Moneyval Report Hailed as 'Significant Achievement' for Guernsey's Financial Services

Affiliated with the Council of Europe

Guernsey has received widespread acclaim for its latest outcome in the Moneyval report, which recognized the island's ongoing progress in the fight against money laundering and terrorist financing. The States of Guernsey hailed the report as a “highly successful outcome,” underscoring the island's commitment to maintaining one of the safest and most secure jurisdictions for financial services globally.

The Moneyval report, which follows an inspection by the anti-money laundering body in April 2024, commended Guernsey for significant strides made since its previous assessment in 2015. However, it also emphasized that there was still room for improvement, particularly in the areas of investigation, prosecution, and conviction of money laundering offenses.

Moneyval, an organization affiliated with the Council of Europe, works to ensure countries and jurisdictions adhere to international standards for tackling financial crime, including money laundering and the financing of terrorism. The latest report highlighted Guernsey's robust understanding of the risks associated with these criminal activities and praised its effective application of targeted financial sanctions. However, it also noted the need for further improvement, especially in enhancing the quality and variety of suspicious activity reports.

A Critical Report for Guernsey's Economy

Guernsey's financial services sector, which constitutes approximately 40% of the island's economy, plays a vital role in the jurisdiction’s overall economic stability. A grey listing by Moneyval—an outcome that could have resulted from a less favorable report—would have had severe repercussions. Guernsey’s Chief Minister, Deputy Lyndon Trott, explained that such a development could have led to a 10% decline in the island's financial services sector, with many businesses potentially relocating elsewhere.

Trott also emphasized the importance of the report in preserving Guernsey's position as a global financial hub, saying, “Quite simply, a result of grey-listing would have caused significant repercussions for the island and a decline in financial services of about 10%. Not only that, but it would have resulted in business going elsewhere that would have otherwise been located in Guernsey.”

Stephen Rouxel, president of the Guernsey Chamber of Commerce, echoed this sentiment, stressing how vital the report was for the island’s ability to operate on the global financial stage. “The economy is predominantly based around the finance sector and it accounts for 40% of direct GDP, indirectly it probably accounts for around 65-70% of our economy,” Rouxel stated. “If you don’t get a good report, it impacts on your ability to work with other financial jurisdictions in a more seamless way.”

A Positive Outcome Despite Areas for Improvement

Guernsey's performance in the report was strong, with the island receiving passing ratings in six out of the 11 categories related to immediate outcomes, and successfully passing all 40 technical compliance recommendations. This was hailed as a “significant achievement” by the States of Guernsey, as it not only demonstrated the jurisdiction’s progress but also secured its position in a “regular follow-up” status, which is key to maintaining its reputation as a top-tier jurisdiction for financial services.

However, despite these positive results, Moneyval’s report also indicated that Guernsey must continue to build on its progress, particularly in addressing the gaps in the investigation and prosecution of money laundering cases. The report noted that while there had been improvements, further efforts were necessary to enhance the overall effectiveness of the jurisdiction's legal and regulatory framework.

Additionally, the report highlighted the need for Guernsey to enhance its suspicious activity reporting system. Although progress had been made in recent years, Moneyval stressed that further improvements were essential to ensure that the jurisdiction remains fully compliant with international standards in preventing financial crime.

Guernsey's Commitment to Financial Integrity

The favorable outcome of the Moneyval report underscores Guernsey's dedication to upholding the highest standards of financial integrity. The jurisdiction's ability to demonstrate significant progress since its 2015 inspection reflects its ongoing commitment to fighting financial crime and ensuring that it remains a safe, secure environment for international financial services.

As Guernsey continues to refine its regulatory framework and tackle the remaining challenges, the positive reception of the Moneyval report serves as a testament to the island’s resilience and adaptability in an ever-evolving global financial landscape.

With financial services representing a significant portion of Guernsey’s economy, the positive report is a crucial step in securing the island's continued growth and competitiveness on the global stage. As the island works to build on this achievement, it remains focused on maintaining its position as one of the world’s leading jurisdictions for financial services, while addressing any areas that require further attention.

Looking Ahead

The States of Guernsey’s continued efforts to improve compliance with international anti-money laundering and financial crime standards will be essential as the jurisdiction works to solidify its place in the global financial system. Guernsey’s ability to address the remaining gaps in its regulatory processes and maintain its reputation as a secure and transparent financial center will determine its success in navigating future challenges.

The Moneyval report, with its recognition of Guernsey's efforts and the areas that need further attention, provides a clear roadmap for the island’s ongoing work in maintaining its financial security and integrity. The collaboration between government officials, businesses, and regulatory bodies will be key to ensuring that Guernsey continues to lead by example in the fight against financial crime.

Guernsey has received a highly favorable evaluation in its recent Moneyval report, cementing its position as a secure and reliable jurisdiction for financial services. Moneyval, part of the Council of Europe, plays a critical role in assessing the compliance of member jurisdictions with international standards on anti-money laundering (AML) and combating the financing of terrorism (CFT). For Guernsey, this report is seen as a significant achievement, showcasing the island’s ongoing commitment to maintaining a strong regulatory framework to prevent financial crime.

