Kenneth Baker has big shoes to fill.

In February 2021, he became the second managing director and CEO of the BVI Financial Services Commission.

For two decades before that, the agency was led by Dr. Robert Mathavious, an industry giant who was lauded on his recent retirement - see Business BVI winter 2021/22 - for helping build the economic pillar that today brings in more than half of government’s revenue.

Last fall, Mr. Baker sat down with Business BVI Managing Editor & Chief Content Officer Russell Harrigan at the FSC offices and during a nearly two-hour interview, he fielded questions on topics including his leadership philosophy, the pending public company register, economic tensions emanating from China, Taiwan, Ukraine, inflation and his strategy to help guide the industry through an uncertain future

Business BVI: It’s been nearly two years since you assumed responsibility for the managing director position here at the Financial Services Commission. What has been your biggest challenge so far, and your most satisfying accomplishment.

Kenneth Baker: It has been a turbulent two years. I assumed the role at a difficult time at the height of the pandemic. It was difficult in terms of keeping the commission going in the environment of having to work remotely. This is something that the Commission has done, but usually at a very senior level — with technology you can work remotely. But to get the whole organisation on board was a challenge. The priority was with respect to approvals for licences and for senior officers and things like that: to make sure that those go through in a timely manner and that the service standards [are met]. From a financial perspective, we didn’t know what the fallout would be. But clearly there was an impact on the economy. The tourism sector was completely shut down. Fortunately, our systems remained resilient, even in the environment of working remotely and we were able to meet our financial targets in terms of the revenue that we had projected. So I think the biggest reward is that we were able to keep the commission going with minimal impact on its operations.

BB: So you see that as not only a challenge, but also an accomplishment?

KB: Yes. And it’s really as a result of the collaborative work of the senior management team. We’d meet on a weekly basis; we’d discuss what the challenges were, how we’d go about them. From a legislative perspective, the passage of the Financial Services (Exceptional-Circumstances) Act, 2020 helped tremendously. We had a similar piece of legislation shortly after the hurricanes of 2017, but it had a finite life period. So we put in another piece of legislation, which will operate indefinitely. That was passed in April of 2020, and we continued it up until December of last year, when we felt that things had settled down sufficiently, that we didn’t need these extraordinary powers to make sure the commission operates effectively.

BB: That would have been, I suppose, a lesson out of ’17. The legislation is going to continue — not continue in operation, but it’s there should something happen?

KB: It is there, yes. I suspect what I would want to do is implement it much in the same way that the [United States] would activate

[the Federal Emergency Management Agency] when a storm’s approaching: to declare a disaster, which frees up resources. If it’s a hurricane, then I would be wanting them to implement the legislation prior, and not wait until the aftermath.

BB: At the global level, we’ve entered what is undoubtedly a sustained period of significant turmoil and uncertainty. Some are billing it the end of globalisation, we have the war in Ukraine and the related sanctions against Russia. The growing schism between the US and China, rising inflation, not seen since perhaps the early ’80s and supply chain disruption. There’s an economic slowdown coming at the global level, which is difficult as it is less than two years after the last, which was pandemic-induced. There’s a steep escalation in terms of the cost of energy and climate change challenges. Against this backdrop, how do you see the outlook for financial services in the next 18 months to two years?

KB: We do foresee a slowdown in economic activity internationally, regionally and locally. Internationally — because that’s where we get our business from — we expect to see a slowdown in incorporations. And that has a direct impact on revenue. But the FSC board has just approved an amendment to the fee schedule to increase licence fees: about a 20 percent increase in incorporation fees. So whilst we anticipate that there will be a decrease in the rate of incorporation, we are projecting that revenue should come in on par or even a little bit higher than normal. Certain people will say, “Why increase fees when things are tough?” But what we looked at is the wider popularity of the [product] and the strength of the brand. The brand is perceived as being relatively cheap versus its value. We think we need to get closer to realising the brand’s value. If you have a quality product, then the fees should reflect that.

BB: When would that increase take effect?

KB: Those increases will come into effect from January of 2023. So we are hoping that they’ll be approved by Cabinet and published during the course of this month - September. The industry requests three, four months of notice.

BB: As you said, a global slowdown is a given. China, which is a major driver of our incorporation business, seems to have hit a bad patch economically. COVID, for them — while they started off initially robust and ahead of everyone, they seem to have been the laggards left, in terms of still having complete shut down of large cities. As a result, the economy has certainly taken a hit, and they seem to be a lot more internally driven. How do you see that? Are they going to be driving most of that slowdown that you anticipate?

