Bailiwick's positive MONEYVAL evaluation is 'significant achievement'

The Bailiwick of Guernsey has achieved a highly successful outcome from its MONEYVAL evaluation into how it combats financial crime, comparing positively to most other jurisdictions.

Securing such a positive outcome was a major priority for the States of Guernsey this political term, such is its importance to the continued prosperity of the island's financial services sector.

The Bailiwick received pass ratings for six out of the 11 categories (Immediate Outcomes) by which its effectiveness in the area of anti-money laundering and combating the financing of terrorism (AML/CFT), as well as combating the financing of proliferation of weapons of mass destruction, was judged. Additionally, the Bailiwick is one of the few jurisdictions to pass all 40 recommendations around technical compliance.

As such the Bailiwick has been placed into what is described as 'regular follow-up', which is ultimately the core aim of all those jurisdictions evaluated. This secures the Bailiwick's position as one of the best, secure and safe jurisdictions in the world for financial services.

MONEYVAL evaluations rate the 11 Immediate Outcomes as either a High Level of Effectiveness, Substantial Level of Effectiveness, Moderate Level of Effectiveness or Low Level of Effectiveness. High and Substantial are the pass ratings.

The Bailiwick was one of a very small number of jurisdictions to receive more than one top rating of 'High', which is achieved for the immediate outcomes of:

• implementation of sanctions on terrorist financing and oversight of non-profit organisations.
• implementation of sanctions on financing of proliferation of weapons of mass destruction.

Deputy Rob Prow, President of the Committee for Home Affairs and chair of the financial crime strategic oversight group, said:

'Preparations for our MONEYVAL evaluation were identified right at the start of this political term as one the most pressing priorities. It is undoubtedly one of the success stories of this term of government, as the amount of effort and collaboration needed to secure this very positive result was a huge task. This is about meeting international standards in anti-money laundering and combating the financing of terrorism and, while there are areas we need to improve, and we will, we have shown that overall we meet the standards and compare positively to most other jurisdictions.

'It has been a privilege for me to lead the strategic oversight group for the last four years as we've worked towards this significant achievement. It has taken a huge collective effort between the States, industry and many other stakeholders across the Bailiwick to secure this successful outcome.'

Deputy Lyndon Trott OBE, President of the Policy & Resources Committee, said:

'While positive news doesn't often grab the headlines, especially areas of work like this that are technical in nature and therefore not necessarily at the forefront of the community's collective mind, I cannot overstate how important it was for our economy to have a positive outcome. Quite simply a result of grey listing would have caused significant repercussions for the island and a decline in financial services of about 10%. Not only that, but it would have resulted in business going elsewhere that would have otherwise been located in Guernsey.

'Therefore, a poor MONEYVAL evaluation would have hit our economy and caused a loss of jobs, which means the significant investment we made to ensure we were well-prepared was money well spent.

'Having said that, I was always confident of a positive outcome given we are - as we have always maintained - a responsible international finance centre that takes its anti-money laundering and combating the financing of terrorism responsibilities seriously.'

While the two "High" ratings are the most striking of the pass ratings, two of the other pass ratings are also of particular strategic importance for the Bailiwick internationally.

One is in relation to beneficial ownership for which the Bailiwick is described as having comprehensive measures to prevent the misuse of legal persons and legal arrangements and to ensure beneficial ownership transparency for legal persons. There is constant pressure to improve transparency internationally and an international finance centre like Guernsey depends on having strong standards of transparency. This outcome proves it does.

The second is in relation to international cooperation. The Bailiwick has long prided itself on assisting other jurisdictions to deal with criminals. This rating on cooperation is important for the Bailiwick's positive regional and international reputation, and the pass rating maintains this reputation.

MONEYVAL evaluations always result in a range of recommendations and the Bailiwick's was no exception.

There was one immediate outcome where the Bailiwick received the lower of the two fail ratings (Low Level of Effectiveness). This was in relation to the investigation and prosecution of money laundering. However, the report also recognises the establishment of the Economic & Financial Crime Bureau as a dedicated and powerful organisation which indicates a strategic shift towards pursuing money laundering activity that is more aligned with the Bailiwick's risks, even if this has only been achieved to a limited extent so far. The report also finds that, despite the low number of cases, all types of money laundering have been successfully prosecuted.

Deputy Neil Inder, President of the Committee for Economic Development, said:

'This outcome protects our key industry and reaffirms to the world that the Bailiwick takes its responsibilities to mitigate the risks of money laundering and terrorist financing seriously. It might not be a subject matter that appeals to the masses but, given the importance of financial services to the quality of life we enjoy, it was essential to do well. From our Committee's perspective, the work carried out by the Guernsey Registry has been crucial to the successful outcome and we were pleased to play our part in this collective effort.'

Mark de Garis, Head of the Public Service, said:

'From a public services perspective, preparations for the MONEYVAL evaluation involved a huge number of staff right across many areas of the States. There are far too many to name, but this really has been a great example of States Committees and services, authorities and the wider industry working together with a shared focus on securing a successful outcome for the Bailiwick. It has taken a massive amount of time and effort to get us to this point, and I thank all public sector staff involved. We won't stand still, there is always much to do in this complex area, and we will continue using the collaborative approach that got us to this point. But today is a day where everyone involved should be proud of their efforts.'

The full MONEYVAL report, and a summary document produced by the States of Guernsey, is available at www.gov.gg/finance-fatf