The British Virgin Islands Financial Services Commission has issued advisory warning concerning Pyramid Scheme Frauds and other related investment scams. In the warning, pyramid scheme is defined as fraudulent money-making scheme based on non-sustainable business model that involves the exchange of money primarily for enrolling other people, without legitimate product or service. While legitimate trading schemes are based on valuable goods and services, illegal pyramid schemes focus on recruiting more and more investors. The members who join the group may get profit by signing up new members.
The deals of this kind are usually scams even if they look like a form of investment opportunity, for example, forex trading. It is a form of financial fraud. The commission provides more information on these fraudulent schemes, and how to avoid becoming their victim, on its website www.bvifsc.vg.
The amendment to the Sanctions and Anti-Money Laundering Bill, which was strongly opposed by the Organisation of Eastern Caribbean States (OECS), still was accepted by the UK government. According to the new provisions to the legislation, British Overseas Territories will be forced to issue public registers of beneficial owners of companies registered in each jurisdiction. The public registers should be developed by the end of 2020.
Earlier, the OECS noted that the issue of public registers is a matter for international financial regulation, led by the Financial Action Task Force (FATF). It does not require public register but that beneficial ownership information is accessible and verified by law enforcement or other competent authorities. Also, the BVI earlier stated that it will comply with such a requirement if it becomes as international standard. It also noted that the UK Register, while being public, is not verifiable, so it does not technically meet FATF requirements.
The OECS said in a statement in the beginning of this week: “While we recognize and respect the sovereign right of the UK to determine its national legislation, our concern centers on those provisions which are discriminatory to the BVI and which contravene the constitutional arrangement between the BVI and the UK by which financial services are formally entrusted to the democratically elected BVI government when the new constitution was agreed in 2007”.
A number of public statements were issued by the British Virgin Islands Financial Services Commission to protect the public interest, and the interests of any customers or creditors of Kerford Investments Limited, DOMINION S.X. Ltd., formerly known as Qualiom Financial Ltd., BNRoptions Ltd, and BVI Business Company Bgo group Ltd which operated the website AYAFOREX at http://ayafx.com. The Commission considered it necessary to warn the public that these companies have never been licensed or regulated by the FSC to carry on any type of financial or investment business services in or from within the Territory.
For Kerford Investments and DOMINION S.X. Ltd., the Commission issued an order to immediately cease carrying on investment business in the BVI, as these BVI-incorporated companies conducted investment business online without having obtained the requisite licence from the FSC and in breach of legislation.
The BVI FSC issued public statement pursuant to Section 37A(2) of the Financial Services Commission Act, 2001, to protect the public interest and the interests of any customers or creditors of the company known as Trade Time Investment, to make the public aware that this company has never been licensed or regulated by the Commission to carry on any type of financial services business.
Trade Time Investment has been connected to the website www.tradetimeinvestment.com which facilitates online investment business activities, and has been circulating a false Investment Business Licence purporting to be issued by the British Virgin Islands.
The British Virgin Islands Financial Services Commission has issued the public statement regarding Smiths Gore and Son’s Reserve Loan Company, in order to protect the interests of the public and of any customers and creditors of this company, and to inform that it has never been licensed or regulated by the Commission to carry on any kind of financial services business.
Smiths Gore and Son’s Reserve Loan Company has been circulating a forged Investment Business Licence which was falsely represented as being issued by the Financial Services Commission. The website to which the loan firm has been connected, www.smithsgoreloan.com, purports to provide online loan services to the public. Also, the company has not been actually registered in the territory of the British Virgin Islands.
The companies registered in Guernsey, Jersey, the British Virgin Islands and the Isle of Man are revealed to be the biggest overseas buyers of property in East Anglia. Since 2015, offshore firms from these tax havens have spent more than £400 million on property in Norfolk and Suffolk. The real number may be much higher as only one third of the 300 properties sold have a sale price on the Land Registry.
The properties sold in Norfolk and Suffolk counties are prime offices and new homes, as well as industrial estates and shops. Purchasing through offshore firms makes it difficult or even impossible to find out the ultimate owner, and there is a legal loophole allowing the tax to be reduced by thousands of pounds when the property is going on sale. In 2016, the UK law was changed making sure non-UK residents are taxed on profits from dealing with UK properties, but still offshore companies do not pay capital gains tax on commercial property sales.