KB: Yes, you’re right. China benefited significantly from the pandemic, because they supply everything to the rest of the world. But then coming out of that, what we saw is that other factors then started impacting the Chinese economy, including in the real estate property market. The major property developers are significantly leveraged with outstanding debts in the hundreds of billions of dollars — and the collapse of one or two of those companies — which then can impact the banking sector. Historically, the Chinese banking sector has always been propped up by the Chinese government, and the central bank would always step in when it needed to provide liquidity and additional capital injection. What we find is that if the Chinese economy sneezes, then we feel the direct impact of that: Our temperature starts to increase, because that economic activity is what drives the need for business companies.

BB: Do you have a philosophy or a set of guiding principles that you are using to navigate what is clearly a difficult global environment?

KB: Yes. We will continue to monitor what’s happening on the international stage. That is what translates into our outlook for the economic slowdown. What we’re hoping to do, is to respond in a manner that’s appropriate for the jurisdiction. Which goes back to the point I raised earlier about increasing the cost of incorporation in a downturn. Now, some people may say that’s not the right time to do that, but if you believe in the quality of your brand, then you will have to take what we call a calculated risk in adjusting our price at that time. The management team is important: We discuss these issues, and we arrive at a consensus which we think is the best approach for the jurisdiction. In fact, the consensus view, is that we probably should have gone higher on the fees, because you recognise the strength of the brand. But my approach, is that we will do it in gradual steps. Because whilst most of the companies operate internationally, the companies also operate domestically and it therefore has implications for local businesses. Government has always been asking us to do more for the local companies. Clearly, we cannot go back to the ring-fencing regimes that we’ve had of years gone. So, government would need to find creative approaches as to how to bring relief to the local companies, because they too will be impacted by the increase.

BB: I’m glad you touched on that. You hear it a discussed a lot in the House of Assembly in particular: As the sector has grown, there is a perception that it has done so with increased costs to the local business companies. The question I have for you — some of which you just mentioned — is, what is the FSC’s view in this regard, and what can be done about mitigating those concerns?

KB: There are two things we have been advising the HOA on. One, the House passed the Micro Business Companies Act in late 2017. For a variety of reasons, it has been suspended. We think it’s time to implement it.

BB: Who caused the suspension?

KB: The House suspended it, because there were some other factors when the Act was implemented with respect to international standards from the [Organisation for Economic Co-operation and Development] and so forth, which the Act didn’t properly address. So as not to disrupt the assessment process with a negative implication, the easier approach was to suspend the Act, get over that hurdle with the Global Forum assessment, and then come back and address those issues. Our work programme actually calls for us to revisit the whole subject: see what amendments need to be made to the Act; get those amendments done; and then bring the Act into force, with the focus being for local businesses. Because we know that economic activity is really driven by entrepreneurs: people who start up businesses. They may start it off with one or two persons — the husband and the wife or the husband and children — and then grows into bigger businesses. The micro business company is a good steppingstone for the starting off of your business, with lower incorporation fees, lower annual fees. Then when it has matured, you migrate and you transition up to the business company, which has more flexibility for bigger businesses. You are then able to afford those higher incorporation fees. Outside of that, the government has an opportunity. What we have advised, is that there are other ways to ease that burden for local companies, which is some sort of a rebate scheme. We’ve seen it in Hong Kong, where the cost of incorporating and annual fees for business companies is rebated through relief in other areas, whether it’s by a reduction in the trade licence fee or different fees that you need to pay as well.

Or it can be done through a direct rebate at the end of the year. So these steps are what we are advising government to do to bring relief to the small entrepreneurs and local businesses.

BB: Is there going to be in this review process, a chance for the airing of the concerns of the small businesses, so that when the package is orchestrated, there would have been some appreciation for their concerns? Is that your bailiwick? Or is that a governmental responsibility?

KB: That is the responsibility of government. The commission is charged with the implementation of the regime. The rebate mechanism is really not an FSC matter. The FSC’S role is to roll out and to collect the fees and so forth. What we are prepared to do, is to provide guidance and advice to the government as to how to go about developing and structuring the rebate. But the commission cannot be involved in the implementation of that. The idea of having some public discussion on it is a good idea. We’ll certainly bear that in mind.

