Compliance Note

Mon 26 January 2015

Guernsey is fast becoming seen as the jurisdiction of choice for trust and company administration business because of its robust and bespoke arsenal of applicable primary and secondary legislation which helps to make Guernsey a tip-top first class business jurisdiction with local expertise to top.

The Guernsey Financial Services Commission (“Commission”) is the respected regulatory body for the finance sector in the Bailiwick of Guernsey. The Commission’s primary objective is to regulate and supervise financial services in Guernsey, with integrity, proportionality and professional excellence, and in so doing help to uphold the international reputation of Guernsey as a world class finance centre.

Guernsey has robust and relevant laws, regulations, instructions, rules, codes, guidance and other documents. Copies of these are available from our Compliance Department upon request.

The Guernsey authorities are committed to ensuring that money launderers, terrorists, those financing terrorism and other criminals, cannot launder the proceeds of crime through Guernsey, or otherwise use Guernsey’s finance sector. The Commission endorses the International Standards on Combating Money Laundering and the Financing of Terrorism & Proliferation issued by the Financial Action Task Force (“FATF”). The Handbook for Financial Services Businesses on Countering Financial Crime and Terrorist Financing (“Handbook”) issued by the Commission and updated from time to time is a clear statement of the standards expected by the Commission of all financial services businesses in Guernsey to ensure Guernsey’s compliance with FATFs standards.

Guernsey’s anti-money laundering and countering the financing of terrorism (“AML/CFT”) legislation (and by extension, the Handbook) applies to all financial services businesses conducting financial services business in Guernsey. This includes Guernsey-based branches and offices of companies incorporated outside Guernsey conducting financial services business in Guernsey.

Details concerning the Guernsey AML/CFT framework legislation can be obtained upon request from our Compliance Department.

The importance of “Corporate Governance” can not be underestimated and is covered by Regulation 15, and refers to the manner in which boards of directors and senior management oversee the financial services business.

The importance of “Customer Due Diligence” must not be underestimated and is covered in Regulations 4, 7, 9 and 10. It is mandatory that all financial services businesses ‘identify and verify identity’ for all its customers and applicable verifiable subjects. Failure to complete customer due diligence procedures is seen by the Commission as a material breach of legislation.

All financial services businesses has a regulatory duty to verify that you are who you say you are, live where you say you live and that your source of funds and source of wealth is well documented.

The Regulations include requirements relating to:

• Risk assessment and mitigation
• Undertaking customer due diligence (CDD)
• Monitoring customer activity and on-going CDD
• Reporting suspected money laundering and terrorist financing activity
• Staff screening and training
• Record keeping
• Ensuring compliance, corporate responsibility and related requirements.

For any financial services business regulated by the Commission, the primary consequences of any significant failure to meet the standards required by the Regulations, the Handbook and the relevant enactments will be legal ones.

We hope this note will help you to understand and appreciate why the data we must collect on you is needed.