Today is not just a day of remembrance, it’s a call for change.
Today, we remember the lives lost to all forms of anti-transgender violence and reflect on the challenges that many in our community still face.
Being transgender is not just about identity—it’s about navigating a world that often misunderstands, misidentifies, or resists who you are, where prejudice and ignorance create a toxic and untrue reality.
Coming out was one of the hardest things I’ve ever done, and I was so grateful for the support of my Business Partner and my family. It meant confronting fear, uncertainty, and the very real possibility of discrimination, not only socially, but professionally.
Unfortunately, those fears became reality. I have been verbally and physically attacked, discriminated against, and lost business and career opportunities, simply because of who I am. These experiences leave scars and remind me that equality for all is still far from guaranteed.
It’s important to understand this: being transgender is not a lifestyle choice—it’s living as who you are. Scientific research shows that transgender individuals often have brain structures and connectivity patterns that align more closely with their experienced gender rather than their assigned sex at birth . This is who we are, not a trend, not a phase, but an intrinsic part of our identity.
But this post isn’t only about hardship. It’s also about resilience and the power of acceptance. When I found support, both at home and at work, it changed everything. That acceptance gave me space to breathe, to grow, and to truly flourish. I’ve discovered strength, appreciation, and compassion I didn’t know I had, and this has helped me build deeper, more authentic connections with those who stood by me and those who accept me.
Today, we remember those who were not given the chance to flourish. One name is Brianna Ghey, a 16-year-old transgender girl brutally murdered in 2023 in a premeditated attack aggravated because she was transgender. Her life was full of promise, and her courage in living authentically should never be forgotten. Brianna’s story reminds us why visibility, safety, and allyship matter so deeply.
My Call to Action
✔ If you are an ally, speak up. Challenge transphobia wherever you see it—online, in workplaces, in schools. ✔ If you lead teams or organizations, make inclusion more than a policy, make it a practice. ✔ If you’re unsure how to help, start by listening and learning. Your support can save lives and help people like me not just survive but thrive.
In Tribute
To Brianna and all those we have lost: your lives mattered. Your stories will not be forgotten. We honour you by fighting for a world where being yourself is never a risk, but a right.
Today has been a lovely day in the coffee culture of St Peter Port, meeting and catching up with people, discussing contracts, plans and ideas, before returning home to work on some clients. Working from home allows me the time and space to not only work on engagements but also on ideas, while also being able to attend to the evening meal, taking breaks to collect fresh vegetables and herbs from the garden before slow cooking for the family. It suddenly struck me that a compliance framework is very similar to a recipe. You wouldn’t just throw random ingredients that look good into a pot and hope for the best — at least not if you wanted it to be edible and the same goes for compliance frameworks.
1. Ingredients (Policies & Procedures) Any recipe starts with a list of ingredients — the must-haves. In compliance, these are your policies, procedures, and controls that have been carefully designed to meet the expectations of regulators, clients, and stakeholders. Without them, you can’t “cook” a compliant organisation
2. Method (Processes & Workflows) The step-by-step instructions in a recipe are your workflows. They guide your team on how to use each ingredient in the right sequence — whether it’s onboarding clients, undertaking client transactions, or reporting breaches, complaints or suspicious activity. The method ensures consistency and clarity.
3. Measurements (Risk Appetite & Tolerances) A pinch of chilli adds flavour; too much overwhelms. Similarly, defining your risk appetite ensures the right balance between flexibility and control. While regulations set the boundaries, your organisation can tailor its approach to suit its unique palate.
4. Timing (Monitoring & Review) A good chef knows when to stir, when to simmer, and when to serve. In compliance, that’s your ongoing monitoring and periodic reviews to make sure the framework is still effective and the business can demonstrate its compliance to the regulatory framework and its appetite and objectives. It helps catch issues early, before they “burn” or for the sauce to curdle.
5. Presentation (Reporting & Audit) Even the tastiest meal needs to look appetising. Your reporting and audit trail present your compliance efforts clearly, demonstrating your compliance with the desired regulatory and business outcomes and your competence to regulators, stakeholders, and auditors.
