Revisions to Anti-Money Laundering Framework

As part of its continuing commitment to ensuring that supervisory standards are up to date and appropriate, the Commission is preparing revisions to the regulations and rules governing anti-money laundering (AML) standards for financial services businesses ‘the Handbook’ and for prescribed businesses (firms of lawyers, accountants and estate agents).  These revisions largely arise from the Commission’s findings during on-site inspections and from comments made by industry in the consultation process. A number of the changes will be of particular benefit to industry.

The amendments will include:

• a more sophisticated approach for firms in risk profiling their customers.  Approaches to risk by industry internationally and locally have developed considerably over the last few years. The Commission’s rules will reflect this.  The changes will be particularly beneficial for Guernsey firms which are part of financial groups as they will allow these firms’ procedures to mesh more easily with group procedures: feedback from industry indicated that the ‘one high all high’ risk profiling methodology has been especially challenging for such firms.

• the removal of general insurance from the AML regulations and rules. The Commission considers that the risk of general insurance being used for money laundering is very low and that, as a result, firms providing or advising on general insurance should not be required to meet detailed AML regulations and rules for that type of insurance; this reflects a more ‘risk based approach’ to AML issues.

• revisions to the ‘likely to benefit’ rules so that, other than in high risk situations, there will be more flexibility for firms in the timing of verification of identity of beneficiaries of trusts falling within the rules;

•  a new chapter providing guidance for firms in relation to bribery and corruption, which are of increasing international concern as crimes in their own right as well as motivations for money laundering. The new guidance will assist Guernsey – and Guernsey firms – to focus on this concern.

The revisions will be issued early in the New Year and, where necessary, firms provided with a transitional period so that they can amend their policies, procedures and controls before the changes come into effect.  In some areas no transitional period is needed, such as the removal of general insurance from the detailed requirements for firms.

Richard Walker, Director of Policy and International Affairs said: “It is crucial that Guernsey’s work in preventing the products and services we offer from being used by money launderers is focussed as much as possible, and industry’s efforts put to the best effect possible.  The current AML framework has been in place for several years.  The experience of both the Commission and industry with it is enabling us to take the positive steps of revising the framework and enhancing its focus.”