Tightening of asset control measures

June 21, 2017

British Virgin Islands introduces Beneficial Ownership Secure Search System (BOSS system)

New legislation – Beneficial Ownership Secure Search System Act, 2017 – was introduced by the BVI Government and was endorsed on June 12, 2017. Under this Act information about beneficial owners of corporate and legal entities are entered into the BOSS system by the Registered Agent. These actions are implemented to allow the immediate sharing of beneficial ownership information between the BVI and UK government.

A Beneficial Owner is a person who ultimately owns or controls directly or indirectly 25% or more of the shares or voting rights of a legal person. But this 25% ownership reporting requirement does not contradict the already established 10% ownership requirement for gathering KYC, as set out in the BVI AML legislation.

The following information about each corporate and legal entity must be entered into the BOSS system:

  • The name, including alternative names;

  • The incorporation number or its equivalent;

  • Date of incorporation;

  • Status;

  • Registered Address;

  • Any other information as the Minister may by Order prescribe.

The following information is required with respect to each beneficial owner of the corporate or legal entity:

  • Name;

  • Residential Address;

  • Date of Birth;

  • Nationality.

All Registered Agents must enter into the BOSS system the relevant details of the beneficial owners until June the 30th, 2017, and the system will go live on July the 1st, 2017.

The corporate and legal entities must inform the Registered Agent of any changes in the beneficial ownership or in the prescribed beneficial ownership information within 15 days counting on the change and including the day when these changes became aware. The Registered Agent must update the BOSS system within 15 days since the moment of his notification of these changes.

The failure to comply with the requirements of the BOSS Legislation creates the risk of strict penalties and criminal charges for both the corporate and legal entities which are obligated to disclose the information and for the Registered Agent which is responsible for the input of the information.

Unexplained Wealth Orders

Unexplained Wealth Orders (UWO) is a powerful new weapon into the anti-corruption arsenal. They are an important provision of the Criminal Finance Bill that was passed on 27 April by the UK parliament. Unexplained Wealth Orders – a legal tool that will provide stronger powers for UK law enforcement to seize and repatriate the proceeds of grand corruption. This follows actions that have already been taken in Australia and Ireland.

The provision specifically targets situations where a person is buying expensive items, like property or jewels, and doesn’t appear to be wealthy enough to make the purchase. If the person has links to serious crimes or access to public money, then the authorities can act accordingly.

An Unexplained Wealth Order can be used now by the UK law enforcement agencies to investigate the source of that money, and, if it is found to be corrupt money, more easily return it to those from whom it has been taken from.

Under the new provision, there is no need for any previous civil or criminal proceedings. An enforcement authority may apply to the High Court in circumstances where an individual is a foreign politically-exposed person (PEP), or there are reasonable grounds to suspect that an individual has been involved in serious crimes. An order could also be obtained against associates, as long as in all cases the court is satisfied that there are “reasonable grounds to suspect” that a person’s known sources of lawful income are disproportionate to specified property worth, in total, more than £100,000. Once made, the order compels a person to explain to the enforcement authority how they obtained the property. If the authority considers the explanation to be inadequate, it may lead to asset recovery proceedings. Failure to respond will automatically trigger civil recovery proceedings with a presumption in favor of asset confiscation. Providing false or misleading information will constitute a criminal offence punishable by a maximum term of two years of imprisonment. Importantly, the making of a UWO will also give rise to a new property confiscation mechanism.