The secret ingredient?Culture Without a shared commitment to doing the right thing — backed by the right resources, experience, and mindset, even the best-designed framework will fall flat. Culture binds it all together
If you’d like to chat about how to get the right ingredients or refine your recipe to make it more palatable for the Stakeholders and Regulator, feel free to reach out: sara@tspgsy.com and please have a look at our website https://technicalspecialistpartners.com/ and see what our menu can offer you.
In the world of diving, we often talk about the immense pressure that builds as we descend into the depths of the ocean. This pressure can be intense, but with the right training, equipment, and mindset, divers learn to manage it and enjoy the beauty of the underwater world. Similarly, in our professional lives, we face pressures that can sometimes feel overwhelming. Deadlines, discrimination, expectations, and responsibilities can build up, making it hard to stay afloat.
Just as divers rely on their training and equipment, we can use various strategies to manage work-related stress. Here are some tips to help you navigate the pressures of work:
Prioritise Tasks: Focus on the most important tasks first and break larger projects into smaller, manageable steps.
Take Regular Breaks: Short breaks throughout the day can help clear your mind and improve productivity.
Maintain a Healthy Work-Life Balance: Set boundaries between work and personal time to ensure you have time to relax and recharge.
Practice Mindfulness and Relaxation Techniques: Techniques such as deep breathing, meditation, or yoga can help reduce stress and improve focus.
Stay Organized: Keep your workspace tidy and use tools like calendars and to-do lists to stay on top of your tasks.
Seek Support: Don’t hesitate to ask for help from colleagues, friends, or professionals when needed.
It’s also important to remember that it’s okay to ask for help. Just as a diver wouldn’t hesitate to signal a buddy for assistance, we shouldn’t hesitate to reach out to colleagues, friends, or professionals when we need support.
Moreover, we must be vigilant and supportive of those around us who might be struggling. In diving, a buddy system ensures that no one is left to face challenges alone. At work, we can create a supportive environment by checking in with our peers, offering a listening ear, and encouraging open conversations about mental health. Simple gestures, like acknowledging someone’s hard work or offering to help with a task, can make a significant difference.
Remember, managing pressure is a shared responsibility. By supporting each other, we can navigate the depths of our professional lives with resilience and compassion.
It is better to have a storm in a teacup than be in a teacup in a storm
As a new week rolls in, don’t face it with dread—think of it like paddling out into the ocean, full of energy, potential, and the unknown.
Monday is your first push through the swells, requiring effort and focus to break past the resistance. But once you’re out there, the real magic begins.
Each task, meeting, and challenge is like reading the water—spotting the right wave, seizing the moment, and taking the leap. Some waves will be too small, others too powerful, but with patience and skill, you’ll find the ones that carry you forward, steering clear of the wipe-outs and hidden rocks.
By midweek, you’re in the flow—balancing, adjusting, and riding each challenge with confidence. Every rise and fall sharpens your skill, building resilience and momentum.
As Friday approaches, you’ll feel the deep satisfaction of a well-surfed week, knowing you gave it your all.
So embrace the waves, take the plunge, and make this week one to remember!
We all know that feeling when Wednesday rolls around, and the weekend still seems so far away. But don’t worry, you’re halfway there! Getting over the midweek hump can be challenging, but I’ve got a refreshing tip to help you power through: sea swimming!
Why Sea Swimming?
Natural Stress Relief: The rhythmic sound of waves and the vastness of the ocean can have a calming effect on your mind. Immersing yourself in the sea can help reduce stress and anxiety, leaving you feeling more relaxed and centered.
Physical Health Boost: Swimming is a full-body workout that improves cardiovascular health, builds muscle strength, and enhances flexibility. The saltwater can also be beneficial for your skin, promoting healing and reducing inflammation.
Mental Clarity: The cold water stimulates your body and mind, increasing alertness and boosting your mood. It’s a great way to clear your head and gain a fresh perspective on any challenges you’re facing.
Connection with Nature: Being in the ocean allows you to connect with nature, which can be incredibly grounding. It reminds us of the beauty and power of the natural world, helping to put our worries into perspective.
Community and Social Interaction: Sea swimming can be a social activity. Joining a local swimming group or simply going with friends can provide a sense of community and support, making the experience even more enjoyable.
