mutual Funds Act, 1996

Legislative act modulating disposal of Common Fundss, including Private and Public Funds, maps of Directors and Administrators, general notices as respects fees and process.

aˆ? BVI Business Companies Act, 2004

Legislative act supplying for the incorporation, direction, and operation of different types of BVI Business Companies, every bit good as for the relationships between companies and their managers and members and for affiliated affairs.

aˆ? Segregated Portfolio Companies Regulations, 2005

Legislative ordinances refering common financess, audit of fiscal statements, creative activity of unintegrated portfolios, presentments to Commission and related affairs.

aˆ? Financing and Money Services Act ( FMSA ) , 2009

Legislative commissariats presenting a government for the licensing, ordinance, and

supervising of funding and money services concern carried out from or within the

BVI, together with condemnable offenses for breach or non-compliance.

5. Political and economic appraisal

Executive authorization in British Virgin Islands is invested in The Queen and is exercised on her behalf by the Governor of the British Virgin Islands. The Governor is appointed by the Queen on the advice of the British Government. Defense and Foreign Affairs remain the duty of the United Kingdom.

A new fundamental law was adopted in 2007 ( the Virgin Islands Constitution Order, 2007 ) and came into force when the Legislative Council was dissolved for the 2007 general election. The Head of Government under the new fundamental law is the Premier ( prior to the new fundamental law the office was referred to as Chief Minister ) , who is elected in a general election along with the other members of the governing authorities every bit good as the members of the resistance. A Cabinet is nominated by the Premier and appointed by the Governor. The Legislature consists of the Queen ( represented by Governor ) and a unicameral House of Assembly made up of 13 elective members plus the Speaker and the Attorney-General.

The Virgin Islands are divided into two political entities which are British Virgin Islands and US Virgin Islands. The United Kingdom administers islands on the E as an abroad district that is known as British Virgin Islands. The United States governs St. Croix, St. John, St. Thomas and Water Island in the West as an unincorporated district known as US Virgin Islands. Out of several islands, merely 15 of the islands are inhabited in the British Virgin Islands.

The economic system of the British Virgin Islands is one of the most stable and comfortable in the Caribbean, based on a sophisticated, well-developed offshore fiscal Centre and a strong tourer industry. About 820,000 tourers, chiefly from the United Stateas, visited the islands in 2005. Because of traditionally close links with the US Virgin Islands, the British Virgin Islands have used the US dollar as its currency since 1959. Livestock is the most of import agricultural activity, and hapless dirts limit the islands ‘ ability to run into domestic nutrient demands, which underlines the importance of the touristry and fiscal services sectors.

With fiscal services and touristry being the twin pillars of the islands ‘ prosperity, the BVI authorities of Premier Ralph O’Neal is extremely interested in guaranting the continued prosperity of both these sectors. As such, the authorities is really acute to see that the BVI ‘s fiscal offshore sector complies with international best pattern and is non a oasis for money-laundering. This is a peculiarly urgent issue as the many uninhabited islands in the BVI, together with the archipelago ‘s propinquity to Puerto Rico, which is seen as a gateway for illegal drugs come ining mainland United States, have made the part a “ natural ” presenting point for the drugs trade.

With this background, the authorities has been eager to guarantee international regulators, and the international anti-money laundering organic structure, the Financial Action Task Force ( FATF ) that the BVI run a transparent government, with formal “ corridors ” or gateways by which national anti-money-laundering and tax-evasion governments can name for information from BVI-registered Bankss and establishments.

In July 2008, the BVI authorities joined the flow of seaward fiscal centres subjecting grounds to the United Kingdom parliamentary commission ‘s offshore enquiry. Government representatives took advantage of their visual aspect before the commission to drive place the message that the BVI operates a “ robust regulative and supervisory government ” in fiscal services, with a well-proven path record of international cooperation. The BVI already have revenue enhancement information exchange understandings ( TIEAs ) in topographic point with the United States, the United Kingdom and Australia. The Organization for Economic Co-operation and Development ( OECD ) welcomed the BVI ‘s enterprises in this country.

The BVI economic system has been characterized over the last six old ages by low rising prices, and low unemployment, with an mean growing rate of 6 per centum. Growth for 2009 is expected to fall, with the extent of the diminution depending on the impact of the planetary lag on the BVI ‘s fiscal services sector, and on touristry. GDP in 2007 was US $ 1 billion with the part from touristry and fiscal services accounting for more than 48 per centum, and existent estate, rental and concern services accounting for 19 per centum. GDP per capita is above US $ 41,000, giving the BVI one of the highest per capita incomes in the Caribbean. Financial services levies are the major subscriber to authorities grosss, along with paysheet revenue enhancements and import responsibilities.

