As Guernsey’s finance sector basked in the glory of a positive Moneyval review last month, the Alderney e-gambling sector was also celebrating after being confirmed as rating “very highly in any international comparison”.
Listed as a “positive finding” in the report is the fact that “the Alderney Gambling Control Commission (has) a very good understanding of risks, they exercise their functions on the basis of risk” while the only priority action for the AGCC was that it “should further enhance, with more effective testing, its monitoring of e-Casinos’ procedures and systems, particularly when it comes to the detection and scrutiny of unusual transactions, and it should rethink and clarify the circumstances under which it takes enforcement action”.
AGCC Executive Director, Andrew Gellatly told Express that this “generally positive review reflected the regulator’s efforts to more aggressively implement a risk-based approach to licensee compliance”.
He added that the AGCC works “very closely with its 24 ‘eGambling’ (B2C and B2B) licensees, hosting providers and service providers”.
MONEYVAL
MONEYVAL is a permanent monitoring body of the Council of Europe. It is a FATF-Style Regional Body (FSRB), and as such undertakes mutual evaluations in respect of countries’ compliance with the FATF Recommendations on combating money laundering and the financing of terrorism and proliferation as well as assessing the effectiveness of their implementation.
The FATF Recommendations are applicable to all countries, and as such the Bailiwick of Guernsey was included in the ongoing cycle of Mutual Evaluations undertaken in order to test Technical Compliance and Effectiveness.
In the case of countries that are members of an FSRB, these assessments are undertaken by that FSRB, which in Guernsey’s case is MONEYVAL.
The review – carried out over many months during 2024 – saw Guernsey achieve the “best outcome that could be expected” and it was placed into regular follow-up.
The island was declared “among (the) leaders” in the fight against dirty money.
Alderney’s input
Alderney came under MONEYVAL’s spotlight as well through its review of Guernsey, with the island’s online gambling industry being looked at.
24 companies are currently registered with the Alderney Gambling Control Commission, with hundreds of websites then covered by those licensees.
The AGCC employees tens of people in the island with almost £2million paid to the States of Alderney to help fund its capital projects last year.
That figure surpassed the £1.74m returned in 2021 and more or less matched the 2019 contribution suggesting the industry survived covid in a stronger position than many others.
The sector hasn’t been without controversy though – with one of its licence holders being ordered to pay £1m. after a Gambling Commission investigation revealed social responsibility and anti-money laundering failures, earlier this year.
However, the AGCC says the MONEYVAL report put the sector in a very positive light with “the Bailiwick of Guernsey and its Alderney gambling regulator in the top tier for financial compliance, matching MONEYVAL’s recent praise for financial compliance on Jersey, another Channel Islands online gambling licensor”.
Fellow Crown-dependency, the Isle of Man is due to be assessed by MONEYVAL next year.
MONEYVAL on Alderney
The AGCC said it was pleased that MONEYVAL’s report “found no substantial fault with gambling regulation nor with wider financial regulation in the Bailiwick of Guernsey”.
The report’s executive summary praised Guernsey’s Financial Services Commission (GFSC) and the Alderney Gambling Control Commission (AGCC) for their “very good understanding of [AML/CTF] threats and vulnerabilities to which the supervised sectors are exposed”.
The GFSC and AGCC responded to the report by saying the two organisations now “meet a standard only seen in four other jurisdictions worldwide”, and that the report found their outreach work with the private sector was “abundant and remarkable”, with “no fundamental improvements” required.
“MONEYVAL confirmed that the Bailiwick has a very full and very contemporary set of regulations relating to AML, CFT and proliferation financing and these are very well communicated by its agencies and well understood by the public sector,” they said in a statement to Vixio GamblingCompliance.
The regulators also noted praise in the report for legal and other cooperation with counterparts in other countries, “demonstrating [Guernsey’s] commitment to being a responsible international partner”.
However, MONEYVAL called on Guernsey to improve on a very low number of prosecutions for money laundering and improve the quality of suspicious activity reports.
It added that the gambling regulator had not used enforcement powers in the period covered, lacks criteria for escalation to enforcement and “overly focuses on remedial actions and has legal impediments in sanctioning entities that withdraw their licences”.
The report’s only priority action for the AGCC said that it “should further enhance, with more effective testing, its monitoring of e-Casinos’ procedures and systems, particularly when it comes to the detection and scrutiny of unusual transactions, and it should rethink and clarify the circumstances under which it takes enforcement action”.
AGCC response
“The MONEYVAL process can be challenging for smaller jurisdictions where resourcing with experienced and knowledgeable staff can be difficult,” AGCC chairman Lord Richard Faulkner said.
“But we are pleased that this evaluation found the AGCC is well prepared and that our relationship manager structure gives our eCasinos a ‘consistent, direct and immediate point of contact’.”
Lord Faulkner said the result “rates very highly in any international comparison that can be drawn, particularly as this was the final evaluation in the [Europe-wide] fifth round, and expectations have been raised during that process”.
AGCC Executive Director Mr Gellatly told Vixio that MONEYVAL’s generally positive review reflected the regulator’s efforts to more aggressively implement a risk-based approach to licensee compliance and work very closely with its 24 ‘eGambling’ (B2C and B2B) licensees, hosting providers and service providers.
On areas needing improvement, Mr Gellatly said the regulator has started adjusting certain practices as part of developing “what was acknowledged to be a very nuanced and detailed understanding of the sector’s … threats and vulnerabilities”.
On the AGCC “overly” focusing on remediation, he said: “Our remedial measures are themselves a form of sanctioning, and they are highly effective when implemented in near real time.
“Remediation plans being complied with can mean further escalation is not necessary and I think MONEYVAL’s evaluation accepted this, but of course, it is not the only approach when viewed horizontally across other jurisdictions.”
Mr Gellatly noted that “FATF standards do not require AML/CFT deficiencies to be fined”.
“Instead, sanctions must be available and used appropriately to improve compliance and we have the full range of sanctions at our disposal,” he said.
Responding to MONEYVAL’s criticism of few prosecutions and unclear procedure, Mr Gellatly said: “Pecuniary fines are one way of enforcing compliance, but … we spend a great deal of time with our small group of operators, more so than most other regulators.
“We gather valuable information on a monthly and quarterly basis, and in our onsite inspections, which take place at least annually.
“As a result the relationship is collaborative and our operators appreciate and value us as a source of regulatory guidance. That is not something we plan to change.
“The consistency of contact allows us to correct any issues at the earliest opportunity and by small course changes made via remedial measures.”
Mr Gellatly said Alderney comes out of the MONEYVAL review “very highly by any international comparison … . It was the last evaluation in the [Europe-wide] fifth round too, and expectations have certainly been raised during that process.”