WILL NEW UK RULE ON DISCLOSURE OF BENEFICIAL OWNERSHIP SHUT DOWN THE LUCRATIVE BVI OFFSHORE INDUSTRY ?

The strict new regulation in the United Kingdom, regarding the mandatory disclosure of the Beneficial Owners of corporate entities that hold real property, could have a severe impact upon what has been a very lucrative business in offshore companies in the British Virgin Islands. the penalties, which include restrictions upon the transfer of real estate whose owners have not been publicly named, and even a five-year prison sentence of offenders, will probably spell the end of the opaque practise of placing valuable land purchases in the name of BVI companies, since the primary goal of the buyers was to deny anyone and everyone the identities of the true owners of their asset.

Over on Roadtown, BVI, we imagine that financial service firms, as well as those in local government, who depend upon the substantial revenues received for company formation to pay their public servants, are distressed. The new UK model could be adopted by the jurisdictions, resulting in a steep decline in their foreign corporate clientele. The fear that cleverly hidden valuable assets might subsequently be exposed to the taxman in their home country, as well as law enforcement and regulatory authorities, will certainly be the cause of many sleepless nights amongst those foreign nationals who have a lot to hide from those at home.

Of course, any and all corporate owners of UK realty are subject to the same what foreign purchasers now regard as severe restrictions, but BVI companies are far and away the first choice of international lawyers and other professionals intent upon hiding their clients' ownership of expensive London property, and that is most likely where this British counter-move will have the most impact. Outside of tourism, the BVI has little outside sources of income, to support its population. Its leaders may now be forced to diversify its economy into other fields, which would generate cash through taxation, to meet its domestic budgetary requirements.

NOTE: Readers requiring more detail are advised to read our blog article from yesterday entitled Read 'em and Weep; Money Launderers placing Cleaned Funds in UK Real Estate, August 2, 2022.