So, if you’re feeling the midweek slump, why not take a dip in the sea? It’s a fantastic way to rejuvenate your mind and body, helping you to tackle the rest of the week with renewed energy and positivity.
As dark clouds swirl and the wind rattles the windows in the storm this evening, here’s a gentle reminder for the week ahead:
🌿 Be kind to yourself. You are a beautiful work in progress. Every step you take is valuable. The journey worth taking is never easy. Believe in your abilities and yourself. Don’t compare yourself to others or their success, you are doing your best and it will come!
🌿 Extend kindness and understanding to others. We often don’t know the battles others are facing or the struggles they’re enduring.
🌿 If you’re feeling anxious about the days to come, pause and breathe. Take time to talk, journal, or simply sit in peace. Acknowledge your feelings without judgment. Remember—you have the strength and belief to overcome them. Ride the wave to success by being your authentic and true self.
🌿 The doubts and fears we carry are rarely a true reflection of reality. Trust yourself. You have got this.
In today’s fast-paced regulatory environment, Guernsey financial institutions must ensure they are not only compliant but also adaptive to ever-evolving domestic and international standards. The Guernsey Financial Services Commission (GFSC)Handbook provides a critical framework for ensuring Guernsey financial institutions uphold the highest standards of governance when countering financial crime, countering the financing of terrorism, and countering the Financing of Proliferation (CFC,CTF,CPF or Financial Crime) when undertaking their business activities. One of the most crucial sections, Chapter 8, delves into enhanced customer due diligence (ECDD) measures required for high-risk business relationships and situations. This blog will explore these ECDD measures and how organisations can align their operations and compliance frameworks with the Guernsey regulatory expectations set out in Chapter 8 of the GFSC Handbook.
Understanding the GFSC Handbook: A Regulatory Pillar
The GFSC Handbook is a guiding document that helps regulated entities in Guernsey comply with legislative and regulatory requirements, specifically around CFC, CTF, CPF and operational soundness to prevent and detect financial crime. By addressing both international and local standards, the Handbook covers areas such as:
Corporate governance
Risk management
Due diligence
Customer relationships
Transaction monitoring
However, when dealing with high-risk scenarios, standard measures are often insufficient. Chapter 8 is designed to mitigate risk in such situations through ECDD, enhanced monitoring, and enhanced reporting requirements to provide for effective corporate governance.
The Importance of Chapter 8: Enhanced Measures for High-Risk Situations
Chapter 8 of the GFSC Handbook specifically addresses scenarios where standard due diligence may not suffice to adequately mitigate risks of high risk business relationships. In such situations, Guernsey financial institutions and their directors and controllers are expected to employ ECDD measures to ensure robust risk management. These high-risk situations may arise from the following:
High-risk customers: Individuals or entities from jurisdictions with weaker CFC, CTF, CPF frameworks or with susceptibility to financing of terrorism or proliferation activities, politically exposed persons (PEPs), or clients involved in industries with higher susceptibility to financial crime.
Complex or unusual transactions: Large transactions that are inconsistent with the customer’s known profile or operations, or where the source of funds or rationale for the transaction is unclear.
Higher-risk products and services: Financial services that pose higher risks, such as correspondent banking, nominee services, and some services involving virtual assets.
Enhanced Customer Due Diligence (ECDD)
One of the critical components of Chapter 8 is ECDD, which goes beyond standard customer identification and verification processes. ECDD measures may include:
Additional documentation: Guernsey Financial institutions must collect more extensive documentation to verify the customer’s identity, business activities and rationale, and the source of their funds and wealth of their beneficial owners .
More in-depth investigations: Guernsey Financial institutions are required to dig deeper into a client’s background, including reviewing ownership structures, past transactions, and financial history (source of wealth and source of funds).
Regular updates: Ongoing due diligence must be performed more frequently, ensuring that any changes to the customer’s profile are promptly captured, investigated, and where required that documentation is obtained to confirm the continued legitimacy of the business relationship.
Key Requirements under Chapter 8 of the GFSC Handbook
To successfully implement Chapter 8, Guernsey Financial institutions need to address several critical areas:
Customer Due Diligence (CDD) and understanding and documenting the rationale of the business relationship and its components.
