Guernsey’s position as one of the best and safest jurisdictions in the world for financial services has been secured, the States has said on the back of a crucial assessment by Europe’s anti-money laundering body.
The Council of Europe’s Moneyval has today published an evaluation of how well the Bailiwick combats financial crime which compares favourably with other jurisdictions, although it still urges action, particularly in terms of the process that would lead to combating major money laundering crimes.
Achieving a positive outcome from this report has been a major focus of government and industry this term, with major steps taken including introducing a swathe of new laws and setting up the Economic and Financial Crime Bureau as a dedicated independent unit.
Home Affairs President Rob Prow chaired the financial crime strategic oversight group which coordinated the work.
“A Moneyval evaluation is of massive importance to our finance industry. And the finance industry really is the bedrock of our economy,” said Deputy Prow.
“And so it’s vital to make sure that this jurisdiction does abide by the international standards which are set by the Financial Action Task Force. Moneyval are the organisation that come and evaluate us against those standards and it’s extremely onerous. All countries in the world have to make sure that they are compliant and have great difficulty in meeting those standards.”
There has been a huge collective effort across government, the statutory authorities, the GFSC, company registry and the law officers, he said.
“The evaluation when you compare with other jurisdictions is an excellent report as far as Guernsey is concerned.”
Deputy Prow acknowledged that the standards that you had to demonstrate compliance with got harder as the evaluation process rolled on.
“I think the challenge is recognising where there were shortcomings, and having the courage to put the resource together in the right areas, certainly as far as legislation is concerned, and getting that legislation through the Assembly.
“More than that, it’s looking at where you think your outcomes will be judged, and making sure you have the resource, you have the expertise in place.
“One of the challenges which we overcame was that we needed to take the law enforcement capacity out of mainstream law enforcement and set up the Economic and Financial Crime Bureau on an independent statutory basis. And the same with the Financial Investigation Unit, although there was an existing FIU, we had to change the concept and put it on a statutory basis as well.”
Deputy Prow said the report was a “very, very good news story”.
“It was an example of Guernsey together, all the elements from industry, from government to the statutory authorities, the regulator to the registrar. We are delighted that we’ve had, what in comparison to other other jurisdictions is actually a very, very good evaluation indeed.”
While urging Guernsey to improve the investigation, prosecution and conviction of money laundering offences, the report highlighted its good understanding of the risks of money laundering/terrorist financing and its highly effective application of targeted financial sanctions.
The report commended the FIU for producing high-quality analytical products and strategic analysis, while acknowledging the limited extent to which they are used by law enforcement authorities to initiate investigations. The quality of suspicious activity reports also remains a concern.
Moneyval said that the Guernsey Financial Services Commission and the Alderney Gambling Control Commission have a good understanding of risks linked to sectors under their supervision. They implement a risk-based supervisory model, which has room for improvement in terms of the frequency and extent of the examinations involved.
The report states that the private sector demonstrated a good understanding of the risks and application of measures against money laundering and terrorist financing. However, challenges remain in relation to the risk mitigation of complex corporate structures, and the application of countermeasures in respect of tax-related money laundering. Moneyval also called for further efforts to enhance the quality and types of suspicious activity reports, especially those related to tax evasion and corruption.
The report states that Guernsey has comprehensive measures to ensure transparency of beneficial ownership of legal persons and arrangements, although the enforcement actions have been limited.
In addition, Moneyval considers that competent authorities actively, regularly and effectively cooperate with foreign counterparts, although, in the case of the FIU, the number of cooperation requests is not fully in line with the risk profile involved.
The report also notes that the legal and institutional framework is in place to provide the widest possible range of mutual legal assistance, but the use of international cooperation channels is far from being exhausted.
Guernsey is expected to report back under Moneyval’s regular follow-up reporting process in May 2027.
The scorecard:
(‘substantially effective’ and ‘highly effective’ are pass marks)
Risk, policy and coordination SE
International cooperation SE
Supervision ME
Preventive measures ME
Legal person and arrangements SE
Financial intelligence ME
Money laundering investigation and prosecution LE
Confiscation ME
Terrorist financing investigation and prosecution SE
Terrorist financing preventative measures and financial sanctions HE
Proliferation financing financial sections HE
The full Moneyval report, and a summary document produced by the States, is available here.