The report, which follows an inspection conducted by Moneyval in April 2024, acknowledged the progress Guernsey has made since its previous review in 2015. It praised the island for strengthening its legal and regulatory framework to better address the risks of money laundering and terrorist financing. Importantly, Guernsey’s proactive stance on the implementation of targeted financial sanctions was highlighted as a key strength. However, while the report lauded the island’s achievements, it also underscored areas where further improvements are necessary.

Key Achievements and Areas for Improvement

Guernsey’s overall rating in the Moneyval report was strong, with the island successfully passing six out of the 11 categories concerning immediate outcomes, and meeting all 40 technical compliance recommendations. The report emphasized that this is a significant achievement for the jurisdiction, as it places Guernsey among the best-compliant jurisdictions globally. This marks a clear step forward in enhancing the integrity of the island’s financial system and protecting it from potential abuse by criminals or terrorists.

Despite this positive evaluation, Moneyval called for improvements in the investigation, prosecution, and conviction of money laundering offenses. While Guernsey has demonstrated a comprehensive understanding of the risks posed by financial crime, the report noted that the jurisdiction must further enhance the effectiveness of its legal mechanisms to deal with financial crime cases.

Moreover, Moneyval pointed out the need for Guernsey to improve the quality and variety of its suspicious activity reports (SARs). These reports are critical in detecting and preventing money laundering and terrorist financing, and strengthening them would provide authorities with better tools to identify and act on potential criminal activity.

A Crucial Report for Guernsey's Economy

The outcome of the Moneyval report is especially significant for Guernsey’s economy, where the finance sector plays a pivotal role. Financial services contribute approximately 40% of the island’s GDP and are critical for the broader economic wellbeing of the jurisdiction. The positive results from the report ensure that Guernsey avoids grey-listing, a process where jurisdictions that fail to meet international standards are listed as non-compliant. Being grey-listed could have had severe consequences for Guernsey’s financial services sector, potentially leading to a 10% decline in business, as businesses may have relocated elsewhere, seeking more compliant jurisdictions.

Chief Minister Deputy Lyndon Trott expressed relief over the positive outcome, noting the significant economic repercussions that grey-listing would have caused. "Quite simply, a result of grey-listing would have caused significant repercussions for the island and a decline in financial services of about 10%," Trott said. "Not only that, but it would have resulted in business going elsewhere that would have otherwise been located in Guernsey." The report’s favorable outcome preserves Guernsey’s reputation as a trusted and secure jurisdiction for international financial services.

Global Competitiveness and Future Efforts

Guernsey’s future success as a financial hub relies on maintaining and strengthening its reputation for regulatory compliance. The island’s continued focus on enhancing its legal and regulatory framework is essential for ensuring that it remains competitive in the global financial market. This will also allow it to continue to attract international businesses and investors who value transparency, stability, and the ability to operate in a jurisdiction with a solid AML/CFT framework.

As Stephen Rouxel, president of Guernsey's Chamber of Commerce, noted, the importance of a positive Moneyval report cannot be overstated. "The economy is predominantly based around the finance sector, and it accounts for 40% of direct GDP, indirectly it probably accounts for around 65-70% of our economy," Rouxel said. "If you don’t get a good report, it impacts on your ability to work with other financial jurisdictions in a more seamless way."

The Moneyval report also emphasized the importance of continued collaboration between the government, regulatory bodies, and the financial sector. In order to address the areas identified for improvement, Guernsey must work closely with businesses and international partners to ensure that its practices remain in line with evolving global standards. This collaborative approach will be crucial in securing the island’s financial services future and ensuring that it can continue to operate on a level playing field with other international financial hubs.

Looking Forward: Strengthening Guernsey’s Financial Integrity

While the Moneyval report’s positive outcome represents a major milestone for Guernsey, it is clear that the island must continue to evolve its financial crime prevention strategies. Strengthening the prosecution of money laundering offenses and enhancing the quality of suspicious activity reports will be vital for ensuring that Guernsey maintains its standing as a leading financial jurisdiction. Furthermore, Guernsey must stay vigilant in monitoring emerging risks and adapting its regulatory framework to address new challenges in the fight against financial crime.

Guernsey's progress, as recognized by the Moneyval report, places the island in a strong position to continue to attract global financial business while safeguarding its financial system from criminal abuse. As the world’s financial landscape continues to evolve, Guernsey's commitment to improving its regulatory practices and ensuring compliance with international standards will be key to preserving its role as a secure and reliable financial hub.

The Moneyval report underscores Guernsey’s dedication to upholding the integrity of its financial services sector and serves as a testament to the island's resilience in maintaining a secure, transparent, and compliant financial environment. With continued focus and collaboration, Guernsey will be well-placed to navigate future challenges and retain its position as one of the most secure financial jurisdictions in the world.