Under Chapter 8, financial institutions must enhance their CDD and while documenting and clearing demonstration the rationale and purpose of the business relationship. This includes verifying the identity of beneficial owners, understanding the nature and purpose of business relationships, and ensuring continuous monitoring. For high-risk customers, ECDD measures require more rigorous background checks, additional verification, a deeper understanding of the client’s source of wealth and funds, and ensuring that it the take on and continuation of the business relationship is signed off by a higher level of authority and oversight.
Transaction Monitoring and Risk Profiling
Guernsey Financial institutions must implement more extensive and frequent transaction monitoring for high-risk clients. Chapter 8 mandates continuous monitoring of business relationships to detect suspicious activities promptly. This includes having lower thresholds for transaction monitoring, greater scrutiny and documentation of transactions, activity undertaken, and their rationale, to flag unusual patterns or irregular transactions that might indicate money laundering, terrorist financing or proliferation activity.
Source of Funds and Wealth Verification, Documentation and Monitoring
Enhanced measures under Chapter 8 place significant emphasis on identifying and verifying the source of funds and wealth and holding up to date documentation on this area. This goes beyond just knowing where the money comes from; Guernsey Financial institutions need to understand how the funds were acquired, the activities that generated them, and ensure they are legitimate. For example, funds coming from high-risk jurisdictions for terrorism or industries require additional scrutiny to prevent bribery and corruption, or activities that may be linked to proliferation activities.
Enhanced Monitoring and Reporting
Monitoring business relationships is a continuous process of both day-to-day review of the transactions and verification subjects and more frequent periodic reviews of the business relationship, especially for high-risk clients. Chapter 8 requires Guernsey financial institutions to apply more scrutiny to transactions for high risk business relationships and escalate suspicious activities to the Money Laundering Reporting Officer and where necessary to the authorities, such as the Financial Intelligence Unit, or for sanctionsto the Guernsey Policy Council . Guernsey Financial Institutions must ensure they have robust internal mechanisms to report suspicious transactions regardless of monetary value, or sanctions while maintaining comprehensive documentation to support their findings.
Risk-Based Approach
Chapter 8 promotes a risk-based approach, where enhanced measures are applied based on the level of risk posed by the customer, transaction, service or product provider and any higher risk area identified. Institutions must create internal policies and procedures that reflect this principle, ensuring flexibility in responding to varying levels and types of risk.
Implementing ECDD Measures: Best Practices
To successfully align with Chapter 8 and the broader GFSC Handbook requirements, organizations should consider the following best practices:
Comprehensive Risk Assessment: Conduct regular risk assessments to identify customers, products, and services that pose higher risks. This will help prioritize where ECDD measures are necessary.
Training and Awareness: Ensure that staff at all levels are trained to recognize high-risk scenarios and know when to apply ECDD measures and what ECDD measures are required.
Technological Integration: Utilize advanced technology such as automated sanction screening and transaction monitoring, to flag suspicious activity, and conduct more thorough and continuaous due diligence.
Documentation and Record-Keeping: Hold and maintain detailed records of all due diligence processes, transactions, and enhanced measures taken. This is crucial for regulatory reporting and audits.
Regular Reviews and Updates: Chapter 8 requires ongoing monitoring and re-assessment of business relationships inclusive of the verification subjects, so Guernsey financial institutions should regularly review their procedures, especially when regulatory changes occur or there are changes to the business plan and sphere of operation.
Conclusion: Staying Ahead of Compliance Obligations
Complying with Chapter 8 of the GFSC Handbook requires a proactive and well-structured approach by the Directors and relevant senior employees in managing high-risk scenarios. Guernsey financial institutions must be vigilant in applying enhanced customer due diligence, monitoring, and reporting, ensuring that all procedures meet the stringent regulatory requirements of the GFSC. By adopting best practices, leveraging technology, and promoting a culture of compliance, Guernsey financial institutions can better manage higher risks and maintain a strong relationship with regulators and stake holders in the Guernsey regualtory framework.
Staying compliant isn’t just about ticking boxes—it’s about detailing the approach to risk, applying the measures and documenting their effectiveness in protecting the local and international financial system from abuse in order to safeguard the reputation of your business and third-parties that provide services to you and your clients.
