Financial Crime Training Thematic Review - Report of Findings (2016-06-08)

Summary

This is a thematic review report published by the Guernsey Financial Services Commission's Financial Crime Supervision and Policy Division, summarising findings from a 2015 review of AML/CFT and financial crime training practices across 62 licensed and registered firms. It is informational rather than a new rule, but it restates existing training obligations under the Regulations and Handbooks and sets out the Commission's expectations for all regulated firms going forward.

• Key finding: A disconnect exists between the financial crime risks firms identify as top threats (notably fraud) and what is actually covered in staff training.
• Ownership effect: Firms that are part of international groups spend roughly 2.5 times more on financial crime training and train staff more frequently than Bailiwick-owned firms.
• Positive finding: High levels of professional qualification among Boards and staff, especially in banking and fiduciary sectors.
• Areas needing improvement: Board oversight of training, tailoring of training content to actual risk, use of third-party MLROs/compliance officers, training for non-executive directors, and methods for monitoring and measuring training effectiveness.

In the Next Steps section, the Commission directs all firms licensed or registered for AML/CFT and financial crime purposes to review their own training arrangements against the standards in the Regulations and Handbooks, and to strengthen controls where gaps exist. Some firms visited on-site received individual feedback, and the Commission may impose Risk Mitigation Programmes requiring firms to address identified weaknesses within a set timeframe.

Key obligations

• All firms licensed by or registered with the Commission for AML/CFT and financial crime purposes must review whether their training arrangements meet the standards required by the Regulations and the Handbooks.
• Firms whose training policies, procedures or controls are not effectively managing employee-related financial crime risks must make necessary changes and implement more robust controls.
• Firms must have arrangements to provide suitable and sufficient training to employees and to assess whether employees understood the training received.
• Firms must be able to readily identify persons requiring training and ensure employees receive regular training within the appropriate timeframe.
• Firms must regularly review their training procedures and content to ensure continued relevance to the firm's business and risk environment.
• Firms subject to a Risk Mitigation Programme must rectify identified risks within the timeframe given by the Commission.

Applies to

financial services businesses, prescribed businesses (legal professionals, accountants, estate agents), banks, fiduciaries, investment licensees, insurance managers and intermediaries, non-regulated financial services businesses