Guernsey's Regulatory Regime Commended

by Robin Pilgrim, LawAndTax-News.com, London

19 January 2011

The Guernsey government and the Financial Services Commission has welcomed the publication of six reports by the International Monetary Fund arising from evaluations carried out in March and May on the island’s financial supervision and criminal justice frameworks.

According to the government, the reports commend Guernsey as having financial sector regulation and supervision of a high standard across all sectors, and a legal framework which provides a sound basis for an effective Anti-Money Laundering/Combating the Financing of Terrorism regime, with preventative measures being largely in line with the Financial Action Task Force Recommendations. The reports also include recommendations on enhancements that could bolster the island’s regulatory regime.

The evaluations were part of the IMF’s global Financial Stability Assessment Program. The Bailiwick was assessed as having a high level of compliance with the international standards against which it was judged: the 25 Basel Core Principles for Effective Banking Supervision; the 28 Insurance Core Principles of the International Association of Insurance Supervisors; and the Financial Action Task Force 40 Recommendations on money laundering and nine Special Recommendations on terrorist financing. The financial stability of the finance sector was also assessed by evaluation of the vulnerabilities of the banking and insurance industries through stress tests.

Welcoming the publication of the reports, Nik van Leuven, Director General of the Guernsey Financial Services Commission, said:

“We are pleased with the IMF’s ratings of our framework and its conclusions on the quality of our supervision. Guernsey - like Jersey and the Isle of Man - has emerged well from the IMF’s evaluations of our financial supervision and criminal justice frameworks. It is apparent that Guernsey’s finance sector is robust. The quality of the standards which apply to supervised firms in Guernsey, the effectiveness of our supervision and the reality of what firms do in practice reflect the importance and commitment the Bailiwick attaches to effective supervision, and deterring economic criminals, money launderers and terrorist financiers.”

”It is particularly pleasing that the IMF’s evaluations reflected the experience of supervision, firms and markets in the economic and financial crisis. That experience has made the IMF’s comments and recommendations especially valuable as a basis to further develop our risk-based approach to supervision in the years to come.”

Lyndon Trott, the island’s Chief Minister, added:

“The regulatory framework and the Bailiwick’s anti-money laundering and combating the financing of terrorism regime that is now in place have been important factors in both sustaining Guernsey’s economy and developing and maintaining Guernsey’s international reputation as an excellent place to do business. This in turn has been an important driver in the continuing development of Guernsey’s international identity.”

“Whilst we welcome the positive evaluation reports of the IMF, we will by no means rest on our laurels. Our place in the global financial services economy means we need to remain proactive in evolving our regulatory framework, and ensure that we remain in the vanguard of international standards. Indeed the IMF reports fully recognise that we update our regulatory regime continually.”

The review also re-assessed the work of the Financial Investigation Unit (GBA/Police), the Law Officers Chambers and all the member organisations of the AML/CFT Advisory Committee, and again reported the achievement of high international standards.

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