Anguilla

Since establishing itself as a captive domicile in 2004, the British overseas territory of Anguilla has grown into an attractive offshore option.

Since establishing itself as a captive domicile in 2004, the British overseas territory of Anguilla has grown into an attractive offshore option.

Steve Garlick, CEO of Anguilla Finance, which is the promotional agency for the island’s finance industry internationally, says that a number of factors can be attributed to Anguilla’s growth, particularly its approach to legislation.

“While other jurisdictions have been implementing significant and sometimes overwhelming legislative and regulatory changes, Anguilla has simply made necessary amendments and enhancements, allowing the regulators to keep the legislation current, whilst remaining focused on maintaining the service and application turnaround levels that have helped build its reputation.”

Garlick believes that as a result of this, Anguilla continues to enjoy both natural growth and an influx of existing captives migrating from other domiciles.

Anguilla’s reputable status has been further enhanced by the Caribbean Financial Action Task Force, which recently placed Anguilla alongside the Cayman Islands and the British Virgin Islands as a centre of excellence for compliance in the region.

“With stringent due diligence requirements for new business and many monitoring procedures in place, the myth that offshore domiciles are an easy target for money laundering can be firmly dispelled,” says Garlick.

Stewart Feldman, CEO of Capstone Associated Services, believes that Anguilla’s growth over the last few years—which has been evident through high standards of formation and licensing—has made Anguilla a popular choice for smaller captives.

The recent influx of middle-market companies forming captives in Anguilla is due to application turnaround on behalf of the regulators and a relatively relaxed regulatory framework, according to Garlick.

He says: “Anguilla is unburdened by the restrictive regulations of other jurisdictions. For example, unlike other domiciles, there are no requirements to appoint local directors; there are no requirements to hold annual general meetings in Anguilla; nor is it mandatory to establish bank accounts here. Therefore, if a proposed captive’s parent has an existing banking relationship in place, albeit offshore or onshore, the commission will permit further accounts to be opened in the newly licensed entity’s name.”

“Furthermore, due to Anguilla’s moderate and flat fee system, its captives are not subjected to fee increases of other jurisdictions that are directly linked to the success of the business and, therefore, can only be described as punitive. This forms part of the reason Anguilla has firmly established itself as a leading choice for prospective captive owners, especially for smaller, family owned structures which need to ensure cost-efficiency and stability to remain viable.”

Offshore advantages

The benefits to forming a captive in an offshore location such as Anguilla are, according to Garlick, primarily related to cost, low or zero local taxes and favourable legislation.

He says: “Generally speaking, offshore regulations relating to initial capital requirements and the required margin of solvency are far less stringent when compared to many onshore counterparts, as well as offering a wider range of investment opportunities.”

“It is obviously important for the regulators and the insurance managers in any jurisdiction to ensure that capitalisation is sufficient to support the net written premium and anticipated exposure levels, particularly when third parties are exposed. However, for small to medium-sized single parent captives, the non-discriminatory requirements of offshore domiciles can have a significant impact on a risk manager’s feasibility assessment.”

Anguilla prides itself on having an approachable and responsive Financial Services Commission (FSC), which is predominantly responsible for the domiciles healthy growth figures, according to Garlick.

He describes the commission as approachable and responsive, with staff that “[work] extremely hard to combine the increasing standards and demands of international regulatory oversight with a commercial outlook”.

“The commission is cognisant of the ever-changing demands of the international business community, and has responded by expanding into new premises and employing new experienced staff to maintain the high standards to which both licensed captive managers and owners have become accustomed.”

Feldman also recognises the important role that the island’s financial structure plays in the creation of a successful domicile.

He says: “In cases where there are time-sensitive filings, there is willingness on the part of the Anguillan Registrar and the FSC to accommodate reasonable deadlines and to put its onsite regulators on task to handle the extra work to meet these deadlines. Its department of insurance is both committed to the regulation of captives and is well versed in such.”

“The Anguilla Insurance Act and the insurance regulations also provide a sound regulatory framework for the operation of captives. Anguilla excels in fairly and consistently enforcing its captive framework. The FSC’s focus has been on providing a secure, practical regulatory framework for the safe and sound operation of captive insurance companies.”

Feldman explains that the FSC’s rules are a balance between good regulation and a recognition that coverage is being written to affiliates of the captive’s owners.

Alongside captives, the island also caters for the formation of protect cell companies through Anguilla’s Commercial Online Registration Network system (ACORN), which uses the latest technology.

Garlick says: “ACORN allows companies to be incorporated instantly from anywhere in the world 24-hours a day, 365 days a year. ACORN also enables all other corporate registration activities permitted under the relevant legislation to be undertaken online.”

To stay successful in the competitive captive market, “Anguilla has striven to continuously review this key sector and how attractive the jurisdiction can be for good business,” says Garlick.

“If potential drawbacks arise then all in the industry, both practitioners and the regulators, communicate actively to ensure that Anguilla remains the jurisdiction of choice for captive owners worldwide.”