The Dawn of a New Era

Compliance monkeyThe 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 by Redwood Offshore Limited to assist the Board with understanding and preparing for the changes to come.

logoIt 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.




PEP Alert: France recommends eight for UN sanctions list

Financial Crime Asia

Not Asia focused for once, but in keeping with the law of identity (A is A) and more poetically by Gertrude Stein (A rose is a rose is a rose) a PEP is a PEP is a PEP, it is probably worth a glance at the eight Central African politically exposed persons (PEPs) that the  French government has recommended be the subject of UN sanctions.


All eight PEPs are connected to the Central African Republic and the select group of individuals includes former President François Bozize, according to this report from Reuters in Paris.

Back in December, the UN backed an intervention to stem sectarian conflict in Central African Republic (CAR), which began when Muslim Seleka rebels seized power in the mostly Christian country. In January, the UN issued a shot across the boughs to the CAR when it mooted the possibility of travel bans and…

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Is Guernsey’s Finance sector in trouble?

There has been a lot said this week of the reduction in the Finance sector here in Guernsey, but is this just the musings of the pessimist? I agree that the sector in Guernsey has shed jobs and lost some businesses and clients since 2008, but taking in to account the conditions of the world economy I think it has performed extremely well and remained stable and safe. The reduction of the Finance sector in Guernsey outside of the world economic situation is down to Guernsey Licensees working smarter, information technology and the use of outsourcing for the traditional labour intensive tasks. The human cost that has occurred has been pushed in to the media and it is sometimes difficult to appreciate the benefits that this streamlining has brought to Guernsey and the optimism we can move forward with.

We have a regulatory system that is respected worldwide and a selling point for Guernsey. New licensees have been and continue to be attracted to Guernsey due to the strength of the regulatory framework. The regulatory system is further enhanced by the ability of the industry and individuals to meet with the regulator on formal and informal basis with ease. We live in an environment where the regulator knows licensee’s and officers personally and understands their business allowing few chances for scandals or poor practice to manifest while allowing good practice and development of products to be at the forefront.

The continuing stance of the Guernsey regulator to engage with industry and to allow us to develop practices and products and remediate our business where appropriate, is beneficial in allowing business to grow while reducing the fear factor of enforcement and creating an open and honest environment. This engagement and regulatory framework allows trust to develop and creates an environment where innovation and creativity can flourish. This has allowed Guernsey to develop itself as a centre of knowledge and excellence that is the envy of many other international finance centres.

I believe that Guernsey is ahead of the curve in respect of ensuring our Compliance cultures and Corporate Governance cultures are fit for purpose for the new world order post 2008. This has assisted The Guernsey licensees to continue to provide consistent high standards in corporate behaviour. There is no doubt that this enhancing of the Guernsey culture was painful at first but this has placed Guernsey ahead of our competitors who will undoubtedly have to go through the same pain as we did, but potentially at greater cost to themselves than we had to endure.

Guernsey in some cases can be more expensive to do business in because of the changes that have been adopted, but should we be concerned? We are now in a world where price reductions are common and consumers want more for less, but do they want a reduction of services or client care? We are now in a society where we need to provide progressive and innovative products and services to the client, where client care and service is primarily the focus rather than aggressive products. Clients are out for value for their money and while maybe not the cheapest jurisdiction available, Guernsey licensees have continued to develop and enhance there services and products, but it does cost money. Clients will justify the expense on the value that can be added to their business by locating to Guernsey, yes we need to be concerned but not paranoid of cost.

The sun has set on marketing a jurisdiction solely on its cheapness, aggressive products or clandestine activities and the new dawn has risen on openness, professionalism, innovation, value for money, while upholding compliance standards with international expectations to safe guard our clients and their businesses. The Guernsey finance sector is well place to continue to develop and be a player in the international finance sector and is in great shape now for 2014 and the future.