Sep 22 2009 Martin Coyle
The Isle of Man's anti-money laundering regime is broadly compliant with the Financial Action Task Force recommendations and its firms generally adhere to a high standard, according to the International Monetary Fund. Despite this, local regulators need to take on a few points made following the IMF assessment. IMF officials, who visited last September, said that the jurisdiction placed the highest importance on having an enforceable AML regime. The IMF noted that the Financial Supervision Commission as well as the Insurance and Pensions Authority had been assigned legislative objectives related to reducing financial crime.
The AML regime for the Isle of Man generally reflects FATF recommendations and runs in parallel with the European Union's Third Money Laundering Directive. The IMF noted that although the island is generally a low-crime jurisdiction, a number of its financial system's characteristics could potentially lead to money laundering. It pointed out that more than 90 per cent of business on the island was conducted on a non-face-to-face basis for non-residents. This created challenges for firms trying to identify customers and locate beneficial owners correctly.
The report said that the local commercial environment, which had been designed to attract financial services business, brought with it the risk of attracting financial crime, particularly from other jurisdictions. The IMF said that although money laundering was a criminal offence in line with international standards, and all predicate offences were covered, the statutory sanctions for money laundering-related offences appeared low. The Isle of Man had reported no convictions for autonomous money laundering and few domestic investigations or prosecutions took place.
The IMF said that, despite the deficiencies, the legal framework underpinning the Isle of Man's system for the seizure and confiscation of the proceeds of crime was "solid" and "comprehensive". It recommended that the island should develop case law for standalone money laundering confiscation and address the low effectiveness of asset recovery measures. There was also concern about the low number of suspicious transaction reports received by the financial crime unit.
"Isle of Man financial institutions are generally well-supervised for AML/CFT purposes. The range of available administrative sanctions, while broad, could be enhanced. The quality of implementation of AML/CFT measures in financial institutions appeared generally good, if somewhat variable," the IMF report noted.
Tony Brown, chief minister, said: "This report from the International Monetary Fund is a comprehensive, independent and expert endorsement of the quality of the Isle of Man's financial services regime. We in the Isle of Man have always worked hard to achieve a high level of compliance with international standards, and will continue to do so as the standards evolve."