By carefully and proactively integrating the ECDD measures detailed in Chapter 8 of the Handbook, Guernsey financial institutions can navigate the financial crime risks posed successfully, maintain compliance with GFSC rules and regulations, reporting requirements, and better protect themselves from investigations, enforcement actions and financial crime while providing products and services to those business relationships and persons who are high risk.
Stay ahead of the curve—ensure your compliance regarding Enhanced Due Diligence and high risk business relationships are up to date!
Join us at Technical Specialist Partners in fostering a culture of integrity and accountability by contacting us at hello@technicalspecialistpartners.com to discuss your requirements and the services that we can provide. Together we can build a compliant and ethical work place.
For Guernsey financial services, enhanced measures are critical for mitigating risks related to money laundering, terrorist financing, and proliferation financing (Financial Crime). The Guernsey Financial Services Commission (GFSC) outlines when and how enhanced measures should be applied, particularly in certain high-risk and higher risk business relationships and occasional transactions. Chapter 8 of the GFSC Handbook, specifically paragraphs 102–125, provides detailed guidance for Guernsey financial institutions on applying these enhanced measures to manage higher-risk and high-risk scenarios.
This post focuses on the application of enhanced measures as they relate to:
Non-resident customers
Private banking services
Personal asset holding vehicles
Customers with nominee shareholders
Non-Resident Customers (Paragraphs 106–110)
A Guernsey Financial institution when dealing with a non-resident customer must look at the reasons for that customer using the Bailiwick, especially where the same services are offered in their own country or territory, as these customers, who wish to establish a business relationship or conduct occasional transactions, may present a heightened risk of Financial Crime. For non-resident customers, Guernsey financial institutions must adopt enhanced measures to mitigate these risks.
Enhanced Measures for Non-Resident Customers:
Understand the Customer’s Rationale: Firms should investigate why the customer, who is not resident in the Bailiwick, is seeking to establish a business relationship or carry out a transaction. Simply stating “tax planning” or “asset protection” is insufficient; firms must delve into the legitimate underlying reasons for the business relationship. This must also be verified by obtaining such documents or precise of such documents, explantions, from appropriate practicioners or external sources.
Leverage External Data: Firms should use external data sources to gather information about the customer’s country of residence and potential risks. This helps build a comprehensive risk profile, similar to what would be available for a resident customer. This can be from the Appendix I & H of the handbook and those identified risks must be mitigated.
Verify Source of Funds: Establishing the source of funds (SoF) that will be used or generated in the business relationship is critical. The firm must consider whether the origin of the funds aligns with its understanding of the customer’s risk profile and the rationale for the business relationship. This is especially important when funds come from countries with capital controls, high bribery and corruption risks or financial instability.
Private Banking Services (Paragraphs 111–115)
Private banking services, which involve high-value, non-standardized, and tailored services to high-net-worth individuals. This is not just in respect of banking activities but could also involve the provision of services by an Investment licensee or a fiduciary Licensee except where the service is part of its duties as a trustee. The significant risks due to the complexity and cross-border nature of the transactions involved. Enhanced measures must be applied to mitigate these risks.
Enhanced Measures for Private Banking Services:
More frequent Review of Business Relationship: The firm should conduct more frequent reviews of the business relationship, ensuring that customer due diligence (CDD) measures are still appropriate. Transaction monitoring and thresholds should be adjusted as necessary to provide greater oversight.
Understand Source of Wealth and Source of Funds: Special attention must be given to understanding the source of the customer’s SoF and Source of Wealth (SoW) in line with the requirements of the GFSC Handbook and the GFSC Thematic. This is particularly important in private banking relationships where the risk of illicit activities is higher due to the large sums of money involved.
Tailored Monitoring: Given the bespoke nature of private banking services, enhanced monitoring and controls should be tailored to each customer’s specific circumstances and the nature of the use of the product and service. The firm should carefully scrutinize large or unusual transactions to ensure they meet the known and evidenced rationale.
Personal Asset Holding Vehicles (Paragraphs 116–121)
Personal asset holding vehicles (legal persons and legal arrangements), often used for holding investments, can obscure the true identity of the beneficial owner or the source of wealth and funds. Therefore, the use of such vehicles presents a higher risk of Financial Crime.