BB: If we can go back to what’s going on globally: The sanctions against Russia, resulting from the invasion of Ukraine, have become a significant challenge for the sector locally in managing their Russian portfolio. The prevailing approach seems to be one where service providers have offloaded that business to avoid conflicts. What’s your take on this approach, and is there an offshore future for Russian business post the Ukraine challenges?

KB: It’s an interesting question. We don’t subscribe to the notion of offloading all Russian business, because that is essentially equivalent to what has been happening to the international finance centres like the BVI: If you’re offshore, the perception is that what you do is bad. In fact, that’s not the case. There’s a perception that if you’re offshore, then you’re involved in money laundering. That’s clearly not the case. The prime minister of Barbados explained it pretty well yesterday at the [US House of Representatives Committee on Financial Services]: The monies are not here in BVI; they’re not here in the international finance centres. The monies are in the major financial centres in the world. How do you launder billions of dollars in small countries? If you walk into a bank with $10 million in cash and ask to deposit it, half the population would know about that before it happens. It doesn’t happen here. That sort of money has to go through big banking systems. Now, we know from experiences some offshore vehicles — or international-finance-centre vehicles —have been used in money-laundering cases. But at the end of the day, money laundering is getting the funds into the banking system. And the funds would not get into the banking system in the international finance centres. So going back to your question, we don’t subscribe to the offloading of all Russian business. What we do subscribe to, is conducting proper due diligence: knowing your customers and properly riskrating them. If it means that you’re from Russia, you have an elevated risk, so be it. There’s nothing wrong with having highrisk business, provided that you take the appropriate measures and you price your service accordingly.

The sanctions have now resulted in the identification of some $400 million in assets that have been frozen in the case of the BVI. Is that the extent of all assets? No, but that is what has been identified in the BVI. I suspect even more assets are in BVI companies, but elsewhere. It is for the jurisdiction where those assets are to identify those assets and to appropriately freeze them.

BB: Do you view the Ukraine-driven sanctions led by the US and the European Union as a kind of a dress rehearsal for Taiwan should China decide to cross the Taiwan Strait?

KB: Well, we’ve seen that China is taking a more proactive approach to Taiwan. They’ve been doing military exercises for years. The US is stepping up their response as well, by also having their naval presence there. So the answer to your question: That’s probably where we are heading. China’s “one country, two systems” policy that’s in Hong Kong — we’ve seen them flex their muscle there. We’ve seen them put in the national security law. We’ve seen the zero-COVID policy. I suspect to a large degree China wants to see — whether you want to call them its states or whatever — conform to the Chinese philosophy. And I suspect it’s a matter of time before they go a bit further. If that happens, you’re right.

I am not sure what the UN response would be. But I suspect the US would respond in some way. But then the US is in a bit of a difficult situation. I don’t think the response would be as quick as we saw in Russia, because the US has a significant exposure to China, in that a significant portion of US bonds are owned by China. China is a sleeping dragon: You have to be careful how you wake it up or how you disturb it.

BB: Should China decide to invade Taiwan, given the role that China plays in our financial services sector, what do you see will be the implications for the BVI

KB: It could have significant implications for us, depending on if and how economic sanctions are applied, and how those sanctions are worded. If it’s targeted just to the leaders of China, that’s one thing. But if it goes much further than that, then, yes, it could have significant implications for the BVI. As we all know, a large portion of the business comes out of China. But then China also is a major player in the developing world, in Africa and in the Caribbean.

[Barbados] Prime Minister [Mia] Mottley spoke about that yesterday as well, because when the US cut off correspondent banking relationships, you still have to trade, you still have to buy food and import stuff. And you seek alternative arrangements. China has been there for the region. When the US pulled back its close relationship with the region, China stepped in because there was a vacuum. Between China and Taiwan, they’ve stepped in particularly with respect to the independent countries. And they have funded a lot of economic development in those countries, whether it’s airports, sporting venues, and seaports. So they have made significant investments in the region.

BB: Switching a little bit to the United Kingdom, I think it is agreed on both sides that the public registers of beneficial ownership are going to take effect in 2023. Are there plans being made by the FSC to facilitate that? And do you think that those registers will be a serious disruptor toward our Chinese and Asian business?

