Consultation on proposed amendments to the Handbook on Countering Financial Crime to cover counter proliferation financing (2024-01-12)

Summary

This document is a Guernsey Financial Services Commission consultation (later closed, with feedback and an updated Handbook issued) on amendments to the Handbook on Countering Financial Crime (AML/CFT) to extend it to cover counter proliferation financing (CPF). The changes flow from parallel amendments to Schedule 3 of the Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law 1999 and touch almost every chapter of the Handbook, mostly as technical AML/CFT to AML/CFT/CPF relabelling, alongside substantive updates on sanctions, the national risk assessment and pooled bank accounts.

• Proliferation financing (PF): Specified businesses, who already apply AML/CFT-style controls to CPF sanctions, must now carry out a distinct, narrower PF business risk assessment focused on breaches of WMD-related international sanctions.
• UN, UK and Bailiwick sanctions (Chapter 12): Amendments update guidance to reflect the post-Brexit sanctions framework and supervisory experience from Russia-related sanctions since 2022.
• National Risk Assessment: Handbook references are updated to the Bailiwick's second NRA (including a first PF NRA) published December 2023, including an updated (lower) risk rating for registered charities and NPOs.
• Pooled bank accounts: Rules and guidance are amended to make it easier for banks to provide pooled account banking services to lower-risk local non-financial-services businesses.
• Consultation outcome: The consultation closed 2 February 2024 with twelve responses, mostly supportive; the Commission published its feedback and issued the updated Handbook on 16 February 2024 without changing the 31 December 2024 PF risk assessment deadline.

The Commission clarified in its feedback that it will not maintain a fixed list of 'PF hub' jurisdictions in the Handbook (since PF risk profiles change too quickly), that references to North Korea and Iran will be updated as needed, and that firms should update policies, procedures and controls soon after completing their PF business risk assessment where the assessment identifies gaps.

Key obligations

• Specified businesses must undertake a distinct proliferation financing (PF) business risk assessment before 31 December 2024.
• Following any changes identified by a PF business risk assessment, firms must consider whether their policies, procedures and controls remain appropriate and effective and, if not, update them on a timely basis.
• Specified businesses must apply the amended Chapter 12 rules and guidance on UN, UK and Bailiwick sanctions, including in relation to counter proliferation financing sanctions.
• Specified businesses must have regard to the updated National Risk Assessment (including the first PF NRA) when assessing ML, TF and PF risk, including the revised risk profile for charities and NPOs.

Applies to

specified businesses, financial services businesses, prescribed businesses, banks (in relation to pooled bank accounts)

Deadlines

• Friday 2 February 2024: Deadline for responses to the consultation via the Consultation Hub (consultation now closed).
• 31 December 2024: Deadline for specified businesses to have undertaken a proliferation financing (PF) business risk assessment.
• Friday 16 February 2024: Date the Commission issued the updated Handbook following consideration of consultation feedback.