Enhanced Measures for Personal Asset Holding Vehicles:
Assess Rationale for the Vehicle: Firms must determine why the customer is using a personal asset holding vehicle rather than holding assets in their own name. The firm must ensure that the use of such a vehicle has a legitimate and genuine purpose. This must also be verified by obtaining such documents or precise of such documents, explantions, from appropriate practicioners or external sources.
Understand Source of Wealth and Source of Funds: Special attention must be given to understanding the source of the customer’s SoF and SoW in line with the requirements of the GFSC Handbook and the GFSC Thematic. This includes investigating the activities that generated the SoF and SoW, and any potential risks associated with transferring those funds to and from the Bailiwick.
Customers with Nominee Shareholders (Paragraphs 122–125)
The use of nominee shareholders can complicate the process of determining the true beneficial ownership of a legal person or arrangement, making it easier for customers to obscure their identity. Enhanced measures are necessary to mitigate the risks associated with such structures.
Enhanced Measures for Nominee Shareholders:
Determine the Purpose of Nominee Shareholders: Firms must investigate why a customer or a legal person that owns the customer is using nominee shareholders. The rationale should be legitimate and not solely for obscuring beneficial ownership and must be verified and documented.
Leverage External Data: To assess the risk posed by nominee shareholders, firms should utilize external data sources to check the fitness and propriety of the nominee shareholder, as well as the particular risks associated with the nominee’s jurisdiction.
CDD for Intermediaries: Where nominee shareholders are used in intermediary relationships, firms must follow the specific CDD measures laid out in the GFSC Handbook at Chapter 9, ensuring that appropriate controls are in place to mitigate the risk.
Conclusion
The application of enhanced measures is essential when dealing with higher-risk and high-risk customers or transactions. Whether the customer is non-resident, utilizing private banking services, operating through a personal asset holding vehicle, or involving nominee shareholders, firms must conduct thorough due diligence to mitigate the potential higher risk of financial crime. By following the guidance outlined in Chapter 8 of the GFSC Handbook, having appropriate policies, procedures and controls, firms can ensure they remain compliant, demonstrate good corporate governance, while protecting the integrity of their operations.
By carefully applying these enhanced measures, Guernsey financial institutions can better protect themselves from the risks associated with Financial Crime, while meeting the rigorous standards set by the GFSC.
Stay ahead of the curve—ensure your compliance is up to date! Join us at Technical Specialist Partners in fostering a culture of integrity and accountability by contacting us at hello@technicalspecialistpartners.com to discuss your requirements and the services that we can provide. Together we can build a compliant and ethical work place. https://technicalspecialistpartners.com/home/
The Guernsey Financial Services Handbook for Countering Financial Crime, Countering Terrorist Financing and Countering Proliferation Financing (GFSC Handbook or Handbook) sets forth comprehensive guidelines on how Guernsey financial institutions should address Source of wealth (SoW) and (SoF) as part of their customer due diligence (CDD) and enhanced due diligence (EDD) processes. These requirements are particularly stringent when dealing with high or higher-risk customers or complex transactions. Some of the key aspects include:
Collection of Information
Guernsey financial institutions must collect sufficient information about the client’s SoW and SoF to properly assess the legitimacy of their customers financial activities and rationale for the use of the Bailiwick. As detailed in the GFSC Handbook this may involve:
Verifying employment income through pay slips, tax returns, or employer references confirming salary.
Confirming inheritance via probate or legal documentation.
Assessing investment income by reviewing dividend statements, property sales records, or portfolio valuations.
The Handbook stresses that for high-risk customers, Guernsey financial institutions must obtain more granular detail to fully understand the journey to and/or origin of wealth and funds of the person and/or business relationship.
Verification of Information
It is not enough to simply collect SoW and SoF information—institutions must also verify and document it! Verification can include independent checks through public databases, third-party documentation, and government records and the generation of a SoW and SoF memo or document comprising these information sources.
The GFSC Handbook and the Thematic Review provide a clear roadmap for Guernsey Financial institutions to manage risks related to SoW and SoF effectively. By following these guidelines, institutions can enhance their Countering Financial Crime, Countering Terrorist Financing and Countering Proliferation Financing (CFC,CTF,CPF) frameworks, protect their reputations, their third party suppliers and ensure good corporate governance while meeting domestic and internal regulatory obligations and requirements.