KB: To answer your first question, yes, the government gave a commitment some years ago that they will transition to publicly accessible beneficial ownership registers. And then, either late last year or early this year, they assigned responsibility for that to the commission. In an amendment to the Business Companies Act that was passed late June, the legal framework for publicly accessible registers was included and passed. So the framework is there. The next step of the process would be public consultation on the implementation of the regulations to make it effective. Simultaneously, the commission is doing the technical work in the background to put the technology infrastructure in place for that. We aim to have it in place by the end of next year. We don’t see any delay in that, and we don’t see any pushing back on that timeframe. In fact, there have been discussions in the UK on why we can’t just bring it forward, because we have [the Beneficial Ownership Secure Search System, known as BOSSS]. So we are working towards meeting the obligation in the timeframe that has been given.

BB: And you clearly see the BOSSS technology as the model that will be used for that? I’m assuming it’s going to be an electronic registry?

KB: Yes, it’s going to be an electronic registry. We’re doing two things simultaneously. One, we are upgrading the VIRRGIN System. It’s 15 years old. VIRRGIN is like a Toyota Hilux — those rugged jeeps that go anywhere and are sort of indestructible. But it’s 15 years old, and you have new technology. What we want, is to get the system onto the new technology: better resiliency, better features, more ability to do data analysis. So we’re modernising the infrastructure. We are upgrading the technology. As part of that upgrade, we will build in the ability to have publicly accessible registers.

BB: So there’s a VIRRGIN 2.0 on the horizon?

KB: Call it VIRRGIN Leap; it’s a leap forward in the technology.

BB: You are well under way to making it happen?

KB: Yes, there are going to be various steps to it. The first step really is modernising the current VIRRGIN, plus the beneficial ownership. Then there will be some other phases over the next three to five years, where we’ll be adding more things onto it.

BB: Do you see the public registry having an impact on your Asian business? They seem to have not reacted to it one way or the other. So is it a non-issue with them in terms of the continuation of their business?

KB: I suspect that there will be some individuals who will choose not to have their information publicly accessible. But because the world is shifting in that direction in any event, the international standards are moving in that direction. The fifth European [Union Anti Money-laundering] Directive has it; the [Financial Action Task Force] is advocating it. I suspect it’s only a matter of time before it becomes embedded in the FATF standards. So the world is shifting in that direction. The international finance centres, the overseas territories, are going to be sort of like the leaders in that shift, because the UK is pushing it, but the rest of the world is coming along behind us.

BB: It’s actually one of the areas where we certainly have demonstrated our leadership, even when compared to major financial centres in the world, in terms of the ability to provide this information in a very timely and quick way.

KB: It is not only that: It is the ability to react to issues. Those issues — we almost treat them like existential threats, because it’s a threat to how the jurisdiction operates. And whilst we don’t subscribe to the concept of our HOA passing legislation in one sitting — because you should create an opportunity for public hearing and public contributions — when we are under threat, we respond and put measures in place to do it. Bigger countries don’t demonstrate that nimbleness, although the US did it after 9/11, when they passed the Patriot Act in record time. Then again, the legislation was always drafted for years, and was just sitting there waiting for the right opportunity or crisis.

BB: Recently, you’ve done some amendments to the BVI Business Companies Act 2004. Come January 2023, those amendments are going to come into force. What are some of the key provisions that the amendments are going to cover, and how will it make the BVI business company more competitive?

KB: One of the simpler things, would be the abolition of the bearer share regime. We’ve had it from the [International Business Company] days. Then we started getting pressure internationally about bearer shares. So we then went and we immobilised the bearer share regime. But the empirical data shows that whilst companies had the ability to issue bearer shares, a relatively small amount of them actually did. Now the international standards are moving in directions where they’re saying bearer shares more generally should be immobilised. We’ve already gotten to that stage and we’re going further and abolishing them, because the revenue earned from them is insignificant to the risks and the perception that it imposed. We’re doing away with the regime altogether. In fact, we started a process some years ago, where we have seen that when the bearer share regime came into existence, we had at one point close to 20 authorised custodians for these bearer shares, and over time they have shrunk down to about two or three now. We saw from those that, in fact, we don’t have a big market for bearer shares. So we had asked our licensees to get rid of the ones that they have.

