Guernsey, a well-known offshore financial center, has been urged by MONEYVAL, the Council of Europe’s anti-money laundering (AML) monitoring body, to intensify its efforts in combating financial crimes. A recent evaluation highlights the jurisdiction’s strengths, including its understanding of financial crime risks and its application of targeted financial sanctions. However, the report also identifies critical areas where Guernsey must improve to meet global AML and counter-terrorist financing (CTF) standards effectively.
Key Areas for Improvement
1. Strengthening AML Enforcement
MONEYVAL emphasizes that Guernsey needs to take a more aggressive approach in investigating and prosecuting money laundering offenses. While the legal framework for financial crime prevention is in place, there are concerns that enforcement efforts have not kept pace with the growing sophistication of money laundering schemes.
Authorities must ensure that financial crime cases are not only detected but also pursued to prosecution, leading to meaningful convictions. This requires allocating additional resources to law enforcement agencies, training personnel in financial crime investigations, and enhancing collaboration between regulatory bodies and judicial authorities.
2. Improving the Quality of Suspicious Activity Reports (SARs)
Financial institutions in Guernsey are required to submit Suspicious Activity Reports (SARs) whenever they detect potentially illicit transactions. However, MONEYVAL’s review indicates that the quality and detail of these reports remain inconsistent, making it difficult for authorities to take effective action.
A well-documented SAR should contain clear information about the nature of the suspicious activity, the parties involved, and potential links to wider criminal networks. Many reports submitted to Guernsey’s Financial Intelligence Unit (FIU) lack crucial details, leading to delays in investigations. Strengthening reporting standards through better training and regulatory guidance is necessary to ensure SARs contribute meaningfully to AML efforts.
3. Expanding FIU-Led International Probes
As a major financial hub, Guernsey is a key player in the global fight against financial crime. MONEYVAL has urged Guernsey’s Financial Intelligence Unit (FIU) to take on a more proactive role in launching international investigations into money laundering and illicit financial flows.
Currently, Guernsey’s FIU cooperates with international financial crime agencies, but the majority of its work is reactive—responding to requests rather than initiating cross-border investigations. To improve its effectiveness, the FIU must strengthen intelligence-sharing agreements, conduct independent investigations into complex financial networks, and enhance its ability to track illicit funds moving across multiple jurisdictions.
Guernsey’s Current Efforts and Challenges
Guernsey has taken significant steps in recent years to improve its financial crime-fighting capabilities. The establishment of the Economic and Financial Crime Bureau (EFCB) in 2021 was a major milestone. Operating as an independent law enforcement body, the EFCB focuses on tackling serious financial crimes, overseeing asset recovery, and ensuring compliance with AML regulations.
Additionally, the FIU has increased its international engagement. In 2022, Guernsey’s FIU sent thirty-five requests for assistance to foreign agencies through secure intelligence-sharing platforms, compared to thirty-one requests in 2021. While this shows progress, MONEYVAL believes that Guernsey must move beyond merely responding to inquiries and instead lead independent investigations into high-risk financial activities.
Another key challenge is ensuring that banks and financial service providers remain fully compliant with AML regulations. Offshore financial centers often face scrutiny due to their potential vulnerability to money laundering. To maintain its reputation as a transparent and well-regulated jurisdiction, Guernsey must adopt a stricter approach to compliance monitoring and enforcement actions against non-compliant institutions.
The Road Ahead
MONEYVAL’s findings serve as an important wake-up call for Guernsey. With financial crimes becoming increasingly sophisticated, passive compliance is no longer sufficient—a more aggressive and proactive approach is needed.
To effectively combat money laundering and financial crime, Guernsey must:
- Enhance law enforcement capabilities by increasing AML prosecution rates and securing convictions.
- Improve the quality of SARs through better regulatory guidance and training for financial institutions.
- Expand the FIU’s international role by leading investigations rather than just assisting global counterparts.
- Strengthen oversight of financial institutions to ensure compliance with evolving AML standards.
If Guernsey successfully implements these changes, it can reinforce its position as a trusted and compliant financial center while ensuring that illicit funds do not flow undetected through its institutions. The fight against financial crime is ongoing, and jurisdictions like Guernsey must remain vigilant, adaptable, and proactive in enforcing AML measures.
