PREMIER'S CALLS FOR INDEPENDENCE OF THE BRITISH VIRGIN ISLANDS COULD KILL THE GOLDEN GOOSE FOR THIS CENTER OF DODGY SHELL COMPANY FORMATION

A very assertive public statement by the sitting leader (Premier) of the British Virgin Islands NATALIO WHEATLEY, regarding self-rule in the BVI, has local media there openly discussing a move towards independence, after what it regards as unnecessary interference by the UK in BVI internal affairs. Allegations of systemic corruption, cronyism, "don't ask don't tell" about the facilitation of drug trafficking through the territory, and other major problems voiced by Britain aside, talk of throwing off what is regarded as the British yoke of colonialism is more dominant since a critical report on the BVI, with the threat of Direct Rule, was issued around the time that disgraced former Premier ANDREW FAHIE was arrested in Florida, and charged with both money laundering and conspiracy to engage in drug trafficking.

What if the BVI becomes independent? From a compliance standpoint, the cache' and implied stability of a British Overseas Territory goes right out the window, when it comes to the anonymous BVI corporation. One might expect most corporate service providers abroad, especially in Hong Kong, to cease recommending the BVI company as the entity du jour immediately, and move on to another jurisdiction. Such a radical loss of revenue in the BVI, both in government fee cash flow, and in the local provider firms, to hit the Road Town economy hard. How will all those cushy "do-nothing" government job salaries be funded? Who will employ the clerks and lawyers who are involved in company formation? Expect a recession forthwith, if not an outright depression, as the direct result.

Of course, as a compliance officer, I would welcome the downfall of the BVI company structure; those corporations are the bane of due diligence inquiries, and continue to bedevil those of use who need to positively establish beneficial ownership at account opening, for transaction monitoring, and to properly discharge our AML/CFT responsibilities each day. Will the BVI dive off the deep end into independence? We cannot say, but we will be watching.