Instruction Number 04/2019 for Specified Businesses - Iceland (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 FATF identified it 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 were previously relied upon.

• Identify affected relationships: Specified businesses must identify any business relationships with a relevant connection to Iceland where they used the introducer or intermediary provisions in paragraphs 6 or 10 of Schedule 3 and related Handbook chapters nine and ten.
• Remediate introducer reliance: Where reliance was placed on an introducer under paragraph 10, ensure the customer due diligence measures under paragraph 4 of Schedule 3 are met for each relationship.
• Remediate regulated Icelandic customers: Where the customer carries on AML/CFT regulated business in Iceland and section 9.6 measures were applied, ensure verification measures under paragraph 4 are met.
• Remediate intermediary as customer arrangements: Where an intermediary was treated as the customer under paragraph 6 and section 9.8, 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 of failures: If a business relationship cannot be remediated under points 2, 3 or 4 by 31 January 2020, the specified business must notify the Commission detailing additional risk controls put in place.
• Terminate where CDD cannot be completed: Where customer due diligence cannot be completed, the business should terminate the relationship in accordance with paragraph 9 of Schedule 3 and consider making a disclosure to the Financial Intelligence Service.

The Commission states it will review compliance with this Instruction through on-site inspections and other supervisory means. Exceptional circumstances preventing completion by the deadline should be handled per the timing of identification and verification rules in paragraph 7 of Schedule 3 and section 4.5 of the Handbook.

Key obligations

• Identify, as a matter of urgency and in any event by 31 January 2020, any business relationships with a relevant connection to Iceland where introducer or intermediary provisions in paragraphs 6 or 10 of Schedule 3 and related Handbook chapters were used
• For relationships relying on an introducer under paragraph 10, ensure customer due diligence measures under paragraph 4 of Schedule 3 are met by 31 January 2020
• For relationships with customers regulated for AML/CFT in Iceland where section 9.6 measures applied, ensure verification measures under paragraph 4 are met by 31 January 2020
• For relationships where an intermediary is treated as the customer under paragraph 6 and section 9.8, either meet correspondent relationship requirements under paragraph 5(1)(b)/section 8.6 or apply paragraph 4 CDD to each of the intermediary's customers, by 31 January 2020
• Notify the Commission by 31 January 2020 if unable to remediate any identified relationship, detailing additional risk controls applied
• Where CDD cannot be completed, terminate the business relationship under paragraph 9 of Schedule 3 and consider disclosure to the Financial Intelligence Service

Applies to

specified businesses

Deadlines

• 31 January 2020: Deadline for specified businesses to identify affected Iceland-connected relationships and complete remediation under points 2, 3 or 4, or notify the Commission if unable to remediate