Guernsey has achieved the “best outcome that could be expected” in its Moneyval assessment, crucial decisions have indicated.
The full details of how the island performed against international standards for anti-money laundering and countering the financing of terrorism will be published within a couple of weeks.
But Moneyval, the Council of Europe’s permanent monitoring body, adopted the mutual evaluation report of the island at its 68th Plenary Meeting and agreed to place it into regular follow-up.
This is the default monitoring system where no material issues or deficiencies are identified in a jurisdiction’s AML/CFT/CFP regime and involves regular reporting on progress of enhancements being made.
Previously the States has said that recommended actions are inevitable for all jurisdictions, regardless of how well prepared they are and that the “best outcome would be to be placed into regular follow-up”.
While changes could still be made to this assessment, that appears extremely unlikely given timescales for the final announcement and crucially means the island has avoided being grey-listed.
At Guernsey Finance’s annual industry update this week, its chairman and the island’s Policy & Resources President Lyndon Trott said the island could be “confident” about the outcome of Moneyval.
A memorandum on the Plenary, which took place in December, said the island has been rated highly or substantially effective in areas that show strength in risk assessments, counter terrorism financing measures, TFS [asset freezing and prohibitions] regimes, and beneficial ownership transparency.
Two other measures were rated as moderate effectiveness due to the limited use of FIU [Financial Intelligence Unit] analysis and confiscation measures.
Areas have as expected also been found for improvement. Investigation and prosecution for money laundering was rated as having low effectiveness, due to limited results noted in high-risk sectors.
Guernsey will be required to report back in 2.5 years time, under the decision made in December.
“We can be confident”
The States and industry have spent substantial time and money preparing for assessment.
Moneyval, alongside the future of global corporate tax, was addressed at the Guernsey Finance event at St James on Wednesday.
“We are a couple of weeks away from the confirmation that, suffice to say, we can be confident about the outcome and that we will continue to be considered a jurisdiction that meets international standards and norms on AML/CFT,” said Deputy Trott delivering his last closing speech as Guernsey Finance chairman.
“I thank all of the businesses that demonstrated our commitment to anti money laundering and countering the financing of terrorism as part of the assessment. The readiness with which our practitioners helped the Bailiwick agencies with the collection and sharing of relevant information and data, both in the lead up to and during the onsite visit by the assessment team in April 2024 is very much appreciated.”
Trump “drives a coach and horses” through global tax deal
In his speech, Deputy Trott also addressed the OECD Pillar 2 tax framework which from January set a global 15% minimum effective tax rate for large multinational enterprises.
It has been estimated the change will generate an extra £30m. in corporate tax revenues for the States.
So far, about 140 countries have signed the OECD plan.
But now US President Donald Trump has rejected the global tax deal.
“Guernsey has played an active part in progressing the global base erosion and profit shifting agenda, working with the OECD, among 130 other jurisdictions to make the agreed statement back in 2021,” said Deputy Trott.
“Now our stable corporate income tax system, now bolstered by the adoption of this robust global minimum rate, ensures that Guernsey remains competitive while operating at the forefront of the highest global standards of tax transparency and fairness.
“But of course, we know that the new Trump administration is threatening to drive a cart and horses through the OECD approach that has provided the framework for multinational tax standards over the past two decades.
“We should expect disruption. Indeed, that is exactly what the Trump administration has been geared up to do across many areas of global givens, and in this case, a proposed global tax rate.”
He said that in global terms, Guernsey is a policy taker, not a policy maker.
“Our skill is in how we adapt to it and implement it, be it tax transparency or economic substance.
“So for now, we will watch and consider, then be ready to move and adapt if or when we need to.
“We can be confident in these times of change, because we have a strong and world class offer. These three words: safe, stable and secure are of particular importance at the moment, as we face a global backdrop of tough fundraising conditions and macro economic difficulties.”
With policy changes in two of our largest target markets in the UK and the US, he said it was imperative that the expertise and benefits that Guernsey can provide are promoted and amplified at the very highest levels.
“Fortunately, our industry is continually innovating and adapting in order to meet the opportunities and the challenges of the future. Through these challenges, Guernsey offers stability and we remain a competitive and highly respected international finance center.”