The second major issue is that we’re getting rid of this concept of struck-off companies. That, again, has been around since the IBC Act. Whilst the legislation tells you what cannot happen when a company is struck off, the data shows that in fact, sometimes companies are struck off and they continue to operate in contravention of what the legislation says should happen. Secondly, it was difficult to explain to international assessors how the struck-off regime worked. It was difficult to comprehend, because you’re saying the company is dead but yet it still has a bank account; it is still doing business. It became difficult to explain that. So what’s going to happen, is that the company after it’s struck off — after, I think, a six-month period — if it’s not restored, it will be dissolved. Then they would have about a year to restore it: make an application to the registrar to have the company restored and pay the outstanding fees. After that year, then you’d have to go to the court for the court to make a declaration that the company should be restored. So it will make the process of us being able to explain to assessors how the BVI regime works simpler and more straightforward. Then the third major section in the act, is what we spoke about earlier: the legal framework for publicly accessible beneficial ownership information. Those are the three issues. It was passed by the House late in June, and it will come into effect on the January, 1st 2023.

BB: A few years ago, there was much anticipation that the requirement for BVI-based substance would result in some economic growth in the territory. Was that just a mirage? Or do you think it still has possibilities?

KB: It was sold to the territory that it would provide economic stimulation: that these people who own these companies would be coming into the jurisdiction; they would need accommodation; that there would be an increase in the office accommodation market as they set things up. That increase in economic activity has not happened to the extent that was anticipated. Not that there was not an increase in activity — there was, but it was more concentrated with the trust and corporate service providers. They have been able to help their companies demonstrate economic substance, by using their own resources. So they designate their staff for the companies; they use the same office environment. You might just add in a phone line or a fax line, whatever the case may be. So they were able to demonstrate that, without incurring significant expense. What did happen, though, is that for the trust and corporate service providers who were able to provide that service, it meant an increase in revenue for them. But because you didn’t increase your headcount [and] because we don’t have corporate taxes, there was no additional income for government. It went directly to the bottom line for the companies. The wider aspect to that, is that a significant number of those companies were exempted because of the nature of the business that they do. We were thinking that 300,000 or 400,000 companies were going to need to establish a presence. A significant number of them were exempted. If you’re just a holding company, then you don’t need to do that.

BB: Also in 2023 you have the Caribbean Financial Action Task Force assessment in the cards. How are the preparations for that going, and why is this assessment seen as critical?

KB: Yes, you’re right: The assessment is critical. The jurisdiction is a member of CFATF, and so we are obligated by membership to undergo a periodic assessment. This is a fourth round of assessment that’s being conducted, the last round being in 2008, which was the third round. During the previous round of assessment, the BVI did very well. We had one of the top assessment ratings, because it looks predominantly at whether or not you had the legislative framework in place. We did a fairly good job in developing our legislative framework, which is modelled off the international standard. When they assessed it, we were found to be largely compliant. Since then, the FATF has revised the assessment methodology, so to speak. They have said that, not only do we want you to demonstrate that you have the legislative framework in place, but we also want you to demonstrate that you have effectively implemented that framework. You demonstrate that through, what they call eleven immediate outcomes. They take a deep dive into how effectively you have implemented it. You will demonstrate through statistics and typologies and case studies, that you have been able to identify money-laundering crimes; that you have investigated them; that you have prosecuted them; that you have convictions, because a prosecution without conviction is a futile exercise. The last part is that you have essentially taken the profit out of crime: that you have confiscated the proceeds of crime; that once a person has been sent to jail, that you have frozen and you have confiscated the assets. If you think back to when we went to university, you remember they had different types of tests. You had the multiple choice and then you had a test where you had some essays, and the essay part carries more weight. In this case, it’s broken down into two parts. The technical compliance is essentially: Do you have the legislation in place? That is probably about 25 percent of the marks. And the 75 percent — the essay part — is the effective implementation. Now, you have to have good technical compliance in order to get effective implementation. So if you fail the first part, then you cannot pass the second part. We made some amendments to the legislation just recently, so we’re pretty confident that we can get a good score on the technical compliance. The effectiveness is more of a challenge, but we think we have increased our chance of getting a good outcome there. An important point is that the assessment itself, will be led by the International Monetary Fund in conjunction with the CFATF. Then, once the report is finalised, it will go through the same CFATF process. Why the International Monetary Fund? Well, they’ve had a history of doing assessments in the international finance centre arena. They did an assessment of the BVI back in 2010 as well. So they approached and asked the Government. We discussed it with the Attorney General, who is the contact for the CFATF, and we agreed collectively as a jurisdiction to allow that to happen.

The IMF was actually here a couple of months ago and it did some training, both for the public sector and for the private sector: training as to how to go about answering the questionnaire on the effectiveness component. It is essentially like a professor saying to you, “I want you to write an essay on a subject and these are the issues that I want you to cover in your essay. And if you follow my guidance and you do sufficient work, then you’ll likely get a passing grade.” We have set up a coordinating committee to lead that process; to engage with the other sectors.

