The new BOSS Act (Beneficial Ownership Secure Search Act of 2017) was implemented in the British Virgin Islands this week. The law puts your personal data in the hands of government regulators and spells the end of privacy in the BVI.
The BOSS Act puts your offshore privacy in the hands of a bureaucrat who’ll turn it over to any agency that comes calling. Don’t form an offshore company in the BVI in 2017. If you already have an offshore company in the BVI, close it down and move to a country that provides some level of protection.
Under previous versions of BVI’s AML and KYC law, your lawyer or incorporator held your personal data. When you formed an offshore company in the BVI, you’d select a trusted advisor. You’d provide a notarized copy of your passport, a copy of a utility bill showing your name and home address, and a statement listing the shareholders and beneficial owners of the structure.
The big change in the BVI is that your personal data must now be uploaded to government servers and maintained by government agents. No longer can you rely on your local advisor to protect your rights… they must give up your data when they file the corporation.
In addition, you’ll be required to inform the government of any changes to your status and any changes in in the shareholders of your offshore BVI company. You will have 15 days to report a change, including a change of your address, to regulators. Failure to do so can result in your offshore company being revoked.
In order to comply with the BOSS Act, local agents will ask you to fill out new forms and send in updated proof of residency each year. And, as these agents need to make money, they’ll likely charge a fee for data collection and require you buy a Certificate of Good Standing every year.
Rest assured that the cost of complying with the BOSS Act will shift from the agent to you very quickly… and the agent will find a way to make money on the process. They typically do this by forcing you to buy a Certificate of Good Standing at a nice markup.
I’d expect the BOSS Act to add $1,000 to $1,500 to your annual renewal in the BVI. Failure to comply will mean your offshore company will be struck from the registry and terminated. The agent’s margin after overhead will probably be $600. Considering most agents have 2,000+ companies under management, this law makes for a nice residual income stream.
And this law makes the government the “boss” of any and all structures in the BVI. This includes international trusts and all types of offshore companies formed in the BVI. The settlor of an international trust must be reported and anyone owning or controlling 10% or more of an offshore company in BVI. Also, the owner must be a “natural person” and not a company or structure (such as a trust).
The phrase “or controlling” means that the ultimate beneficial owner must be reported to the BVI government. You can’t put in nominee directors or play any games by using holding companies from jurisdictions that have privacy laws… you must report the person who owns or controls the offshore structure… the ultimate beneficial owner.
Not all countries with public registries force you to report the beneficial owner. Some just require you to report the owner. The owner can be either a natural person or a company, including a company from another jurisdiction.
For example, in Panama the founder of a foundation (like the settlor of a trust), along with the officers and shareholders of a corporation, can be structures or persons. Because Panama has a public registry that reports founders, shareholders, and officers, we often use foreign LLCs to fill these spots.
We use a Belize LLC as the founder of a Panama foundation and a Cook Islands LLC as the officer of a Panama corporation. This way, when someone searches the registry, all they see is the name of the LLC. For more on this, see: The Bearer Share Company Hack.
Because the BVI BOSS Act requires a natural person, we can’t use a Cook Islands or Belize LLC to maintain privacy. Because the BVI BOSS Act requires the ultimate beneficial owner be reported, we can’t use a nominee.
If you care about your personal privacy, I suggest you shut down your BVI structure and open up somewhere else. The BVI is now the least secure offshore jurisdiction.
Agents must upload client data to the government in the next few weeks. If you don’t want this to happen, you must shut down your company immediately. If you want to maintain personal and business privacy, you need to act before your agent is forced to turn your records over to a regulator.
Some level of personal privacy is important, even in 2017 where “know your client” and FATCA are realities. Making it difficult for civil creditors to find our foreign accounts is a basic component of international planning.
When your data is held by an agent, someone you trust and who will fight to protect your privacy, you know that you’re in good hands. When that data is uploaded to a massive government database, you must see some level of risk there.
Countries like Belize, Nevis and Cook Islands keep your data with your local advisor. It will only be released if you’re sued in the island, which is the best you can hope for today.
If you want access to a major banking center like Cayman, Singapore or Panama, you’ll need to pay for the privilege. All three of these countries now require you to be a resident or own property to open a bank account. For more, see: Panama is getting out of the offshore banking business.
The lowest cost residency option is Panama. You can get residency with an investment of $20,000 in the country’s green initiative, the Friendly Nations Reforestation Visa.
I hope you’ve found this article on BVI’s BOSS Act to be helpful. If you don’t want a government bureaucrat to become the boss of your structure, I suggest you move ASAP. Please contact me at firstname.lastname@example.org or call (619) 550-2743 for a free and confidential consultation.