IMF Urges Guernsey to Step Up Fight Against Money Laundering
The International Monetary Fund said it is concerned about the way Guernsey implements its money- laundering rules, saying there is a “disconnect” between cases that are investigated and those eventually prosecuted.
The British Crown dependency needs to bolster rules to prosecute foreign money launderers and expand the list of “high-risk customers,” the IMF said in a report published in Washington today.
“The modest number of cases involving money laundering by financial-sector participants, and the disconnect between the number of money-laundering cases investigated versus the number of cases prosecuted and eventually resulting in a conviction, calls into question the effective application,” the Washington- based lender said.
Guernsey has come under pressure to comply with European Union rules, improve disclosure and do away with low taxes. About a third of the island’s economy comes from financial services.
Critics include U.K. Business Secretary Vince Cable, a Liberal Democrat lawmaker. Cable said British banks that received taxpayer funds during the financial crisis, such as Royal Bank of Scotland Group Plc, should close their units in tax havens.
The IMF wants Guernsey’s regulator to bolster its compliance regime, while law-enforcement agencies should improve their performance when investigating money laundering.
The IMF said that banks in Guernsey remain exposed to spillover risks from their parent companies and the island’s economy is vulnerable to uncertainty over changes to its tax regime.
Guernsey should monitor the financial soundness of the parent companies of its banks as a matter of “high priority” and establish a panel to examine financial stability on the island, the IMF said.
To contact the reporter on this story: Gonzalo Vina in London at gvina@bloomberg.net
To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net
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