New Beneficial Ownership Requirements In The British Virgin Islands: A Trust-worthy Perspective

Abstract

Following the Caribbean Financial Task Force's Mutual Evaluation Report, a number of changes to the British Virgin Islands' (BVI) trust and corporate legislation have been made with a view to ensuring that (a) trustees retain and maintain accurate and up-to-date beneficial ownership information and, perhaps more significantly (b) records relating to the beneficial owners of BVI companies are placed on a non-public register. The information relating to BVI companies which needs to be placed on the register includes details of individuals who own or control 10% or more of the shares or voting rights in the company and, in the case of shares held by trustees of trusts which are not exempt, details relating to trustees, settlors, protectors and beneficiaries with vested interests. The register will be maintained by the BVI Registrar of Corporate Affairs and will be available for inspection by regulators, law enforcement agencies and, it is expected, those who are regarded as having a "legitimate interest". In the case of trusts which have regulated trustees, ie those which hold licences under BVI legislation, only the name of the trustee will need to be placed on the register provided that the trustee is able to provide the relevant information within 24 hours of being required to do so by the Registrar.

In February 2024, the Caribbean Financial Action Task Force (the CFATF) Mutual Evaluation Report (the "Report") made a number of recommendations to strengthen the anti-money laundering and counter-terrorist financing measures in force in the British Virgin Islands ("BVI"). In relation to trusts specifically, the Report recommended that there should be:

• a requirement for trustees to keep adequate, accurate and up-to-date beneficial ownership information and to review and update that information on a timely basis; and
• penalties for trustees, including non-professional trustees, who fail to provide timely information to competent BVI authorities such as the BVI's Financial Services Commission.

The BVI government subsequently made several significant legislative reforms with a view to complying with the CFATF's recommendations and to aligning the jurisdiction's laws with international standards. Amongst the legislative reforms, a number of amendments were made to the BVI's Trustee Act (the "Trustee Act") and to the BVI Business Companies Act, 2004 (the BCA); the reforms in question introduced new requirements in relation to the retention of the beneficial ownership information in relation to BVI trusts and trustees and of BVI companies whose shareholders are trustees. A broad outline of these new requirements is set out below.

AMENDMENTS TO THE BVI'S TRUSTEE ACT

In furtherance of the Report's recommendations, the Trustee (Amendment) Act, 2024 (the "Amendment Act"), which made several amendments to the Trustee Act, came into force on 10 December 2024. The Amendment Act introduced new definitions of "beneficial owner" and "beneficial owner information" by its modifications to p 92A of the Trustee Act and introduced a new p, 92B, which requires trustees to collect, keep and maintain accurate and up-to-date beneficial ownership information¹ on beneficial owners. "Beneficial owner" is defined as meaning "the trustee, the settlor or other person by whom the trust is made, the protector (if any), the beneficiaries or class of beneficiaries with a vested interest in the trust at the time of or before distribution of any trust property or income and any other natural person exercising effective control over the trust (including through a chain of control or ownership)".

p 92B of the amended Trustee Act also requires trustees to take reasonable steps to verify beneficial owner information and to update beneficial ownership information within 30 days of becoming aware of any change to a beneficial owner or a beneficial owner's interest.

It is considered that the above changes to the Trustee Act are, by and large, unlikely to impose additional burdens on most professional BVI trustees, ie since the trustees of most well-administered trusts would have been complying with these new statutory requirements in any event, for instance as a consequence of having to comply with the jurisdiction's very robust anti-money-laundering and counter-terrorist financing regulations or else simply because the information is needed to properly administer the relevant trust.

Trustees are also now mandated by p 92B to retain beneficial ownership information for five years following the termination of the trust. p 92B also introduces an offence for trustees, which carries a fine of up to US$75,000 on conviction, if a trustee who, without reasonable excuse:

• fails to collect, keep and maintain adequate, accurate and updated information on beneficial owners;
• fails to take reasonable steps to verify beneficial ownership information;
• fails to update beneficial ownership information within 30 days of its awareness of the change;
• fails to maintain information for at least five years after termination of the trust;
• fails to cooperate with a competent authority or law enforcement agency in the lawful performance of its functions; or
• provides false, inaccurate or misleading information to a competent authority or law enforcement agency.