A lot of people may think because the commission is leading it, that it’s an assessment of the commission. It’s not: It’s an assessment of the jurisdiction. So there are a lot of different players. It involves the commission, the Financial Investigation Agency, because they’re the ones responsible for receipt and analysis of Suspicious Activity Reports. They are key part of it. The police is a key part of it. The Attorney General is a key part of it, because they are responsible for international cooperation, mutual legal assistance requests. The Governor’s Office is part of it, because he is responsible for the sanctions regime. The industry is a part of it, because they’re the ones who have to implement. The DPP is part of it because that’s the office who has to prosecute these people. The customs, immigration, they’re part of it, because they need to make sure that criminals can’t get through. So it covers a lot of the public sector. That’s why we had this training to bring them in on it. The first part of the questionnaire — the technical compliance part — has been submitted. That was due at the end of August, and we’re currently working through any remaining issues. The second major submission is at the end of October, when we have to submit the effectiveness component part of it. Then the actual onsite visit will happen somewhere in March of 2023. A team of somewhere around 10 experts will be here to conduct the mutual evaluation. The window is fairly narrow in that CFATF has about two plenaries a year: one early in the year and one later in the year. So somewhere along October, November of 2023, the report should be presented at the plenary for discussion and approval. Then it goes to the FATF plenary, which is the following February, 2024. FATF would look at it to see whether or not the report is consistent with the other reports. If it is, then it is given its final approval. So about mid 2024, the report will be published to the entire community. It’s important because it will demonstrate whether or not the BVI has an effective anti-money-laundering regime in place. A lot of it is based on being able to demonstrate the true statistics to show the number of different things that you have done and be able to articulate them clearly.

BB: Once it’s done and the assessment is made, what’s the upside of it, assuming we get a good standing? What does it say to the global financial community?

KB: It says that the jurisdiction has a good anti-money-laundering regime in place: They’re able to identify money-laundering claims; they’re able to investigate them, prosecute them, get convictions on them, and confiscate the proceeds of that crime. Clearly the events of earlier this year have not helped us, because the former premier was the chair of the national council for anti-money laundering. So when the head gets caught up in corruption matters, it makes it more difficult for us. While the event itself will create negative perception, the delay in the resolution of that and the timing creates another dimension.

BB: The central takeaway from the Commission of Inquiry undertaking was a governance matter in my mind. Does that present challenges for this review?

KB: It does colour the process, because the assessors will know of the COI report and they will know that the former premier was arrested. So they will come with certain notions in their minds that there are weaknesses in governance. They will come with that. We need to be able to demonstrate as best as we can, that this system might have had some kinks, but it’s not broken. The good thing is, when the investigation was launched, they reached out to a number of agencies, including the commission. And we gave a very comprehensive response to the questions that they asked, and they came back and said, “Based on your submissions, we don’t think there’s any need to ask any further questions there.” Now, that is a direct result of the leadership of the commission, particularly before my time. That goes to Robert’s leadership. He put proper governance structures in place. My responsibility now, is to strengthen those governance structures as best as we can. And where we have unwritten governance procedures in place, to reduce them to written form, so that everybody knows what they are. I’m on a number of other boards, so I ask those questions as well, and try to strengthen the governance. Because if you are perceived to stand out as a light on the hill, then you need to spread that light as far as you can, to help make sure that others aren’t found wanting.

BB: Are there some trends that you see globally that we as a jurisdiction should keep our eyes on?

KB: Yes. One in particular I want to speak about, because I saw an email from HLSCC last night. They’re having a graduation ceremony for a FinTech group. The government has [a memorandum of understanding] with the National University of Singapore. They hosted what I consider to be an important training event earlier this year, teaching people how to essentially write apps. I think that there’s close to a million apps on the app store. Anything you want, there’s an App for it. Which to me is an opportunity for particularly our young people. I remember December 2019. The commission had its cocktail party, and late in the night I had a drink with the manager of Cable & Wireless. I said to him, “I need a favour from you.” And he asked me where I live, because Cable & Wireless was putting back in the fibre optics. I said I’m not asking for internet service where I live: I want a better level of service at the college, because I know we have this relationship with Singapore.

