The Dawn of a New Era

Compliance monkey

The Commission have released a new Consultation on Revisions to the AML/CFT Framework with the purpose of bringing the Guernsey AML/CFT framework up to and in line with the Financial Action Task Force international standards issued in 2012. This new Framework will also address the recommendations that have been made by MoneyVal in their report on Guernsey that were published in January 2016.

These enhancements to the Guernsey Anti-Money Laundering and Comatting Financing of Terrorism (“AML/CFT”) Framework will affect Guernsey Financial Services Businesses, Prescribed businesses and the Non-Regulated Financial Services Businesses which will all become Specified Businesses. Some of the headline changes that need to be borne in mind by the Boards, Senior Managers and Controllers of Specified Business are as follows:

  • There will be only one Handbook for “specified businesses”, removing the current separate Handbooks for “Financial Services Businesses” and “Prescribed Businesses”. This is done on the basis that prescribed businesses have now had sufficient time to develop and be experienced in AML and CFT requirements.
  • Business Risk Assessments (“BRAs”) must clearly distinguish between AML and CFT risks. This can still be covered in one document. The proposed Handbook clearly puts more emphasis throughout on CTF, compared to the current Handbook. BRAs must also refer to the National Risk Assessment.
  • The definition of ‘Business Relationship’ has been expanded to include giving advice. “Such a relationship does not need to involve the firm in an actual transaction; giving advice may often constitute establishing a business relationship”
  • Additional CDD (“ACDD”) is proposed for the following relationships
    – Non-resident Customer
    – Private Banking Services
    – A customer that is a legal person or a legal arrangement used for personal asset holding purposes
    – Company with nominee shareholders that issues shares in the form of bearer shares
  • There is a proposed change in the treatment of PEPs with “domestic PEPs” and “Foreign PEPs” to be classified appropriately and the addition of International Organisation PEPS ( “IOPEPs”) and finally a risk based approach for the treatment of PEPs with no assets in a structure.
  • The role of Money Laundering Reporting Officer (“MLRO”) is to change to Financial Crime Reporting Officer (“FCRO”), which again highlights the coverage of CFT as well as AML.
  • In addition to the FCRO, a new role of Financial Crime Compliance Officer is proposed. This role can be undertaken the FCRO but this role must be undertaken by someone independent of business development and client facing roles.
  • A revised approach to identifying beneficial ownership is proposed which extends beyond just legal ownership, instead focussing on actual ultimate ownership and control.
  • There are new rules proposed for authorised and registered Collective Investment Schemes which will define the responsibility for AML and CFT requirements which fall under the responsibility of the nominated businesses which are licensed under the Protection of investors Law.

This consultation gives all parties the opportunity to raise any further considerations that may be of benefit and we would encourage everyone to take the time to consider how this new handbook will affect their business and industry and to make representation if any improvements could be considered.

The Board’s of Specified Businesses should make themselves aware and be familiar at this early stage of the high level changes to the Guernsey regulatory framework. A high level review of the Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) (Amendment) ordinance, 2017, schedule 3 to identify the proposed enhancements to the Guernsey AML/CFT Framework, has been prepared to assist the Board with understanding and preparing for the changes to come.

It is important with the dawn of this new era that all Specified Businesses consider this Consultation fully and make representations as may be necessary to the Commission. Specified Businesses must ensure that their business and respective industry and the Guernsey Financial Services industry as a whole continue to have an effective and workable AML/CFT regime going forward which serves to maintain and promote itself as one of the best International Financial Centres in the world and a place to do business.

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