AMENDMENTS TO THE BCA AND THE ASSOCIATED REGULATIONS

Changes have also been made to the BCA which contains the BVI's statutory provisions in relation to BVI companies; with over 360,000 active companies on its register,² the BVI is regarded as the world's leading international financial centre for the incorporation of international business companies. Furthermore, two sets of regulations were made by the Cabinet pursuant to the BCA: these regulations are the BVI Business Companies and Limited Partnerships (Beneficial Ownership) Regulations, 2024 and the BVI Business Companies (Amendment) Regulations, 2024; these two sets of regulations are together referred to in this article as the "BCR" and the BVI Business Companies (Amendment) Act, 2024 and BCR are together referred to as the "BC Amendments". The BC Amendments came into effect in January 2025 and, amongst other things, implemented changes to the beneficial ownership requirements for BVI companies and limited partnerships.

The BC Amendments require beneficial ownership information, which had, since 2017, been maintained by the Beneficial Ownership Secure Search System (BOSSs) platform, but which, as a result of the BC Amendments, now has to be filed with the BVI Registrar of Corporate Affairs (the "Registrar") under the jurisdiction's pre-existing secure digital regulatory system, VIRRGIN, which has been improved and enhanced to host the beneficial ownership information. The BC Amendments also require the Registrar to keep and maintain a non-public register of the beneficial ownership information (a "BO Register"). The BC Amendments further stipulate that a BVI company's beneficial ownership information which is filed with the Registrar must include adequate, accurate and up-to-date information on the beneficial owners of the relevant company and places a duty on its registered agent to verify the information provided to the Registrar.

The BO Register must, in particular include the name (as it appears in a passport or government issued identity document), date and place of birth, nationality, gender, occupation, address and nature of interest or control of each natural person ultimately owning or controlling 10% or more of the shares or voting rights of the relevant BVI company (or having the right to appoint or remove a majority of its directors or otherwise exercising control over such BVI company's management). Similar beneficial ownership information to that which is required in relation to such natural persons will be required in relation to shares held by trustees of trusts unless the "Licensed Trustee Exemption" referred to below applies; such information will (unless such Exemption applies) be needed in relation to the trustees, settlors, protectors, beneficiaries or classes of beneficiaries with a vested interest in the trust at the time of or before distribution of any trust property or income and any other natural persons exercising ultimate effective control over any trust in which BVI company shares are held.

The BC Amendments also introduce timelines for the filing of beneficial ownership information. All BVI companies, unless exempt, must file their beneficial ownership information within 30 days of the company's date of incorporation (or, if relevant, that of its continuation to the BVI). BVI companies, the date of incorporation (or continuation in the BVI) of which pre-dates the BC Amendments, must file their beneficial ownership information by June 2025. A BVI company's registered agent must also file any changes to the company's beneficial ownership information within 30 days of becoming aware of the change.

The licensed trustee exemption

Importantly, the BC Amendments carve out an exemption from the new requirement for BVI companies to file their beneficial ownership information on the BO Register. The BC Amendments specify that BVI companies whose shares are held by a trustee which holds a licence under the BVI's Banks and Trust Companies Act, 1990 (as amended) (a "Licensed Trustee") are not required³ to file their beneficial ownership information on the BO Registrar if it can be provided to the Registrar, upon request, within 24 hours.⁴

Thus, if a BVI company's beneficial ownership is held by a Licensed Trustee, the only beneficial ownership information which must be filed on the BO Register is the name of the Licensed Trustee.

According to statistics produced by the BVI's Financial Services Commission there are currently over 270 Licensed Trustees in the BVI,⁵ over 112 of which currently hold unrestricted trust licences allowing them to provide complete trustee services from within the BVI.⁶ Licensed Trustees operating from within the BVI must conform to strict government regulations and maintain a minimum required capital and are supervised by the Financial Services Commission in accordance with internationally accepted supervision standards.

Many, and probably most, BVI trusts have Licensed Trustees as their trustees and so the new requirements contained in the BC Amendments should, by and large, only affect shares in BVI companies which are held by private trust companies⁷ and/or individual shareholders.

