Guernsey Smug But Not Complacent After FATF Blacklist Escape

Lisa Ugur, Tax-news.com, London

27 June 2000

Last week the Financial Action Task Force (FATF) finally named and shamed 15 offshore jurisdictions deemed "unco-operative" over money laundering, and now the reactions to the FATF report are beginning to emerge, one of the first being from Guernsey, which in fact managed to avoid being listed.

President of the Advisory and Finance Committee Laurie Morgan said 'Guernsey has always maintained that what matters is not whether a financial centre is onshore or offshore but whether it complies with high international standards. This latest report from FATF confirms that it does. Guernsey prides itself not only on having high quality international services combined with high quality regulation and supervision, but on cooperating fully with its international partners. The regulatory and law enforcement agencies of the Bailiwick will continue to work closely together and share information to deny criminals and their illicit funds access to the global financial systems. We have gone through an intense interrogation by FATF and this result is very good news. We are very pleased to have passed the tests.'

Echoing Mr Morgan was Peter Crook, director-general of the Guernsey Financial Services Commission, who said 'This is all excellent for Guernsey. All these provisions are beginning to bite but we are already on top of the situation. In the areas of regulation, legislation and anti-money laundering measures we have won at every stage.'

However, Crook does fear that Guernsey will fare less well in the OECD's list of harmful tax regimes, which was due to be published yesterday. He said 'Our involvement with the OECD has been very frustrating and although we seem to have won at least two major battles there is a lot more yet to do. All this, so far, has shown Guernsey in the best possible light. We have emerged well from Edwards, the Financial Stability Forum and FATF but we must continue to keep abreast of developments.
Guernsey has no intention of falling from the high standards we have set. Businesses here are already operating at high standards and should have no difficulty in adjusting to anything else expected from them.'

What is clear in Guernsey's case is an acceptance that organisations such as the OECD will not cease in their efforts to try and 'regulate' offshore financial centres and therefore the island should just make the best of it. John Gibson, head of international private banking for Insinger de Beaufort, commented that 'The reality is that the pressure will continue to mount. The truth is that the world wants its dollar. The future philosophy is "disclose or pay"'.

Of the European withholding tax debacle, he said 'I am pleased that the European withholding tax idea has been dropped but not really convinced by the exchange of information alternative. It seems that will only go ahead if agreements are made with every significant jurisdiction in the world to exchange information. I find it difficult to see that happening, certainly during the timescale suggested. As far as we are concerned we have no intention of falling out with the regulators.'

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