Isle of Man

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

Yes, the Proceeds of Crime Act 2008, the Terrorism and Other Financial Restrictions Act 2014, Anti-Terrorism and Crime Act 2003, the Anti-Money Laundering and Countering the Financing of Terrorism Code and ancillary regulations 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 question 3) apply to all persons. Regulatory Offences (about which more is said under questions 3 and 8) apply to businesses in the regulated sector 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 Act 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 property (the Primary Offences), failure to disclose a suspicion arising in the course of business, and tipping off (the Regulatory Offences).

Under the Anti-terrorism and Crime Act, 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 Isle of Man.

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 Isle of Man or, where criminal conduct has taken place outside the Isle of Man, would constitute an offence in the Isle of Man. 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 £10,000 or imprisonment for a term of up to 12 months, or both; or (b) on conviction on information, imprisonment for a term of up to 14 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 12 months, or to a fine not exceeding £10,000, or to both; or on conviction on information, 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 3 months, or to a fine not exceeding £10,000, or to both; or on conviction on information, 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 not exceeding £10,000 or to both; or conviction on information, 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 not exceeding £10,000 or to both; or on conviction on information, 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 Isle of Man. As set out under question 4, criminal conduct occurring outside of the Isle of Man may underpin an offence within the jurisdiction.

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.).

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

Penalties for failure to comply with these obligations vary. Most, on summary conviction, attract a fine of up £10,000 or imprisonment for periods of 3 months to two years depending on the offence, or both; or on conviction on information, imprisonment for a term of five years or a fine, or both.

Under the Anti-Money Laundering and Countering the Financing of Terrorism (Civil Penalties) Regulations 2019 it is now possible to also impose penalties of up to 8% of person’s income.

10. Who are the relevant enforcement authorities in the Isle of Man and what are their contact details?

The Financial Services Authority has responsibility for the regulation and supervision of persons undertaking regulated activities. The Financial Intelligence Unit has the functions of receiving, gathering, analysing, storing and sharing information about financial crime (whether in the Island or elsewhere); assisting with the prevention and detection of crime, and in particular, financial crime (whether in the Island or elsewhere); cooperating with law enforcement agencies; and contributing to the reduction of crime, and in particular, financial crime and to the mitigation of its consequences.