It cannot be gainsaid that those many shareholders of BVI companies who have not already made plans to cater for the succession to their shares when they pass away⁸ should do so as soon as possible. The relevant steps would be the preparation of a BVI will which is both formally and materially valid under the law of the jurisdiction in which he or she is domiciled at death⁹ or, if a probate application in the BVI following the shareholder's death is to be avoided, taking steps such as the establishment of a lifetime trust which, everything else being equal, is generally thought to be the best succession planning option. It is considered that an indirect consequence of the BC Amendments will be to make the establishment of BVI trusts which have Licensed Trustees as their trustees an even more attractive proposition since this will provide enhanced confidentiality.

Inspection of the BO Register

The BC Amendments state that the BO Register may be inspected by:

• any law enforcement agency in performance of its lawful investigative powers; or
• a competent authority in the lawful exercise of its regulatory powers or lawful discharge of its authority and obligations.

However, in January 2025, the BVI government launched a public consultation to garner stakeholders' input on the policy to be adopted around rights of access to the BO Register and the definition of "legitimate interest". The public consultation closed on 14 March 2025 and its results are expected in the relatively near future. Once the relevant legislative provisions have been enacted, it is anticipated that this will be covered in a further article which will be published in this journal.

Severe potential penalties for non-compliance

The penalty for an existing company which fails to file its beneficial ownership information pursuant to the BC Amendments are US$600 for the first three months of non-compliance followed by US$800 for the following three months, after which the company may be struck off the register. If a company is struck off for failure to comply with the beneficial ownership filing requirements and later applies to be restored, it is liable to pay an additional restoration penalty of US$2,500 if the restoration is made by a former director, former member or former liquidator of the company.

Failing to collect, maintain and keep accurate and up to date beneficial ownership information pursuant to the BC Amendments is classified as a Tier 4 contravention and carries a maximum administrative penalty of up to US$75,000. Knowingly or recklessly making a false statement in purported compliance with the requirement to provide beneficial ownership information pursuant to the BC Amendments is also a Tier 4 offence and both the legal entity and its senior officers who permitted the offence are liable on conviction for the prescribed penalty of up to US$75,000.

CONCLUSION

The BVI has undergone extensive revamping of its beneficial ownership regime to align its anti-money laundering and terrorist financing framework with international best practice for financial transparency and integrity. Trustees, settlors, beneficiaries, protectors, practitioners, registered agents, advisors, and any other natural person exercising control over BVI trusts or BVI companies subject to trusts will need to familiarise themselves with the BVI's legislative reforms and keep abreast with the evolution of BVI beneficial ownership requirements and the relevant exemptions in order to ensure that they comply with the relevant laws.

Footnotes

1. This term is defined with reference to Regulations made under p 230 (3A) of the BVI Business Companies Act.

2. As at 31 March 2025 there were 361,167 such companies. See the Q1 2025 FSC Statistical Bulletin on the BVI Financial Services Commission's website (www.bvifsc.vg).

3. It is considered that this exemption is broadly equivalent to that which applies in The Bahamas: see p 7(2) of the Register of Beneficial Ownership Act which came into effect there in 2018.

4. There is a similar exemption for companies whose shares are listed on recognised exchanges and for certain companies which are private funds, professional funds, public funds, private investment funds, approved funds and incubator funds.

5. See the Q1 2025 FSC Statistical Bulletin on the BVI Financial Services Commission's website (www.bvifsc.vg).

6. See the Q1 2025 FSC Statistical Bulletin on the BVI Financial Services Commission's website (www.bvifsc.vg).

7. Of which over 1,140 are incorporated in the BVI, making the jurisdiction one of the most popular international financial centres in which to set up private trust companies. See the Q1 2025 FSC Statistical Bulletin on the BVI Financial Services Commission's website (www.bvifsc.vg) and Private Trust Companies: The Best of All Worlds by Christopher McKenzie published in Trusts & Trustees vol 14 No 2. March 2008 (an updated version of which can be found on O'Neal Webster's website at www.onealwebster.com).

8. See Encouraging Successful Succession—Estate planning options for shareholders of BVI companies by Christopher McKenzie, STEP Journal, April 2024 (republished on O'Neal Webster's website at www.onealwebster.com).

Trusts & Trustees, published by Oxford University Press

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