Guernsey regulator's changes to the AML rulebook at-a-glance

Chris Hamblin Editor London 22 April 2020

Guernsey regulator's changes to the AML rulebook at-a-glance

The Guernsey Financial Services Commission is consulting interested parties about changes that it wants to make to its anti-money-laundering rules to take into account the Government’s National Risk Assessment (published in January) and other things.

The regulator wants to create a new section (appendix H) to the rulebook, or 'handbook' as it calls it in an act of deference to the Financial Conduct Authority in the UK, in which it proposes to list those countries and territories that the Financial Action Task Force has accused of being significantly and strategically deficient in their efforts to fight money launderers, terrorist financiers and people who finance the proliferation of various things of which the FATF does not approve. In accordance with Paragraph 5(1)(c)(i) or Schedule 3 of the Handbook on Countering Financial Crime and Terrorist Financing, a firm has to be "extra-customer-duly-diligent" (ECDD) when assessing a business relationship or occasional transaction in which the customer or beneficial owner has a relevant connection with a country or territory that the FATF has blacklisted in some way or other. At the moment firms receive notices from the Government.

The GFSC wants to create another section - appendix I - in which it proposes to list various  countries and territories that various people accuse of being more risky than others. These people include the denizens of government departments such as the HM Treasury, the US Treasury and various charities such as Transparency International. The regulator also wants the appendix to include countries that are subject to FATF “calls for action” and countries “under increased monitoring” by the FATF, although government bulletins on these subjects will continue for now.

The regulator can tell any firm that it likes to apply ECDD to any country or territory that it likes. It proposes to repeal Instruction (Number 1/2020).

These days, the FATF obliges all its members to produce national risk assessments or NRAs. Guernsey has done so and the GFSC wants to require firms to take its findings into account, along with the findings of any update.

The GFSC will also evolve guidelines by which firms ought to incorporate the findings of national risk assessments in their business risk assessments and customer risk assessments.

The regulator also heralds "the reintroduction of insurance products as a qualifying product and service for an intermediary to be considered the customer of the firm." In particular, if a firm is licensed under the Insurance Business (Bailiwick of Guernsey) Law 2002 and offers insurance products as part of its relationship with another regulated financial services business, the GFSC will allow it to treat that regulated firm as its customer.

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