The Guernsey Financial Services Commission has published its revised Handbook on Countering Financial Crime and Terrorist Financing in its final form.

The new rules spring from the Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) (Amendment) Ordinance 2018 which the States of Guernsey approved in December. Guernsey made them to satisfy its desire to please the Financial Action Task Force (FATF) and to follow recommendations made by MONEYVAL - Europe's FATF-style regional body - as a result of its evaluation of the isle. MONEYVAL published its report in January 2016.

The main changes are as follows.

• Section 2.8.1. – regarding Money Laundering Compliance Officers – the wording has been revised to say that it is up to the MLCO of each firm to ensure that it follows its policies, procedures and controls, but that the ultimate responsibility for the firm’s compliance with the statutory and regulatory requirements of the Bailiwick remains with the board. The MLCO’s job is one of monitoring the firm’s compliance with its internal controls and reporting to the board about the results of this monitoring.
• Section 5.3. – regarding the verification of natural persons' identities – the regulator no longer requires firms to "verify multiple nationalities." It still requires them to collect information about the identities of individuals, looking at whether they belongs to more than one nation, but they should concentrate on verifying each person's primary nationality.
• Section 7.10. – regarding trusts and other legal arrangements – the regulator has extended the long-standing requirement to identify and verify the identities of beneficiaries of trusts to include persons who may not be named in trust documents, but whom the trustees believe are likely to benefit from the trusts (for example, because they have been named in letters of wishes).
• Section 9.6. – to do with 'Appendix C' businesses – the regulator claims to have 'clarified' this section in respect of the circumstances in which the business provisions of Appendix C cannot be used, specifically where an Appendix C business (other than a Guernsey licensed fiduciary) is acting as trustee to a trust.
• Section 9.9. – regarding pooled bank accounts – there is now an extra provision has been added that distinguishes between the short-term "holding of customer funds on a client account" by a fiduciary (for example, before a trust or company bank account has been established) and the holding of funds in a pooled account for the purposes of providing treasury/cash management services.
• Section 11.3. – regarding the monitoring of transactions and activity obligations - the regulator has reinstated Rule 277 of the FSB Handbook and Rule 213 of the PB Handbook, which require every firm to consider the possibility that someone might be using legal persons and legal arrangements as vehicles for money laundering and terrorist financing.
• Appendix E – which contains the list of domestic PEPs - now includes senior government posts as a result of the restructuring of Guernsey’s civil service.

The regulator decided on these new rules and guidelines on 1 March. They come into effect on 31 March and will replace the FSB and PB Handbooks on that date.

Compliance Matters will, in due course, publish come commentary from the Channel-Island law firm of Babbé about these changes to the rules.