Feedback on AML/CFT On-Site Visits (July 2012)

Summary

This is a 2012 feedback paper from the Guernsey Financial Services Commission summarising themes observed during its AML/CFT on-site inspection programme in 2011. It does not create new rules, but highlights good practice and common weaknesses relative to existing AML/CFT regulations and Handbook rules so that businesses can review their own policies, procedures and controls.

• Business risk assessment: Some businesses used generic, group derived, or third party risk assessments that did not reflect their own specific ML/FT risk, or omitted risks they believed were already mitigated.
• Relationship risk assessment: Assessments sometimes failed to clearly show the basis for the ML/FT risk rating, confused ML/FT risk with other risk types, or conflated business level and relationship level assessments.
• High risk customers: Some businesses lacked documented policies for risk rating, wrongly downgraded overall risk despite a high risk factor (e.g. PEPs, high risk jurisdictions), or refused high risk business without having controls to prevent inadvertently taking such customers on.
• Low risk customers: Simplified due diligence was sometimes applied without proper regard to the regulations and Handbook, reasons for low risk determinations were often undocumented, and confusion over introducer/intermediary definitions led to incorrect low risk classifications.
• Monitoring: Risk based periodic reviews were generally established but sometimes delayed due to resourcing, and trigger event based monitoring was not always assessed for appropriateness, resulting in insufficient enhanced monitoring of high risk customers.
• Record keeping: Generally satisfactory, though some policies were not updated to reflect current legislation and some files held overseas or by third parties were not readily retrievable on request.
• Training: General staff training was mostly adequate, but training provided at group level was sometimes not tailored to Bailiwick legislative requirements, was informally delivered, or failed to give MLROs and the Board/senior management the additional, more specific training required by the Handbooks; training logs were sometimes not kept up to date.
• UN sanctions: Awareness was generally good, but some smaller businesses without automatic checking software struggled to monitor sanctions lists, particularly for non face to face customers.

The paper is informational and intended to help businesses self-assess against existing AML/CFT regulatory and Handbook requirements; it complements the Financial Intelligence Service's Feedback and Typologies 2008-2011 document.

Applies to

financial services businesses, registered businesses