Consultation on Proposed Amendments to the Financial Crime Returns Rules

Overview

This consultation paper proposes amendments to the Financial Crime Returns Rules (“the FC Returns Rules”) which will make mandatory the filing of periodic returns by the prescribed business sector (accountants, lawyers and estate agents). This will end a disparity with the financial services sector where such filings are mandatory.

The Commission is proposing the amendment following changes made by the States of Guernsey in 2024 to Schedule 5 to the Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law, 1999. Those changes to Schedule 5 included enabling the Commission to make rules requiring the filing of periodic returns. The proposed change to the FC Returns Rules will mean that both sectors are treated equitably in respect of the filing these returns to ensure a consistent focus on financial crime issues across all regulated sectors.  It will also help address those prescribed businesses who fail to submit accurate returns on time which require the Commission to address with the firms concerned.

The other main change to the FC Returns Rules is a proposed amendment requiring businesses licensed under the Lending, Credit and Finance (Bailiwick of Guernsey) Law, 2022 (“the LCF Law”) which undertake money services business, to report on a quarterly basis financial flows data. This change will place these businesses on an equal footing with banks which are required to report this data quarterly.

We are also taking the opportunity to make a small number of technical changes to provide greater clarification about the insurance and LCF licensees who are subject to reporting and those who are not because their activities are exempt from the application of the anti-money laundering, counter-terrorist financing and proliferation financing requirements of Schedule 3 to the Proceeds of Crime Law.  These technical changes already reflect the approach we have taken in practice.

The specific proposals are:

The Commission is intending to amend the existing FC Returns rules to:

1. Make it mandatory for prescribed businesses to file the annual financial crime risk return (paragraph 2.1(1) of the draft FC Returns Rules).
2. Make it mandatory for prescribed businesses to file the annual prescribed business return (paragraph 2.2 of the draft FC Returns Rules).
3. Make it mandatory for LCF licensees that undertake money services business activity (except those undertaking only currency exchange and/or cheque cashing) or informal money or value transfer services to complete the quarterly financial flows return (paragraph 2.4(1) of the draft FC Returns Rules).
4. Clarify the requirements in respect of insurance managers to make it clear that all insurance management business conducted is to be reported within the FCRR regardless of the type of insurance business conducted by the insurers managed (paragraph 2.1(4) of the draft FC Returns Rules).
5. Clarify the requirements in respect of insurers and insurance intermediaries undertaking long term (life) and general (non-life) business to make it clear that only the long term (life) business is to be reported within the FCRR (paragraph 2.1(5) & (6) of the draft FC Returns Rules).
6. Clarify the requirements in respect of licensed incorporated cell companies (“ICCs”) with incorporated cells (“ICs”) that are also licensed and undertake business which is subject to financial crime supervision (e.g. ICs with life insurance licences) to reflect that both the ICC and IC must complete separate FCRRs (paragraph 2.1(7) of the draft FC Returns Rules), and
7. Clarify that LCF licensees which are not subject to financial crime supervision (i.e. those providing services ancillary to credit and those providing credit only in respect of general insurance premium financing) are not required to submit a financial crime risk return. (paragraph 1.1(1)(c) of the draft FC Returns Rules).

Clean and tracked changes copies of the proposed amended FC Returns Rules are attached to this consultation.

If you would like to provide any feedback regarding the proposed amendments to the FC Returns Rules, please respond by Monday 17 March 2025 to AMLCFT@gfsc.gg.