By Samantha Sheen, AML Director Europe, ACAMS
6 September, 2016

Introduction

When news of the Panama papers was first published in April 2016, regulatory bodies around the world sprang into action. By the end of April, for example, the FCA, had asked 64 firms for information about any involvement with Panama-based lawyers Mossack Fonseca and what they were doing to assess their exposure. One group of regulators who have not received a great deal of attention are also taking steps to try and address some of the financial crime issues disclosed by the Panama Papers.

Group of Internal Financial Centre Supervisors (“GIFCS”)

Formerly called the Offshore Group of Banking Supervisors, GIFCS is made up 20 countries which are more commonly referred to as off-shore financial centres. I’ve included a list of their members at the end of this blog.

GIFCS was formed in 1980. According to its website, its present membership accounts for a market share of approximately 10% of global international banking assets. GIFCS meets formally twice a year. One of GIFCS’ main aims is to encourage and assist its members in implementing international regulatory standards such as the FATF Recommendations, especially in relation to the banking and fiduciary sectors (i.e. trust and corporate service providers).

In October 2014, GIFCS published the “Standard on the Regulation of Trust and Company Service Providers” (“TCSP Standard”). The TCSP Standard is intended to provide a benchmark for its members in their establishment of regulatory frameworks and supervisory practices. This includes requirements regarding AML, bribery and corruption and international sanctions.

GIFCS’ Response to the Panama Papers

GIFCS members met in London at the end of April 2016. At that meeting they canvassed a number of different topics including their strategy for countering the financing of terrorism. Also discussed were the Panama Papers’ disclosures. GIFCS considered the disclosures to be especially relevant for its members in view of the TCSP Standard. In response, GIFSCS members have agreed to the following measures:

  1. All GIFCS members will achieve a ‘largely compliant’ position with the TCSP Standard within a time frame of three years (April 2019).
  2. All GIFCS members must submit their action plans for compliance with the TCSP Standard by the next meeting (November 2016).
  3. A formal process to assess members’ compliance against the TCSP Standard will shortly commence and take the form of a peer assessment. There is an expectation that assessment reports will be published.

The next GIFCS meeting will be held at the end of November 2016 in Santiago, Chile, immediately before the International Conference of Banking Supervisors, which will also be held in Santiago.

Concluding Thoughts

From an AML/ CDD perspective, the measures undertaken by trust and corporate service providers are not always well understood, particularly in those jurisdictions where trusts are not regulated or not legally recognised. The proposed peer assessments and their possible publication may provide some useful insight into how CDD is undertaken by these jurisdictions and what steps are needed to improve them. The commitment made to the compiling an action plan might, in itself, be seen as a positive indication that these AML regulators are committed to ensuring that their financial institutions undertake effective CDD on their customers and apply appropriate controls to mitigate potential financial crime risks.

Note:

The members of the GIFCS are: Antigua & Barbuda, Aruba, Bahamas, Barbados, Bermuda, British Virgin Islands, Cayman Islands, Cook Islands, Curacao and Saint Maarten, Gibraltar, Guernsey, Isle of Man, Jersey, Labuan, Macao SAR, Panama, Samoa, Turks & Caicos Islands and Vanuatu. Attending the meeting in April 2016 as observers were Anguilla, DFSA Dubai, Jamaica, Liechtenstein, Nevis and Qatar.

For more information about the Standard and GIFCS: http://www.gifcs.org/

For a copy of the Standard: http://www.gifcs.org/index.php/tcsp-supervision