The Guernsey Financial Service Commission has published its 2021 annual report and financial statements.
The report notes that the combination of the vast quantitative easing undertaken across the developed world to combat Covid restrictions and the war in the Ukraine have crystallised the inflationary risk the Commission had previously highlighted.
The fiscal and monetary responses to this inflation are likely to lead to increased financial stability risks in the year ahead, it reports.
Firms need to be mindful of the effect that these economic changes, possibly on a scale unseen in 30 years, may have on their customers, risk profiles and business models.
FATF standards
During 2021, the Commission initiated its second three-year business plan, a key tenet of which is the continuation of its long-running project to prepare for the bailiwick’s next inspection against the Financial Action Task Force’s international standards for combatting money laundering and terrorist financing in 2023/4.
The project has already delivered enhanced data returns and a review of the Commission’s supervisory and authorisation policy and procedures.
The next phase will involve an increased number of financial crime inspections and continued work to ensure that the money laundering and terrorist financing risks in the bailiwick are understood and mitigated by all actors associated with financial services.
Global expectations on countering money laundering and terrorist financing continue to evolve and the bailiwick’s next evaluation by the Council of Europe’s regional FATF inspectorate will put greater emphasis on how well firms are applying measures commensurate with the money laundering and terrorist financing risks they face.
Sustainability measures
This year’s report includes carbon emissions reporting for the first time, reflecting the Commission’s move towards becoming a net zero emissions regulator.
Having witnessed an evolution of non-financial reporting, in June 2021 the Commission enhanced the Finance Sector Code of Corporate Governance to ask firms and funds to consider their environmental preparedness and disclosures.
Reflecting the Commission’s commitment to help develop sustainable finance, during 2021 the Commission also amended the Guernsey Green Fund Rules - making two liberalisations based on industry feedback gathered during its thematic review of the Guernsey Green Fund Regime.
These aim to reduce the administrative burden on funds while maintaining the integrity of the Guernsey Green Fund regime and investors’ confidence in it.
Further to this, the Commission also reformed its Private Investment Fund regime in 2021, providing two new pathways to give experienced and family office investors improved unbureaucratic access to regulated structures.
Commission Chairman Julian Winser (pictured) commented: “I was delighted to be appointed a Commissioner during 2021 and to take over as Chairman at the end of the year. The Commission will continue to work hard to ensure that the bailiwick remains credible as a good place in which to do high quality business.”
Director General William Mason added: “Working through the Covid restrictions proved tough for many at the Commission. I am immensely grateful for the fortitude my colleagues continued to show during 2021 after a gruelling 2020.”
• To view the report click here