Norfolk and Suffolk properties bought by the British Virgin Islands companies include Wickes store in Norwich bought for just under £6m in March 2017, by Dakota Properties Limited, and it seems not possible to find who is behind this BVI firm.
Another example is the building in the city centre, a prime retail spot, which was bought for for £2.7m by the BVI-based company Balavan Limited. The registered address of the company is Mossack Fonseca, the Panamanian law firm known for Panama Papers data leak.
The EU has released blacklist of 17 countries which are said to be tax havens not doing enough to cope with offshore avoidance schemes. Among these countries there are the United Arab Emirates, Bahrain, Tunisia, Panama, South Korea, Macau, Barbados, and some others. They will have restrictions in receiving EU funding and investments, and maybe the sanctions of the EU member states.
Some other jurisdictions, among them the British Virgin Islands, Bahamas, Antigua and Barbuda, also failed to comply with the EU standards, but got a temporary pass because they severely suffered from this year’s hurricanes and may not currently have the needed infrastructure. According to the EU statement, they have to deal with the problems until early 2018, not to be blacklisted.
The list was made based on three main components: tax transparency, fair tax competition and implementation of Base Erosion and Profit Shifting (BEPS), which is a way of battling tax avoidance created by the OECD. It is stated that the goal of the list is to ensure that the EU partners adhere to the same tax standards as the European Union itself.
In the end of last week the US-based International Consortium of Investigative Journalists (ICIJ), which released Panama Papers last year, made public the Paradise Papers, a leak containing over 13 million documents being sifted through by journalists in more than 67 countries. In particular, the papers revealed information about top companies and dignitaries in the UK who avoided taxes using offshore tax havens. The new information on tax avoidance was discussed by EU finance ministers during the regular talks in Brussels, and some officials urge EU member states to rapidly take measures, among them adopting a European tax haven blacklist.
Similar to the Panama Papers, the Paradise Papers show the secret ways how multinational companies and rich individuals cut taxes by shifting their profits offshore, with the help of accountancy firms. There was also LuxLeaks scandal which revealed in 2014 that Luxembourg, with European Commission President Jean-Claude Juncker as prime minister, gave companies huge tax breaks. In all these cases, billions of profit were legally diverted from taxation, using such offshore jurisdictions as the British Virgin Islands, especially known from Panama Papers leak.
As a result of these scandals, the EU ministers are due to make an official list of unwanted tax havens in December 2017, whittling down an initial list of 92 countries finalised last year. About 60 countries have been warned by EU that their tax policies may be problematic, and asked to provide further information before 18 November deadline.
BVI-registered mining and exploration group Polo Resources Limited announced on 18 October, 2017 that it did not finish the appointment of a replacement nominated adviser by 19 October 2017, as it is required by the London Stock Exchange. As a result of this, the Exchange will suspend the BVI company on 19 October 2017. The company will seek the replacement adviser, and inform its shareholders in due course.
This news followed the announcement of Polo Resources on 11 October, and London Stock Exchange’s announcement on 10 October where the company was notified that the London Stock Exchange decided to remove the status of the Company’s nominated adviser, ZAI Corporate Finance Limited on 19 October 2017 for failure to meet the Exchange’s continuing eligibility obligations. The BVI company is required to find another nominated adviser by 20 November 2017, to avoid cancellation of company’s shares trading on AIM.
It became known that Wintris, an offshore company registered in the British Virgin Islands and owned by the wife of former Primer Minister of Iceland, failed to pay taxes in Iceland for a period of several years. The existence and ownership of the offshore company was made public last year, due to the Panama Papers, and resulted in the resignation of country’s Prime Minister.
Wintris was founded shortly after Anna Sigurlaug Pálsdóttir acquired a prepaid inheritance from her father. Iceland’s Prime Minister had a 50 per cent stake in the company, worth over 1 billion EUR 8 million, which he sold to his wife for $1 shortly after becoming a member of parliament in 2009.
One month after the existence of the company and the couple’s ownership of it was made public, the letter was sent by their attorney to the Director of Internal Revenue, with request to correct their tax returns from 2011 to 2015, and recalculate the charges. The letter’s claim that Wintris may not have paid taxes according to law is in contradiction with couple’s public statements that the company had always paid taxes correctly.
The public ruling made last week shows that for several years taxes were not properly paid for the assets held by Wintris and so the financial information provided by former Prime Minister was not accurate.