Compliance Senior Associate
Businesses are expected to use a risk-based approach when considering business relationships to prevent their products and services being used for the purpose of money laundering (“ML”) or financing of terrorism (“FT”). Where a suspicion has been formed in relation to any property, transaction or proceeds which may directly or indirectly relate to criminal conduct, consent provides a statutory defence to ML & FT offences, however it is not a substitute for reporting entities to discharge their obligations as required under the relevant laws.
The purpose of seeking consent is to seek a defence to an ‘act’ that could constitute an offence under the law. If a reporting entity is being asked to carry out an act that may comprise of any concealment, conversion or transfer of such property or its removal from the Bailiwick, they must seek a defence from the FIU before they undertake that act. Failure to provide sufficient details will delay the FIU’s decision making process. There is no statutory time limit in which the FIU must respond to a consent request. However, the FIU will aim to respond to the request within 14 working days of the submission.
The FIU is entitled to withhold consent as long as it has grounds to suspect that an act involves funds that represent the proceeds of crime or comprise of terrorist property. If a business proceeds with the requested activity following consent being refused they will have no statutory defence to a charge of ML or TF. The FIU can re-consider the original ‘No Consent’ if the business provides new information or information they were previously unaware of to the FIU which they believe may negate the original suspicion.
Where consent has been granted the business will have a defence to a ML or TF offence, only in relation to the act specified in the request if the business chooses to undertake the proposed act. Any changes in circumstances thereafter may impact the validity of the defence. Granted Consent does not imply that the FIU approve of the circumstances within the disclosure or that the associated property or funds are not the proceeds of crime.
Once a SAR has been submitted to the FIU, it does not release you from your ongoing obligations in respect of all future transactions. Further considerations may include how to negate the suspicion or how to appropriately terminate the business relationship. Under no circumstances must you inform your client or customer that you have submitted a SAR to the FIU, or that you intend to submit a SAR. If you do inform your client as such, you could be committing an offence under the relevant legislation.
On the 4th May 2022, the Guernsey Financial Services Commission (“GFSC”) circulated a letter to Guernsey Licensees, describing areas of good and poor practice observed during onsite inspections, on customer due diligence processes for the application of Enhanced Measures.
Our Head of Company Secretarial Services, Lezanne Kretschmer, shares the recently published whitepaper from the Nasdaq Centre for Board Excellence (“NCBE”) on How Corporate Governance is Changing and the need for Boards and Governance Professionals to remain curious.