Guernsey has won the backing of the international Financial Action Task Force (FATF) for its impressive regulatory and criminal law framework and how the Bailiwick cooperates in practice against money laundering.
The FATF was set up after the 1989 meeting of the Group of Seven Finance Ministers to look at the regulatory standards and practices employed in finance centres as part of the global initiative against money laundering. The FATF's work carried the support of the OECD and IMF and the endorsement of Guernsey follows an in-depth review of Guernsey's anti-money laundering procedures which was undertaken during the summer of 1999. A number of reports were provided by Guernsey to FATF and Bailiwick representatives met with FATF in Paris in order to explain the Bailiwick's policies and practices.
This is the second international endorsement which Guernsey has received within the last month.
At the end of May, another international body, the Financial Stability Forum (FSF), also established by the Group of Seven countries, placed Guernsey in the top division for having legal frameworks and supervisory practices better than those in other jurisdictions.
This is further international confirmation of the UK Government's "Edwards Report" which concluded that Guernsey is in the 'top division of finance centres'.
Laurie Morgan, President of Guernsey's Advisory and Finance Committee, said: "Guernsey has always maintained that what matters is not whether a financial centre is onshore or offshore, but whether it complies with high international standards. This latest international report from FATF confirms that Guernsey does. Guernsey prides itself not only on having high quality financial services combined with high quality regulation and supervision but on co-operating fully with its international partners. The regulatory and law enforcement agencies of the Bailiwick will continue to work closely together and share information to deny criminals and their illicit funds access to the global financial systems."
Notes to editors
The Financial Action Task Force ('FATF') on Money Laundering is an intergovernmental body set up in 1989 to combat money laundering. The FATF consists of 26 countries, the European Commission and the Gulf Co-operation Council. Its membership includes the major financial centres of Europe, North America and Asia, and includes France, Germany, the United Kingdom, and the United States.
Membership of the FATF is by invitation only. Whilst Guernsey is not a member, it has formally subscribed to the international anti money laundering standards set out in the forty Recommendations of the FATF.
Report on non co-operating, jurisdictions
The FATF published a report in February 2000 describing a process designed to identify non co-operative jurisdictions in the fight against money laundering and to encourage them to implement international standards in this area. The initiative has included the development of 25 criteria to identify detrimental rules and practices that impede international co-operation in the fight against money laundering. The criteria address the following issues:
- The loopholes in financial regulation that allow no, or inadequate supervision of the financial sector, weak licensing or customer identification requirements, excessive financial secrecy provisions, or lack of suspicious transaction reporting systems.
- Weakness in commercial requirements including the identification of beneficial ownership and the registration procedures of business entities.
- Obstacles to international co-operation, regarding both administrative and judicial levels.
- Inadequate resources for preventing detecting, and repressing money laundering activities.
Four regional review groups were established to evaluate a list of 29 jurisdictions, nominated for assessment by the FATF's membership. Factual surveys were undertaken on each jurisdiction included in the review, consisting of an evaluation of each jurisdiction's anti-money laundering laws, regulations, and practices against the criteria set. A number of reports were provided by the Bailiwick to the FATF. In addition, HM Procureur (the Attorney General) and the Director General of the Guernsey Financial Services Commission made a presentation in Paris to the European regional review group of the FATF. setting out the Bailiwick's high anti-money laundering standards.
The FATF and its members will implement focused efforts to convince non co-operative jurisdictions to improve legislation and domestic practices and to participate actively in international co-operation.
Specific action could also be taken by other multinational bodies such as the G-7 and OECD to seek the issuance of public statements or other appropriate action.
In the event of failure to remedy the detrimental rules and practices, the FATF will consider applying counter-measures to non co-operating jurisdictions.
Editors attention is specifically drawn to page 737 of the States Advisory and Finance Committee's 2000 Policy and Resource Planning Report which is available on the States of Guernsey web site at www.gov.gg