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GFSC Handbook updates are evidence of ‘proactive approach’ – local expert

GFSC Handbook updates are evidence of ‘proactive approach’ – local expert

22 February, 2024
Guernsey Regulatory, Compliance & Legal Anti Money Laundering Compliance Monitoring Data Protection & GDPR Financial Crime Compliance Consulting

The Guernsey Financial Services Commission’s (GFSC) updated handbook on Anti-Money Laundering, Countering the Financing of Terrorism, and Countering Proliferation Financing (AML/CFT/CPF) is a proactive move and a sign of things to come, according to compliance consultancy Newgate Compliance.

A recent consultation period conducted by the States of Guernsey, which sought input on rules and guidance to enhance existing obligations on specified businesses, has resulted in the GFSC tightening its regulatory handbook, and signals that businesses need to update their policies and procedures, engage in three lines of defence and roll out enhanced due diligence training.

The GFSC's commitment to strengthening the regulatory framework for countering financial crime comes against a backdrop of intensified global regulation, and the new handbook particularly addresses countering proliferation financing and in view of ongoing Financial Action Task Force and MoneyVal assessments.

Proliferation financing is the provision of funds or financial services used for the manufacture, acquisition or possession of nuclear, chemical or biological weapons.

Rachel Gardiner, Head of Prescribed Roles at Newgate Compliance, stated: “The updated handbook reflects a comprehensive response to the evolving landscape of financial crime, with a specific focus on countering proliferation financing. It is evident that the GFSC is taking a proactive approach to address emerging threats and uphold the highest standards of compliance.

“Even though we’ve been advised that our risk in Guernsey is very low, we still have to consider the risk that businesses may be exposed to proliferation financing. It’s yet another factor and nuance that businesses need to account for in their risk assessment and update their policies and procedures. The regulator will be expecting to see that businesses have factored it into their three lines of defence and enhanced due diligence training."

The revisions in the handbook align with changes introduced by the States of Guernsey’s Policy & Resources committee. The consultation process also encompassed amendments in response to the recently published second national risk assessment on money laundering, terrorist financing, and proliferation financing risks within the Bailiwick.

Key updates include modifications to the rules governing pooled bank accounts for local businesses, as well as changes to Chapter 12 of the handbook concerning UN, UK, and Bailiwick sanctions. Additionally, the GFSC made various minor adjustments to enhance the overall efficacy of the framework.

Of notable mention is the incorporation of updated assessments from two sources used in the compilation of Appendix I of the handbook. While there were no alterations to the countries and territories identified in Appendix I, an updated version has been published to reflect the latest information.

Gardiner continued: "The GFSC's commitment to staying ahead of financial crime risks is commendable. The attention to detail, including the incorporation of updated assessments in the handbook, demonstrates a forward-thinking approach that benefits both the financial industry and the broader community.

“We recommend following three lines of defence approach to protect their businesses – firstly, implement robust procedures, policies and training; secondly, comprehensively monitor these; and finally, review and challenge through an independent audit.”

Newgate Compliance three lines of defence approach to tackle risk and compliance challenges:

  • Line one: create clear and robust frontline processes and procedures, supplementing this with both online and face to face training programmes for staff.
  • Line two: build and empower a comprehensive compliance oversight function which monitors and assesses the processes and procedures, as well as advising and supporting staff and senior managers to comply with the firm's obligations.
  • Line three: seek review and challenge of the firms AML framework via annual independent audits.

Newgate Compliance remains committed to supporting businesses in navigating and implementing regulatory changes effectively. As the financial landscape continues to evolve, Newgate Compliance stands ready to collaborate with its clients and regulatory authorities to promote a secure and compliant financial ecosystem.

Assisting with a broad range of compliance services Newgate Compliance, delivers pragmatic and flexible solutions to help clients meet often complex, evolving and increasing regulatory obligations. The team led by industry experts and ex regulators helps clients with the submission of regulatory authorisation applications, provision of Money Laundering Reporting Officers (MLROs), the implementation of compliance frameworks and governance structures, as well as regulatory and compliance training for employees.