Unsung heroes

My busiest jurisdiction – despite my post a few days ago – is Guernsey.  Working for Guernsey clients takes up about 60% of my time, and thanks to the approachability of their FIU (and in the past – but sadly no longer – their regulator) I feel that I have a deeper understanding of their AML regime, vulnerabilities and concerns than those of my own jurisdiction.  Of course my clients are self-selecting (in other words, I see only people who take AML seriously), but even allowing for this I would say that the Guernsey regulated sector is more determined than most to get it right.  And so it is particularly galling for them that when they have a mutual assessment, as they last did in October 2014, with the report published in September 2015, they read this sort of thing: “Although the number of money laundering investigations, prosecutions and convictions [has] increased… the overall level remains low and there is a discrepancy between the numbers of investigated money laundering cases and final convictions.”

I want to smite my forehead, roll my eyes and say (as I did when a teenager), “Well, duh!”.  Guernsey is a lovely place – great beaches, excellent food, wonderful flowers – but it is a small island.  It’s quite important in world financial terms, but still a junior player in volume and value of transactions.  It is extremely safe, with local crimes being mostly of the “someone hit my wing mirror and drove off without leaving a note” variety.  When money laundering does happen in Guernsey, it is almost exclusively of the proceeds from crimes committed overseas, with Guernsey simply one of the layers in the scheme.  The local regulated sector is good at picking up on – and reporting – that kind of suspicion.  The local FIU is good at sharing that information with their more directly concerned counterparts in overseas FIUs – who in turn are good at taking on responsibility for investigating and convicting.  All of this means that the conviction eventually ends up on someone else’s scorecard, with the result that Guernsey’s money laundering conviction rates look low compared to their level of financial activity.  It does not mean that there is lots of laundering that they are missing/permitting.

And now, thank goodness, another jurisdiction has spotted the same trend.  On 30 April Hong Kong published its first-ever national risk assessment.  And at its launch, a spokesperson from the HK Police Force was quoted in the South China Morning Post as commenting that HK is often a “transition spot” for international cases: “We do not have enough evidence to arrest the culprits in Hong Kong.  They might not be physically here.  But we can share the information we have with our overseas counterparts to assist them in further investigations or possible prosecution.  Money laundering is a global matter, and intelligence matters.”  Indeed it does – for without intelligence there would be no convictions at all, on anyone’s scorecard.  Measuring AML success purely by raw conviction figures is too simplistic.  Perhaps every FIU that participates in a money laundering investigation by contributing intelligence should be awarded points to count towards local statistics, as the current system of mentioning that the FIU has “responded to x number of international requests for assistance” tends to get lost along the way, and its significance is never appreciated.

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2 Responses to Unsung heroes

  1. Sam Sheen says:

    Hi Susan,
    Love reading your articles. Just a bit of info though – as part of a FATF assessment Guernsey was, and other jurisdictions are, asked to produce statistics evidencing the number of international requests for assistance made to Guernsey’s FIU and other regulators by other regulatory and enforcement bodies. There is also drilling down into those statistics.

    Perhaps it’s more accurate to say that what’s missing in some evaluation reports is recognition of the time and resource invested by local authorities in locating, securing and sending information and evidence that proves important towards the prosecution of a cross jurisdictional case. Guernsey certainly received recognition for this in the Och Ziff FCPA case, for example, by the US SEC. So, while I agree the emphasis in that FATF related report places an unhelpful slant on the findings, I speak from first hand experience in 2014 and can say that Guernsey received a positive reaction and should be commended for its international cooperation with other jurisdictions’ enforcement and regulatory authorities. All the Best, Sam

    • Thank you for your comment, Sam, and welcome to the blog. This is a very helpful clarification, and it is good to know that such contributions (which are, as you say, time- and resource-hungry) are recorded and recognised within the regulatory/law enforcement community. It’s just a pity that the headline-writers rarely go into the detail behind the key findings. Best wishes from Susan

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