Fast forward, the first cohort is about to graduate. The FSC had a team on it, and they developed an App to receive and analyse our potential returns. We were in discussion with a service provider who would have done that same work for us, and we’d have probably spent a couple hundred thousand dollars doing it. They were able to do it in a matter of weeks at little cost. I think we paid about $3,000 for each person to attend. But now they have skills to be able to do this. I would want to see more people, both young and old, being able to take advantage of that. These are skills you can use anywhere in the world. It creates entrepreneurial opportunities to solve problems for people at reduced cost; enable them to develop the apps and put them on whatever app store. Remember, the government has passed some legislation to help digitise the economy. They passed the data protection legislation, the electronic transactions support. So the legal framework is there. What you need is technology to take advantage of that.

The point really is that FinTech is here to stay. FinTech is disrupting financial services business. FinTech helped a lot of people through the pandemic when the world was shut down. People used technology to keep going. One of the amendments we made to the legislation back in probably 2018, is what we call electronic verification. But it requires the technology to make that happen. The commission is prepared to fund the development of the App for electronic verification — so that when you want to go and open another bank account, you don’t have to stand in line for an hour to get inside, and then spend another hour in there. You will be able to take your phone and conduct electronic verification from the office or your home or whatever the case may be.

So FinTech provides the jurisdiction with tremendous opportunity to bring us into the 21st Century; to get us closer to where Singapore is. Our VIRRGIN system is based on the Singapore registry, considered to be one of the best registries in the world. Because it’s modelled after that, we have one of the best registry systems in the world. Singapore is known to have deployed technology throughout the country, and that is what has helped to propel that country to where it is today. And because of the lockdown in Hong Kong, Singapore is poised to take over, to surpass Hong Kong. If Hong Kong doesn’t reopen by the end of this year, Singapore will leapfrog Hong Kong as the leading financial centre in Southeast Asia. We are now considering whether or not we commit to staying in the Far East, but it may not be in Hong Kong: It very well might be in Singapore. So I would want us to see the technological development and advancement that Singapore has. I’d want to see that replicated here in the BVI. And I am prepared to use the commission’s resources to help get us there.

BB: What’s the best piece of advice you’ve received since assuming leadership at the FSC?

KB: One of the best pieces of advice is to listen to my senior management team. We meet on a weekly basis — almost every Monday we meet — and it’s really to listen to their advice. Collectively, we have hundreds of years of experience in different areas. I think in the past we relied to a great extent on the brain power of Robert, because of his years in government: his important role as financial secretary and his international presence and experience and so forth. Some of us to an extent have some of that international presence, but collectively we can’t measure up to that. So we had to come together and share that experience to come close to equating to Robert’s knowledge. I think for me the one thing that I believe the government should have done differently in recognising his contribution was to bestow a more significant honour on him than an OBE. He should have at least gotten a CBE, and in many respects he deserved a knighthood for the work that he has done for this country.

BB: What canary in the coal mine is keeping you up at night? I did a focus group yesterday and raised the same question. The canary in the coal mine was China for a number of people, particularly with the Taiwan angle. What would you say?

KB: I wouldn’t disagree with that. Because the data shows that 60 percent of our business comes from China — well, comes from China through Hong Kong. And if China sneezes, we catch a cold. At the end of the day, it translates into dollars and cents. If confidence in the Chinese market were to wane significantly, it would touch our pockets in a real way. It would make life difficult for us.

That’s why we’ve had to be talking about diversifying for years, but no government has really made a concerted effort we have seen. We have to diversify away from financial services. Would it mean that the commission becomes less relevant? Probably. Do I have a concern about that? No. If the commission becomes less relevant, but the economic pie in the BVI increases significantly, that’s so much better for us. It’s not about me and the commission, or what we do. Whilst we take pride in what we do, and what we do is important, equally important is the empowerment of the masses. Equally important is the whole economic pie getting bigger for us — and there’s a legacy for our children or grandchildren and others to come. So I think FinTech is a tremendous opportunity for the jurisdiction. We have the ability to pivot, and I’m hoping that we pivot before a crisis. We tend to pivot in crises, but I’d want us to pivot before the crisis happens. So when it does happen, the income stream is well on its way and it does not disrupt our standard of living. BB

It was on the 9th of July 2022 when I read the article in the Island Sun on the postponement of the passing of the Register of Interests Act that I started to question whether our ethics in the BVI are still in focus. Traditionally, we are a people who are in favour of upholding ethical standards and by extension good governance. But, today, what does this mean? To some, it sounds like a good pledge during election campaigns, while to others, it seems that they believe in it, but do not know the true meaning for themselves. For elected officials, once they are in power, it’s as if good governance is for the previous Government and other people, but does not apply to themselves. One has the impression that their main goal is in fact, to have better opportunities for personal aggrandizement. Hence, the importance of legislation for the Register of Interests Act 2022, which will make declarations of interests of senior public servants more transparent - as part of good governance and mitigate the risks of dishonesty.

