Banking

When the BVI began their development as an IOFC, the authorities decided not to encourage offshore banks to establish themselves in large numbers, as a defence against money-laundering. Unlike Bermuda, however, which created local banks to the exclusion of external banks, the BVI authorities allowed in a small number of international banks. There are in fact a total of 9 banks in the BVI, including Barclays Bank and Chase Manhattan.

Lately there has been pressure on the Government from the business community to allow in larger numbers of respectable offshore banks; professional firms in particular feel that the BVI's legislative and regulatory apparatus is well up to global standards and well able to defend the BVI and its good reputation against scams, criminals and drug money. By now it's likely that the Government would not refuse new applications from top banking institutions.

Banks are regulated under the Banks and Trust Companies Act 1990, and supervised by the Banking and Fiduciary Division of the Financial Services Commission. See Offshore Legal and Tax Regimes for further details of the supervisory and taxation regimes.

Trust Management

Trust Management has been a major activity in the British Virgin Islands for 30 years or more. Originally the trust was used primarily by wealthy individuals from the major common law countries, but it is now accepted as a major technique of asset protection in all parts of the world. Trusts in the BVI have a basis in common law, and are formed under the Trustee Ordinance 1961. The Trustee (Amendment) Act 1993 considerably modernised and updated the legislation, allowing for purpose trusts among other things. The new legislation, together with the highly flexible BVI International Business Company, has opened up wider markets for the BVI trust, in which clients are not necessarily interested so much just in tax avoidance, but also in the efficient management of wealth in a more general sense.

There is a large and sophisticated community of professional advisers on trust matters in the BVI. Companies offering trust services must be licensed under the Banks and Trust Companies Act 1990, and supervised by the Banking and Fiduciary Division of the Financial Services Commission. See Offshore Legal and Tax Regimes for further details of the licensing regime for trust managers, and fees payable.

Insurance

The British Virgin Islands insurance sector offers one of the very few examples of an IOFC which deliberately took the axe to a thriving business sector in order to clean it up. In 1990 there were 2,000 captives in the BVI, of which many were known to be 'shell' operations possibly engaged in doubtful or even illegal activity or money-laundering. By applying minimum capital regulations and other measures, the Government reduced the number of captives to a mere 125 acceptable companies, and installed new legislation designed to maintain a solvent and well-regulated insurance sector. In 2002, 50 new captive insurance sector were granted by the government, bringing the total number of captive insurers actively managed in the territory to 282.

A total of 67 new captives were licensed in 2004, a record for the BVI. “The BVI has further consolidated its position as the world’s fourth largest offshore jurisdiction for captives, and enjoyed a record year in 2004. Interest from around the world continues to grow, particularly from medium-sized single parent corporations, and the captive vehicle generally is becoming more widely known as an efficient and effective insurance option,” commented Greg Taylor, Chairman of the BVI Insurance Association.

New captive business in 2004 stemmed primarily from parent companies operating in three industry sectors: Real Estate and Construction business, Healthcare and Finance and Insurance. The upward trend in registrations continued in 2005 with strong interest in BVI as a captive domicile. The jurisdiction is now home to nearly 400 captives and supports a growing number of professional services firm to manage them.

The Insurance Act 1994 and the Insurance Regulations 1995 establish the regulatory and supervisory regime for insurance, including captives, in the BVI. Insurance licenses distinguish between Long Term, General and 'Credit Life' insurance companies. Insurance professionals (agent, broker, adjuster, etc) are also licensed. The sector is regulated by the Financial Services Commission. See Law of Offshore for further details of the regulatory regime.

The new insurance regime allows for a wide range of insurance activities, including single-parent and group-owned captives for direct and reinsurance business, rent-a-captives, underwriting for risk purchase and risk retention groups, alternative risk transfer, protected life policies etc. There is now once again a flow of new insurers arriving in the BVI. Although obviously it is far behind Bermuda and Cayman, its two local competitors, it is considerably cheaper as a jurisdiction and has legislation which is at least as good.

The Insurance (Amendment) Act, 2002 makes provision for segregated portfolio companies. A segregated portfolio company (sometimes referred to as a protected cell company) is an entity that allows each portfolio or cell to have legal separation of assets. Thus, the assets and liabilities within a segregated portfolio would be segregated from the assets and liabilities of other segregated portfolios and those assets and liabilities of the company that are not held in any segregated portfolio. The creation of segregated portfolios is subject to the approval of the Financial Services Commission.

Most captives and other insurers in the BVI use the International Business Company form, which is exempt from taxation.