For higher and high-risk business relationships and scenarios, additional layers of verification are required, often involving more detailed documentation, such as bank statements, legal contracts, or public filings.
Ongoing Monitoring
SoW and SoF checks are not a one-off exercise. Institutions are required to monitor the source of wealth and funds on an ongoing basis, particularly when dealing with politically exposed persons (PEPs), high-net-worth individuals, or clients from jurisdictions with weaker CFC,CTF,CPF frameworks. If any red flags arise, institutions must investigate further and escalate the matter internally to their Money Laundering Reporting Officer (MLRO) who may externalise a report to the relevant authorities if necessary.
Record Keeping
Maintaining thorough records of all SoW and SoF inquiries, documentation, and verification processes is mandatory. These records are essential for audit trails and for satisfying GFSC’s requirements during compliance reviews or in the event of an on-site regulatory visit, thematic reviews, request for information from a regulatory or law enforcement authority and when making disclosures to the Guernsey FIU.
Insights from the Thematic Review: A Focus on Private Wealth Management
The Thematic Review conducted by the GFSC on Source of Funds and Source of Wealth in the private wealth management sector highlights several critical findings and areas for improvement within the Guernsey financial industry. This review provides deeper insight into how Guernsey financial institutions can bolster their compliance with SoW and SoF requirements.
Key Findings:
Insufficient Depth in SoW/SoF Information: The Thematic Review found that many institutions were not gathering enough detailed information on SoW and SoF, particularly for high-risk clients. A common issue was reliance on customer declarations without independent verification. The GFSC expects institutions to dig deeper, especially when there are signs of complexity or higher risk within a business relationship or transaction.
Lack of Independent Verification: While most institutions collected some form of SoW and SoF data, verification was often lacking. The GFSC stresses that for high-net-worth individuals, high-risk clients or clients with complex wealth structures, institutions must take extra steps to verify the authenticity of their SoW and SoF.
Inconsistent Risk-Based Approach: Many institutions had policies in place but did not apply them appropriately or consistently, particularly in identifying and managing higher and high-risk scenarios. The GFSC noted that this inconsistency poses a significant risk to effective of a Guernsey financial institutions CFC, CTF, CPF controls and the wider compliance with the Handbook’s corporate governance requirements.
Best Practices for Strengthening SoW and SoF Compliance
To better align with the GFSC’s expectations and the findings of the Thematic Review, Guernsey financial institutions should adopt the following best practices:
Implement a Robust Risk-Based Approach
A risk-based approach to SoW and SoF inquiries ensures that the level of investigation and verification matches the customer’s risk profile. High-risk clients, such as PEPs, those in or conducting transactions with high risk jurisdictions, or those involved in complex financial arrangements, should undergo enhanced due diligence (EDD), which includes more thorough SoW and SoF checks.
Increase Depth of Information Collection
Institutions must ensure that they gather comprehensive information about the client’s SoW and SoF. This includes not only basic facts but also deeper context, such as the history of wealth accumulation and the specific details behind large transactions.
Utilize Independent Sources for Verification
To avoid over-reliance on customer-provided information, institutions should use independent and reliable sources to verify SoW and SoF. This may involve using public records, financial databases, or independent experts.
Enhance Staff Training and Awareness
Staff at all levels should be trained to understand the importance of SoW and SoF checks, and how to conduct these inquiries effectively. Training should also cover the red flags to watch for potentially risky transactions or clients that may trigger a suspicion to the MLRO.
Ongoing Monitoring and Review
Regular reviews and continuous monitoring of client profiles and their transactions are vital. Institutions must be prepared to escalate any concerns about SoW or SoF to their MLRO , ensuring that these concerns are investigated and, if necessary, reported to the Guernsey FIU.
Conclusion: Ensuring Compliance and Mitigating Risk
Ensuring compliance with SoW and SoF requirements not only helps in meeting regulatory expectations but also plays a key role in maintaining the integrity of the Bailiwick and the global financial system.
