Consultation on Revisions to the Bailiwick's AML/CFT Framework (2017-06-09)

Summary

This is a joint consultation paper issued by the Policy and Resources Committee of the States of Guernsey (P&R) and the Guernsey Financial Services Commission (GFSC) proposing a comprehensive overhaul of the Bailiwick's AML/CFT legal and regulatory framework. The changes are intended to align Guernsey with the FATF's 2012 Recommendations and to address findings from MONEYVAL's 2016 mutual evaluation. It proposes repealing the existing Proceeds of Crime Regulations and replacing them with new Schedules to the Proceeds of Crime Law, together with a revised Commission Handbook.

Key proposed changes

• Single framework: Financial services businesses and prescribed businesses would be merged into a single concept of 'specified business' under new Schedule 3, with separate Schedules 4 and 5 for registration of money/value transfer, currency changing, and prescribed businesses.
• Risk focus: A new general duty to understand, assess and mitigate ML and FT risk, more detailed business risk assessments, and a requirement to have regard to the Bailiwick's National Risk Assessment.
• Additional Customer Due Diligence (ACDD): A new ACDD category, separate from enhanced due diligence, proposed to apply automatically to non-resident customers, private banking clients, personal asset holding vehicles, and companies with nominee shareholders or bearer shares.
• PEPs: Enhanced due diligence requirements would be extended beyond foreign PEPs to cover domestic PEPs and persons with prominent functions in international organisations (IOPEPs), plus their family members and close associates.
• Beneficial ownership, CIS, reliance on others: The consultation also covers proposed changes to corporate governance, beneficial ownership requirements, collective investment scheme due diligence, and rules on reliance on intermediaries.
• Transitional provisions: The Commission proposes that new rules take effect three months after final issuance (planned for autumn 2017), with existing high-risk business relationships to be reviewed within one year and all other existing relationships within two years of the new framework coming into force.

As a consultation paper, this document does not itself impose binding obligations; it seeks industry feedback on proposed legislative and Handbook changes via specific questions, with a formal deadline for responses.

Key obligations

• Respondents wishing to comment must submit feedback via the Consultation Hub (Citizen Space) or in writing to the named GFSC and Policy Council contacts by close of business on Monday 31 July 2017.
• Under the proposed framework, specified businesses would be required to carry out a business risk assessment for ML and FT as soon as possible after Schedule 3 comes into force.
• Under the proposed transitional provisions, firms would need to review and remediate all existing high risk business relationships within one year of the new Schedule 3 and revised Handbook coming into force.
• Under the proposed transitional provisions, firms would need to review and remediate all remaining existing business relationships within two years of the new Schedule 3 and revised Handbook coming into force.
• Under the proposed ACDD requirements, specified businesses would need to apply additional customer due diligence automatically to non-resident customers, private banking clients, personal asset holding structures, and companies with nominee shareholders or bearer shares.

Applies to

financial services businesses, prescribed businesses, legal professionals, accountants, estate agents, collective investment schemes, money or value transfer services businesses, money or currency changing businesses

Deadlines

• 31 July 2017: Deadline for submitting responses to the consultation via the Consultation Hub or in writing.
• autumn 2017 (planned): Anticipated date for issuance of the final legislation (Ordinance/Schedules) and revised Commission Handbook.
• three months after Schedule 3 and the revised Handbook come into force: Proposed transitional period for specified businesses to bring policies, procedures and controls into compliance with the revised requirements.
• one year after Schedule 3 and the Handbook come into force: Proposed deadline for reviewing all existing high risk business relationships under the new requirements.
• two years after Schedule 3 and the Handbook come into force: Proposed deadline for reviewing all remaining existing business relationships under the new requirements.