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FATF (Financial Action Task Force on Money-Laundering) report on finance centres

full report can be found on the OECD web-site

(section on) Gibraltar, Guernsey, the Isle of Man and Jersey

27. These jurisdictions have comprehensive anti-money laundering systems. Gibraltar, Guernsey, the Isle of Man and Jersey have in place a system for reporting suspicious transactions. Where the underlying criminal conduct is drug trafficking or terrorism, the obligation to report is a direct one. Where the underlying criminal conduct is another predicate offence, the reporting is an "indirect obligation": failure to make a report potentially leaves one open to a charge of money laundering; making a report is a defence against such a charge. During the review process the issue was raised as to whether an "indirect reporting requirement" is adequate and consistent with FATF Recommendations or whether the obligation should be a direct one for all predicate offences. FATF has agreed to consider the issue and will need, following this exercise, to discuss further the adequacy of the suspicious transaction reporting system in the jurisdictions with the authorities.

28. Gibraltar, Guernsey, the Isle of Man and Jersey allow certain intermediaries, and individuals, which are subject to the same anti-money laundering standards and supervision as financial institutions, to introduce business to banks and financial institutions on the basis that the introducers themselves verify the identity of the customer. In addition, the jurisdictions allow certain institutions based in overseas countries, subject to equivalent anti-money laundering systems, to introduce business, without separately verifying the identity of the client. The banks and financial institutions in Guernsey, Isle of Man and Jersey are only required to know the name of the client but not to verify the identity separately. There is concern as to whether such a system is consistent with FATF Recommendations and provides sufficiently rigorous checks on the identity of clients of banks and financial institutions, especially cases where the introducer is not a financial institution. Guernsey, Gibraltar, Jersey have decided to restrict to those meeting FATF anti-money laundering standards, the list of countries permitted to introduce business to Guernsey, Gibraltar, Jersey banks without them having to verify separately the client's identity. The FATF has decided to consider the issue and will need, following this exercise, to discuss the adequacy of introducer system in the jurisdictions with the authorities.

29. The lack of a stringent scheme to apply the new rules of customer identification for accounts opened prior to their entry into force is also a source of concern. The new rules for customer identification verification were introduced in Gibraltar in 1995, Guernsey in 1999, Isle of Man in 1998 and Jersey in 1999.

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