For Guernsey financial institutions and those international firms wishing to set up in the Bailiwick, the message is clear: robust, well-documented, and verified SoW and SoF processes are critical for reducing exposure to financial crime risks and ensuring long-term success in the Guernsey Financial Sector for your business.
You can access the GFSC’s full Thematic Review on Source of Funds and Source of Wealth in the Private Wealth Management sector here .
Stay ahead of the curve—ensure your compliance is up to date! Join us at Technical Specialist Partners in fostering a culture of integrity and accountability by contacting us at hello@technicalspecialistpartners.com to discuss your requirements and the services that we can provide. Together we can build a compliant and ethical work place. website link
I am still wild at heart, surfing, kayaking, and diving sometimes to extremes here on the Island. Every time I go into the water there is risk but also reward. The risks I face will vary on the day and the activity. While the rewards I will gain range from deep relaxation to extreme adrenaline rushes and highs. Each journey into the great blue needs differing skills, preparation and an appreciation of circumstances within myself and outside in the environment to ensure that the risks are managed and mitigated. It is more than just turning up to the coast with cool gear, superficially ticking the box of safety, but ensuring that I have the right flow of information, the tools, and skills to stay within my risk appetite and avoid injury or more. In a fluid environment to extract the maximum I must ensure that the information provided from external and internal sources is processed, considered and acted on to ensure safety.
The Guernsey Framework has brought in the requirement that firms must assess their business of risks related to money laundering, terrorist financing. Alongside the recent focus on assessing the proliferation financing risks posed by the products and services that they provide to their customers. This allows the level of risk that a business may face to be ascertained and for the board to then ensure that their policies, procedures, controls and the resources required are suitable and sufficient and remain within their risk appetite. A firm’s BRA must also look at the intrinsic risks of the firm as well as the external risks of the environment, which must be reviewed regularly or at least annually. Allowing the board to take due consideration of these changes, the level of risk that may have changed to their own risk appetite, and to ensure that risks continue to be managed and mitigated. Preventing the business from being subjected to financial crime.
The Guernsey regulatory framework sets out the areas that the board should be considering regularly, with suggested and meaningful questions to be considered, alongside a requirement that the board should consider other factors that are present in the business but not necessarily suggested in the framework. These questions or factors will change at different rates to the socio-political environment, the risk of the customers engaged by the business, and resources at hand to manage and mitigate the risks. The board needs to have up-to-date management information on the levels of risk of customers, the resources present, and the current and immediate future requirements. Allowing them to assess the risks and consider the suitability of its policies, procedures, and controls to protect the business and Guernsey.
The issue becomes where the BRA is treated as a document used to meet the regulatory requirements. Shown through the demonstration of ticking the box of what is believed to be expected in the regulations, an ornament to be brought out, dusted off annually before being put back into its box. The failure to ensure that the BRA remains suitable and sufficient, with up-to-date management information being presented to the board regularly on the risks posed internally and externally inclusive of resources and financial crime issues faced by the firm. Which leads to mis-informed decisions and the higher potential of the failure of policies procedures and controls to prevent financial crime and regulatory intervention.
It has always appeared odd to me that businesses require monthly management accounts to assess and control their business to its aims and objectives, but that financial crime risk is not considered in the same way. By ensuring that the financial risks are monitored with the resources required to manage and mitigate them a board is the best place to control the businesses exposure to risk, allow resources to be placed to risk, and allow early intervention to protect and preserve their business.
The BRA is much more than a superficial document that shows compliance with the requirements, being instead a tool to allow board consideration of risks faced and posed on a regular on-going basis to ensure appropriate management and mitigation. Allowing the board to ensure that resources are put to risks where required and that the direction of the business can be helmed effectively, they are able to handle the financial crime and regulatory squalls, overfalls, and rip currents that undoubtedly will be faced by the business. The BRA won’t stop financial crime but with up-to-date internal and external management information will assist the Business in reacting to risks, real or posed, take effective action by having the necessary resources, experience and skills to survive a storm and ensure the safety of the business by the minimisation of those risks.
Therefore, much like constant reviewing of conditions and potential risks and rewards when partaking in surf kayaking, firms must continually review and follow the due processes to manage and mitigate financial crime risks, protect the business endeavours and key stakeholders.
Technical Specialists 