IMF Assessment of the Supervision and Regulation of the Financial Sector

Press Release

25 November 2003

• the Bailiwick's comprehensive regulatory framework and supervisory structure;
• the action that continues to be taken by the authorities to preserve the Bailiwick's good international reputation;
• the level of international cooperation displayed by the Bailiwick;
• Guernsey's well established and well respected Financial Services Commission and its experienced staff;
• the fact that Guernsey was one of the first jurisdictions to apply a comprehensive regulatory regime for trust and company service providers; and
• the developed framework for anti-money laundering and combating the financing of terrorism and the strong rapport between the Commission and licensed institutions on these issues.

'The Advisory and Finance Committee has a longstanding commitment to maintaining international standards and, as a result, Guernsey has a regulatory and law enforcement framework in place of which we are justly proud.

Guernsey is formally assessed by the IMF to have a high level of compliance with international standards of regulation in banking, insurance, securities, trust and company service provision, anti-money laundering and combating the financing of terrorism. Such a positive assessment by the IMF reinforces our excellent international reputation and this in turn is good for Guernsey and good for business.

The Guernsey Financial Services Commission, the Law Officers' Chambers and the Financial Intelligence Service have rightly achieved international recognition for their work in regulation, criminal justice and law enforcement.'

'The IMF's assessment serves to highlight to the international community Guernsey's outstanding reputation for high standards. It is also testament to the strength of our pragmatic and effective approach to regulation in the Bailiwick.'

The IMF applies the same international benchmarks to all financial centres. Guernsey has therefore demonstrated that in the application of established international standards the Bailiwick is in the first tier alongside such financial centres as the City of London.

The IMF's assessment programme demonstrates conclusively that all financial centres should be judged on their merits using the same criteria. It is only by adopting this level playing field approach that real advances can be made in protecting the international financial system and those who use it.'

'It is of the utmost importance that Guernsey plays a full part in the fight against international crime with particular reference to the prevention and detection of money laundering and terrorist financing. The report by the IMF confirms that not only do we have a first class armoury of legislation, we also allocate adequate resources to the fight against crime and effectively use the powers we have.

We are determined that Guernsey will keep up with international standards as they develop and ensure that the authorities have every tool with which to deter criminals from using our financial institutions.'

'The IMF assessment served to comprehensively externally audit law enforcement's financial crime strategy that brought about the creation of the Financial Intelligence Service eighteen months earlier. It is pleasing to note that the IMF report found the FIS's organisational structure to be of a high standard with very good working practices.

Attention was also paid to the Commercial Fraud Departments of Police and Customs & Excise who, together with the FIS, comprise law enforcement's collective strategy to counter money laundering and the financing of terrorism. These departments also acquitted themselves well, clearly demonstrating the high level of co-operation and assistance which they provide to other jurisdictions.'

Editor's notes

1.  The IMF assessment is part of a programme of assessments of the regulatory standards of all financial centres.
2. On the regulatory system in Guernsey, the IMF report notes: 'the comprehensive regulatory framework; the proactive approach of the regulators to achieve high standards in the financial services sector; and an off- and on-site supervisory process that has been addressing the key types of reputational risk to the Bailiwick.'
3. On the Guernsey Financial Services Commission, the IMF report states: 'The GFSC is a well-established and well-respected supervisory agency with an experienced staff. The GFSC has a good range of regulatory and enforcement powers. The GFSC is to be commended for its continuous proactive attitude taken in order to enhance the Bailiwick's regulatory regime and its endeavour to meet international standards'.
4. On Guernsey's anti-money laundering measures and combating the financing of terrorism, the IMF report states: 'Guernsey has a developed legal and institutional framework for AML/CFT, particularly, with respect to confiscation of the proceeds of criminal conduct, exchange of information, and international cooperation. The broad regulation of the financial sector is another strength.'
5. The report contains a number of technical recommendations for action, which are being addressed, or which have already been addressed.
6. A copy of the full IMF report is available here.