Guernsey finance crime penalty rise gets nod

The States of Guernsey has approved plans to significantly raise the fees levied on those financial services firms doing business on the island which are found to have broken the rules, including money laundering.

The proposal now must go through the legislative process before taking effect, a States of Guernsey spokesman said. He wasn’t able to say when this would be completed, and the increase in the penalties for financial crime would formally become law.

As reported, among the changes to Guernsey’s existing package of penalties for major financial crimes included an increase in the maximum possible fine, to £4m from the current £200,000, while fines above £300,000 would be limited to a maximum of 10% of the licensee’s turnover.

The proposed changes were approved following a debate on Tuesday at a States of Guernsey meeting. The approval came less than 10 days after a report on Guernsey’s handling of financial services crimes was released by the Council of Europe’s anti-money laundering committee, MONEYVAL.

MONEYVAL said that the existing maximum discretionary penalties levied by the Guernsey Financial Services Commission (GFSC) weren’t sufficiently dissuasive, and it urged the jurisdiction to strengthen them.

At issue are a package of penalties that exist to be levied on Guernsey-licensed financial services businesses that are found to have failed to carry out the necessary checks on their customers; failed to carry out regular risk reviews; and/or failed to make various disclosures required of them under Guernsey law.

As reported here last week, Guernsey’s Policy Council said it had undertaken a review of the level of discretionary financial penalties available to the GFSC in light of, among other things, “one of the findings of the MONEYVAL report… and in order to demonstrate a rapid response to that finding”.

It also cited “international expectations for the level of financial penalties which should be available to financial services supervisory authorities” as well as “the need to ensure that Guernsey is prepared for future evaluations of its financial supervisory framework”.

Among the other proposed changes to the existing regulations covering financial crimes in Guernsey, which are now expected to become law:

  • The maximum level of fines applicable to so-called relevant officers – for example, directors and other executives of Guernsey licensed businesses, and formerly-licensed businesses – as well as to personal fiduciary licensed businesses, should be be raised to £400,000 from £200,000, with the income “arising in respect of the relevant officer’s (or personal fiduciary licensee’s) position” to be taken into account as well
  • The Policy Council should be given additional powers to “make regulations on such matters as it considers appropriate in relation to discretionary penalties, and by way of example these should include the meanings of ‘turnover’ and ’emoluments'”


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