Instruction Number 04/2019 for Specified Businesses (2019-11-29)

Summary

This is an Instruction issued by the Guernsey Financial Services Commission under Section 49AA(6) of the Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law, 1999, following Iceland's removal from the list of Equivalent Jurisdictions after an October 2019 FATF statement identifying Iceland as having strategic AML/CFT deficiencies. It requires specified businesses to apply full customer due diligence to existing business relationships connected to Iceland where reliable introducer or intermediary provisions under Schedule 3 of the Law were previously relied upon.

• Identify affected relationships: Identify, as a matter of urgency and by 31 January 2020, any business relationships with a relevant connection to Iceland where paragraphs 6 or 10 of Schedule 3 and related Handbook rules on Appendix C Businesses, Intermediary Relationships or Introduced Business were used.
• Introducer reliance: Where an introducer was relied on under paragraph 10 of Schedule 3, ensure customer due diligence measures under paragraph 4 of Schedule 3 and the Handbook are met for each relevant relationship.
• Regulated Icelandic customers: Where the customer's business in Iceland is regulated for AML/CFT purposes and section 9.6 measures were applied, ensure verification measures under paragraph 4 of Schedule 3 are met.
• Intermediary treated as customer: Where an intermediary is treated as the customer under paragraph 6 of Schedule 3 and section 9.8 of the Handbook, either meet correspondent relationship requirements under paragraph 5(1)(b) and section 8.6, or apply paragraph 4 customer due diligence to each of the intermediary's customers.
• Notify the Commission: Notify the Commission by 31 January 2020 if unable to remediate any identified relationship under points 2, 3 or 4, detailing additional risk controls put in place.
• Exceptional circumstances: Where remediation cannot be completed by the deadline, apply timing of identification and verification rules under paragraph 7 of Schedule 3 and section 4.5 of the Handbook; where due diligence cannot be completed, terminate the relationship and consider a disclosure to the Financial Intelligence Service under paragraph 9 of Schedule 3 and section 4.7 of the Handbook.

The Commission states it will review compliance with this Instruction through on-site inspections and other supervisory means.

Key obligations

• Identify, by 31 January 2020, any business relationships with a relevant connection to Iceland where reliable introducer or intermediary provisions of Schedule 3 and related Handbook chapters nine and ten were used
• Where an introducer was relied upon, ensure customer due diligence measures under paragraph 4 of Schedule 3 and the Handbook are met for each such relationship
• Where the customer's Icelandic business is AML/CFT regulated and section 9.6 measures applied, ensure verification measures under paragraph 4 of Schedule 3 are met
• Where an intermediary is treated as the customer, either meet correspondent relationship requirements under paragraph 5(1)(b)/section 8.6 or apply paragraph 4 due diligence to each of the intermediary's customers
• Notify the Commission by 31 January 2020 if unable to remediate an identified relationship, detailing additional risk controls applied
• If customer due diligence cannot be completed, terminate the business relationship and consider making a disclosure to the Financial Intelligence Service

Applies to

specified businesses

Deadlines

• 31 January 2020: Deadline for specified businesses to identify affected Iceland-connected business relationships and complete required remediation/customer due diligence measures
• 31 January 2020: Deadline to notify the Commission if unable to remediate an identified business relationship, detailing additional risk controls