With growing inflation, the aspiration to do business, invest, and live a better life, most able bodied persons are seeking means to increase their incomes. It is a normal right, especially in a world where there is hyperinflation and climate crises which negatively impact the costs for agricultural and fisheries products. Businessmen and women turned politicians, will continue to do business. This is the way of the world. Business endeavours, however, must be linked with the moral imperative, for those in public office to be transparent in their business dealings.

One of the tenets of a democratic society is equality and equal opportunities, but hiding one’s business and financial dealings, shows disrespect by political leaders and contributes to defiance among members of their constituencies. There is nothing wrong with being wealthy or with being involved in business outside of our regular civil service portfolios. But as a senior official, one’s dealings should stand up to scrutiny to show that acquired assets are not directly linked to one’s public office.

The requirement for public officers to declare their interests, should not result in reluctance to aspire to high office. Transparency contributes to higher levels of citizen involvement in social development. Transparency as a process, involves being completely visible and open to scrutiny. We must be able to look at each other as citizens - in the face - and say we have done right by you. We need to promote opportunities for all our people. Additionally, we cannot afford to exclude potential investors. In this regard, transparency is imperative.

Just as remuneration of elected leaders is public knowledge, there should likewise be a commitment to ensuring that public servants adhere to the tenets of the constitution. It is common knowledge that the lack of responsible and transparent action on the part of elected officials leads to corruption. Elected officials are entrusted with making decisions that directly affect the daily lives of the constituents - and must strictly comply with the law. A Register of interests in keeping with a Code of Ethics for public servants is most appropriate.

A system of registration of interests once established, that implements the requirements of the Constitution insofar as it requires the declaration and registration of interests by elected officials, gives clear guidance as to what must be disclosed and when, and has effective provisions (involving sanctions where appropriate) to require compliance. Subject only to restrictions that are truly necessary, the register should be open to public access as detailed in the COI Recommendation B2.

As stipulated in the recommendations of the COI, for an effective registration of interests’ system, it must be designed to cover all persons in public life, a properly formulated and costed plan should be produced for the implementation of such a system, and a commitment made to ensure that it is, and will continue to be, funded, and resourced so that the system is efficient and effective stated in the Recommendation B3.

Once the registration of interests’ system for Members of the House of Assembly has been established, evaluated and its extension costed, then consideration should be given to its extension to other public officials on an incremental basis. For example, the first tranche of public officers to be covered could be the most senior officers such as the Permanent Secretaries, the Financial Secretary, and the Cabinet Secretary (or those acting in such roles); the second tranche could be members of statutory boards; and so on, until all public officers intended to be included are covered in concert with the COI Recommendation B4.

Sections 66 and 67 of the Constitution will need to be amended. This is to make clear the circumstances in which a person seeking election to the House of Assembly, or a Member of the House who (either personally or through a DBA, a partnership or company with which he or she is associated) contracts with the BVI Government, needs to declare such an interest, how such a declaration should be made and the consequences of him or her not doing so. See COI Recommendation B5.

In conclusion, elected officials are entrusted with making decisions that directly affect the daily lives of their constituents - and must strictly comply with the law. When they do comply, public trust in leadership will be enhanced - especially if elected officials and public servants are seen as not taking advantage of business and financial opportunities during their tenure of service. Accountability means that there are governance procedures with checks and balances in place to prevent decision making being infected by factors other than the public interest.

Best practices in Bermuda, Singapore, and Switzerland, for example, sensitize all public servants and provide regular training and appropriate resources to manage the maintenance of up-to-date registers. Confidentiality is maintained by independent service providers who conduct checks and verifications of the entries.

Leaders must lead by example, as it gives good impressions to the citizens at large as well as to the outside world, including potential investors. As our legendary Bob Marley said long ago, “there is so much trouble in the world” and now, more than ever, we need leaders with integrity to face the struggles through painful crises. It is only with strong guidance from our leaders and more particularly transparent leaders that ‘we can overcome one day!’ BB