Moneyval report - Guernsey highly successful

• Guernsey has performed very well with its MONEYVAL report and has some of the highest findings and ratings in the world, securing its position as one of the most secure and safe jurisdictions for financial services. 
  
  
• Guernsey is one of only three jurisdictions to achieve a high effectiveness rating for its implementation of sanctions (the UK and the US being the other two).
  
  
• The key recommendations relate to money laundering investigations and prosecutions, suspicious activity reports, and the GFSC's financial crime supervisory process.

The results are in! Guernsey has obtained strong results in MONEYVAL's latest report on Guernsey, which was published earlier today.

The overall report and the ratings for Guernsey's legal and institutional framework complying with the 40 FATF Recommendations, as well as the effectiveness of that framework, are an excellent result for the island. However, when Guernsey's ratings are looked at in comparison with reports on other MONEYVAL as well as FATF jurisdictions, it is clear that Guernsey has outperformed its competitors.

The report noted Guernsey's significant efforts to strengthen its legal and regulatory AML/CFT framework since the last MONEYVAL report, and Guernsey's comprehensive measures to prevent the misuse of legal persons and arrangements for money laundering and terrorist financing.

Guernsey's ratings

Technical compliance assessment¹

• Compliant with 25 of the 40 FATF Recommendations
  
  
• Largely compliant with 15 of the 40 FATF Recommendations

Guernsey is therefore compliant or largely compliant with all 40 FATF Recommendations showing that Guernsey has the necessary framework in place for all FATF Recommendations. Guernsey is one of only a few jurisdictions to achieve this result.

Effectiveness ratings for the immediate outcomes (IO)² 

• 2 IO: high level of effectiveness - these both related to sanctions and only Guernsey, the UK and the US have achieved this rating for sanctions
  
  
• 4 IO: substantial level of effectiveness - including understanding AML/CFT risks, and transparency of legal persons and arrangements
  
  
• 4 IO: moderate level of effectiveness – including preventative measures carried out by the private sector and financial intelligence
  
  
• 1 IO: low level of effectiveness - money laundering investigation and prosecution

Guernsey's effectiveness ratings are some of the most commendable in the world. 

Recommendations:

The report recommends 11 priority actions for Guernsey, which include:

• increasing efforts to obtain the necessary resources particularly in terms of well-trained and skilled investigative specialists for the Economic and Financial Crime Bureau; 
  
  
• continuing actions to enhance the quality and relevance of suspicious activity reports, as well as addressing underreporting; and
  
  
• the GFSC further improving its supervisory process by recalibrating its risk categorisation process for investment firms and fiduciaries, and revisiting the extent (in terms of client file sample size) of examinations, and frequency for medium-high risk entities to ensure these are adapted to size and risks.

Walkers' thoughts

Guernsey's high effectiveness ratings for sanctions are to be applauded, and Guernsey is the only MONEYVAL jurisdiction to achieve these ratings for sanctions (both the UK and US are FATF jurisdictions).  The substantial effectiveness rating for transparency of legal persons and arrangements is also extremely important, as it shows that MONEYVAL effectively approves of Guernsey's approach of limiting access of the beneficial ownership register to competent authorities, such as law enforcement, regulatory and tax authorities.

Coming out of the 5th round process, every jurisdiction has areas and recommendations that they need to work on.  Guernsey, as with many other jurisdictions, will need to work on implementing its priority actions, including the recommendations around money laundering investigation and prosecution and suspicious activity reports.  We expect that Guernsey will mainly make operational changes to implement the recommendations.

About Walkers' Channel Islands' Regulatory & Risk Advisory Group

Walkers has a dedicated team of regulatory experts spanning all practice areas who regularly advise on all aspects of Guernsey regulation, including financial services, AML/CFT, sanctions, data protection, consumer protection, competition, corporate tax (including Pillar 2), economic substance, FATCA, and the CRS. 

Our team can assess your business for compliance with AML/CFT, sanctions and other requirements. We also provide training to staff on a broad range of topics.

[1] There are four possible levels of compliance with the 40 FATF Recommendations: compliant, largely compliant, partially compliant and non-compliant.

[2] There are four possible levels of effectiveness with the 11 immediate outcomes: high level, substantial level, moderate level and low level.