Guernsey

1. Does Guernsey have legislation making it a criminal offence to engage in money laundering and/or terrorist financing?

Yes, the Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law, 1999 (Proceeds of Crime Law), the Terrorism and Crime (Bailiwick of Guernsey) Law (Terrorism and Crime Law), 2002, The Drug Trafficking (Bailiwick of Guernsey) Law, 2000, Sanctions (Bailiwick of Guernsey) Law, 2018, the Criminal Justice (Proceeds of Crime)(Bailiwick of Guernsey)(Amendment) Ordinance, 2017, the Financial Services Business (Enforcement Powers) (Bailiwick of Guernsey) Law, 2020 and ancillary regulations, orders and guidance notes together form a comprehensive and modern anti-money laundering, counter terrorist financing and sanctions regime.

2. To whom does the legislation apply?

The Primary Offences (as defined in the response to question 4) apply to all persons. Regulatory Offences apply to businesses in the regulated sector (usually known as prescribed businesses and financial services business) and, in the case of failing to disclose a suspicion of money laundering, to any person who forms that suspicion based on information that came to him or her in the course of employment, trade or business.

3. What does the legislation prohibit?

The Proceeds of Crime Law prohibits the concealing of criminal property, entering into arrangements to facilitate the acquisition, retention, use or control of criminal property by or on behalf of another person, the acquisition, use and possession of criminal, failure to disclose a suspicion arising in the course of business, and tipping off.

Under the Terrorism and Crime Law, a person commits an offence if they invite another to provide money or other property, receive money or other property or themselves provide money or other property that they intend should be used or have reasonable cause to suspect will be used for the purposes of terrorism. It is also an offence to: possess money or other property that is intended should be used or have reasonable cause to suspect will be used for the purposes of terrorism; facilitate money or other property being made available to another person and they know or have reasonable cause to suspect that it will or may be used for the purposes of terrorism or they have failed to exercise due diligence as to whether it will or may be used for the purposes of terrorism. These offences are in addition to the money laundering offences of facilitating the retention or control of terrorist property by concealment, disguise, conversion, removal from the jurisdiction, transfer to nominees, or in any other way. Much like under the anti-money laundering legislation, there are also offences of failing to disclose under this legislation.

4. How is money laundering defined? Does underlying criminal activity have to be proven?

Money laundering is defined as an act which constitutes a Primary Offence (or an attempt, conspiracy, incitement to commit a Primary Offence, or aiding, abetting, counselling or procuring such offence) or would constitute such an offence specified if done in the Bailiwick of Guernsey. There is no requirement for the underlying activity to resulted in a criminal conviction in order for the offence to be made out.

The Primary Offences under the Proceeds of Crime Act relate to the proceeds of criminal conduct, which is defined as any conduct constituting an offence in the Bailiwick of Guernsey or, where criminal conduct has taken place outside the Bailiwick of Guernsey, would constitute an offence in the Bailiwick of Guernsey. It is not necessary for there to be a prior conviction for the criminal conduct for the offence of money laundering to be made out.

5. What level of intent or knowledge is required to establish a violation?

The Primary Offences require that the property in question is reasonably suspected of being criminal property. The offence of failing to disclose requires that the person “knows or suspects or has reasonable grounds for knowing or suspecting” that another is involved in criminal conduct.

6. What are the potential penalties for infringing the legislation?

Penalties for offences vary. Generally, penalties for Primary Offence are: on summary conviction, a fine of up to Level 5 on the uniform scale (which at the time of writing is currently set at £10,000) or imprisonment for a term of up to 12 months, or both; or (b) on conviction on indictment, imprisonment for a term of up to fourteen years or a fine, or both.

Tipping off and disclosure offences carry different penalties.

For disclosure: on summary conviction, to custody for a term not exceeding 6 months, or to a fine a fine of up to Level 5 on the uniform scale (which at the time of writing is currently set at £10,000), or to both; or on conviction on indictment, to custody for a term not exceeding 5 years, or to a fine, or to both.

For tipping off: on summary conviction, to custody for a term not exceeding 6 months, or to a fine a fine of up to Level 5 on the uniform scale (which at the time of writing is currently set at £10,000), or to both; or on conviction on indictment, to custody for a term not exceeding 2 years, or to a fine, or to both

Breach of the main offences under the terrorism legislation may result in: on summary conviction, to custody for a term not exceeding 12 months, to a fine of up to Level 5 on the uniform scale (which at the time of writing is currently set at £10,000) or to both; or conviction on indictment, to custody for a term not exceeding 14 years, to a fine or to both.

Disclosure offences attract penalties of: on summary conviction, to custody for a term not exceeding 12 months, to a fine of up to Level 5 on the uniform scale (which at the time of writing is currently set at £10,000) or to both; or on conviction on indictment, to custody for a term not exceeding 5 years, to a fine or to both.

7. Does the legislation have extra-territorial reach?

Certain offences may be committed where the conduct which gives rise to the offence takes place wholly or partly outside the Bailiwick of Guernsey. As set out under question 4, criminal conduct occurring outside of the Bailiwick of Guernsey may underpin an offence within the jurisdiction, if the activity would constitute an offence in the Bailiwick of Guernsey.

8. Are there additional anti-money laundering or counter terrorist financing regulations or obligations, such as registration or reporting obligations, for businesses or individuals that operate in particular sectors or undertake particular activities?

Offences relating to the failure to disclose a suspicion of money laundering and tipping off apply to persons who come into that suspicion in the course of a business in the regulated sector or other trade, business, profession or employment. The offences of failing to establish and maintain adequate policies and procedures for the prevention of money laundering, conduct customer due diligence, maintain records, train staff etc. apply to businesses in the regulated sectors (including banks, insurers, etc.).

The Financial Services Business (Enforcement Powers) (Bailiwick of Guernsey) Law, 2020 (Enforcement Law) contains a comprehensive consolidation of enforcement provisions relating to all of the laws relating to oversight and regulation of the financial services industry in Guernsey, and incorporates principles of conduct for licensees.

The provisions had largely existed in other forms previously but are now all in one place. In addition to the financial penalties listed below, the Enforcement Law also contains enhanced disclosure and powers to obtain more information and also the ability to issue prohibition orders.

9. What are the potential penalties for failing to comply with these obligations?

Penalties for most Regulatory Offences are on summary conviction, a fine of up to Level 5 on the uniform scale (which at the time of writing is currently set at £10,000) or imprisonment for a term of six months, or both; or on conviction on indictment, imprisonment for a term of five years or a fine, or both.

It may also be deemed appropriate to impose a discretionary financial penalty under section 39 of the Enforcement Powers Law. The penalty could be up to £4m for a firm and £400,000 for an individual. Please see this page for more information on how the penalties will be determined:

https://www.gfsc.gg/sites/default/files/2021-10/Discretionary%20Financial%20Penalties%20%E2%80%93%20Schedule%20of%20Bandings.pdf

In determining which band a firm or individual may fall under, the behaviour of the firm and individual (as relevant) will be considered. All of the characteristics falling within a particular band do not have had to occur for the proposed sanctions to fall within that band. Additionally, where some behaviour falls within a lower band and some within the higher band, this does not mean that the lower band will be applied. Each situation will be looked at on a case by case basis to determine which is the appropriate band to apply.

10. Who are the relevant enforcement authorities in Guernsey and what are their contact details?