Fundamental improvements are needed to ensure the effective investigation, prosecution and conviction of money laundering cases in Guernsey, Moneyval has said.
The Council of Europe’s anti-money laundering body has today published an evaluation of how well the Bailiwick combats financial crime which generally compares favourably with other jurisdictions.
But it said that there were very few money laundering prosecutions and convictions in the period under review and bar one case they mostly concerned unsophisticated issues related to low-level domestic concerts, something which is out of kilter with what would be expected given the huge flows on money through the island.
During the review period Guernsey moved to establish the Economic and Financial Crime Bureau and put the Financial Intelligence Unit on an independent footing.
“The establishment of the EFCB as a dedicated and powerful LEA [law enforcement authority] indicates a strategic shift towards pursuing money laundering activities more aligned with the jurisdiction’s risks, but this objective has only to a limited extent been achieved mainly because of insufficient human resources,” Moneyval’s assessment said.
“As a result, the number of money laundering investigations and prosecutions is generally low and declining.”
It said that some high priority areas, like the increase of staff, are yet to be completed.
“The FIU produces high-quality analytical products and intelligence reports, however they are used to a limited extent to initiate money laundering and predicate offences investigations and some LEAs (especially EFCB) seek FIU’s assistance to a limited extent.”
Suspicious Activity Reports from firms alert law enforcement to potential instances of money laundering or terrorist financing, but again there are shortcomings.
“Most SARs come from the eGambling sector with generally limited intelligence value and the reporting from some high-risk and material sectors remains limited.”
Moneyval said that the Bailiwick should increase their efforts to obtain the necessary resources particularly in terms of well-trained and skilled investigative specialists for the EFCB to pursue complex, transnational money laundering investigations.
Among its intelligence gathering, the FIU receives reports of suspicious activities from money laundering reporting officers in industry. It also gains and exchanges intelligence internationally.
It is the first stage of intelligence gathering before the EFCB investigates cases with the view to get them before the courts.
Home Affairs President Rob Prow has taken the political lead in Moneyval preparations.
“We are entirely confident that the work that we’ve done this term holds us in very, very good stead,” he said.
“Some of these investigations take years, rather than months and weeks and so you really need a portfolio of successful prosecutions which weren’t available at the beginning of this term, but I can assure you and the public that the officers in there have got their teeth into some very important cases. And they are very much up to the challenge that is presented to us.”
He said there are many challenges in getting cases prosecuted.
“Some of the perpetrators of these crimes can live overseas, so it’s very specialist and detailed work. You’re talking about very complex financial transactions. So the expertise needed is very specialist,” he said.
“Obviously you need law enforcement skills, because at the end of the day, it’s criminal investigations at a high level, but you also need a good understanding of financial structures, you need a good understanding of what the finance industry is about. And perhaps most importantly, both for the Financial Intelligence Unit and as well as the EFCB, it is the question of understanding what the risks are to the Bailiwick, and a lot of work is done by those two organisations and the regulators, the GFSC and others, to really understand what the risks are to the Bailiwick as a whole from money laundering, so we can concentrate and prioritise in those areas with the limited resources that are available.
“Why do they need to be statutory independent? It’s generally recognised that the investigation of offenses is a specialist and discrete part of government, and that they should be able to operate independently and investigate as they feel they should do as a professional. And it is the job of government to have ultimate oversight at a strategic level and to fund and resource them.”
He was pleased that Moneyval had recognised that setting up the EFCB and FIU as discrete organisations had put the island on a “very good road on the way forward”.
There is a government oversight group that has been set up to monitor the outcomes on a regular basis to ensure that the investment being put in was leading to what Moneyval wants to see, investigations leading to prosecutions, said Deputy Prow.
He believed the system, including the decision making process about whether prosecutions went ahead, was fit for purpose.
The Law Officers economic crime unit, the EFCB and the FIU are all based in a financial crime centre in a brand new building ar Mary Randall House paid for from seized assets.