In denoting the authorities ‘s budget for 2009, the BVI expect grosss to amount to US $ 279.8 million in 2009 against operational outgo of US $ 252.48 million. This diminution of 1.7 per centum over the old twelvemonth estimations is straight attributable to the planetary lag. As a effect of the planetary lag, touristry to the islands had experienced a lag in the latter portion of 2008. This had caused layoffs and cutbacks in the sector but the authorities is committed to prolonging touristry through enterprises such as keeping a subsidised conveyance service to Puerto Rico. Infrastructure undertakings such as redevelopment work on the Cruise Ship Pier and the stamp dock for sail ships would besides travel frontward in 2009. Although the lag creates “ important challenges ” for the BVI economic system, at the same clip it besides presents chances.

The authorities is looking to excite the economic system through a assortment of policies and plan enterprises. Besides, the BVI House of Assembly that company incorporations in the BVI had besides fallen back, due to the planetary lag. The figure of companies integrating in 2008 was down by 20 per centum on the 2007 figures. In peculiar, the confined insurance and common fund sectors of the BVI ‘s fiscal services industry were difficult hit by planetary events. As a consequence, the BVI disposal expects to see minimum growing in incorporations in at least the first half of 2009, though the outlook is that new incorporations will pick up in the 3rd and 4th quarters.

The pull offing manager and main executive officer of the BVI Financial Services Commission, Robert Mathavious, warned at the terminal of January 2009 that the district ‘s offshore Centre faced ambitious conditions, and non merely from the planetary lag. The fact that the entrance government of US President Obama is committed to much tighter ordinance of seaward revenue enhancement oasiss is itself a challenge. The coming enterprises against offshore legal powers would pull a differentiation between seaward legal powers that have implemented effectual criterions and are committed to transparence and the exchange of information on revenue enhancement affairs, and those seaward centres that seek to offer complete secretiveness and privateness to those utilizing their legal power.

6. Developments

The British Virgin Islands is in the thick of some important alterations for touristry over the past 4 old ages. These progresss include the development of a big belongings on Beef Island, advancing watering place on bing belongingss and Tourism Industry Standards ( TISS ) , a freshly implemented criterions plan.

To day of the month, the development constructs of the five major resort undertakings have been approved, viz. Scrub Island, Beef Island, Smuggler ‘s Cove, Nail Bay and Lambert Beach. It is believed that these undertakings can convey important sustainable value to the economic system. The first to come on watercourse will be Mainsail Resort and Spa on Scrub Island. It was a new five-star resort and watering place which concentrate on athletics fishing. As a consequence, the BVI is known as a fishing land, and the authorities is doing an attempt to integrate athleticss angling in a more active manner. In add-on, the debut of the marina installations, an 18-hole Jack Nicklaus Golf Course and resort on Beef Island are scheduled to be completed within 6 old ages. The investing is about $ 80 million.

With respects to bringing of quality service, the authorities has spent in surplus of $ 1 million over the last three old ages to establish the Tourism Industry Standards ( TISS ) preparation programme for all industry forces in the public and private sectors. The plan is indispensable to heighten all of the services on the island.

In twelvemonth 2008, the largest full-service marina and boatyard in the British Virgin Islands has introduced a new yacht storage system for hurricane storage that will increase the safety of yachts stored. By this system, Nanny Cay Marina which is the first boatyard in the Caribbean Windstorm Exclusion Area ( CNWEA ) has received the position of an sanctioned hurricane storage installation by one of the universe ‘s prima insurance company of luxury yachts, Pantaenius.

7. Ranking

British Virgin Islands was ranked in the twenty-ninth topographic point in September 2008 in Global Financial Centres Index ( GFCI ) , published by the City of London. The index is updated every six months, and it is based on 14 factors of fight grouped into five cardinal countries which are people, concern environment, market entree, substructure and general fight. The British Virgin Islands dropped to 34th topographic point in March 2009. However, BVI are the lone offshore Centre to lift in the rankings, up one topographic point to 33rd and confirmed its presence in the list of the top 40 states in the GFCI, on September 2009.

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