Anti-Money Laundering and Countering the Financing of Terrorism
Legislation and Regulatory Guidance
The Island introduced its first anti-money laundering legislation in 1987, the Drug Trafficking Offences Act. This was followed by other legislation such as the Prevention of Terrorism Act 1990, the Criminal Justice Act 1990 and the Criminal Justice Act 1991. A list of both the Island's historic and current anti-money laundering and countering the financing of terrorism legislation is below:
- Drug Trafficking Offences Act 1987
- Prevention of Terrorism Act 1990
- Criminal Justice Act 1990
- Criminal Justice Act 1991
- Drug Trafficking Act 1996
- Criminal Justice (Money Laundering Offences) Act 1998
- Anti-Money Laundering Code 1998
- Anti-Money Laundering (Amendment) Codes 1999, 2001 and 2005
- Criminal Justice Act 2001
- Terrorism (United Nations Measures) (Isle of Man) Order 2001
- Anti-Money Laundering (Money Service Businesses) Regulations 2002
- Anti-Money Laundering (Online Gambling) Code 2002
- Anti-Terrorism and Crime Act 2003
- Criminal Justice (Money Laundering) Code 2007
- Criminal Justice (Money Laundering) (Amendment) Codes 2007 and 2008
- Part 9 of the Financial Services Rule Book 2008
- Criminal Justice (Money Laundering) Code 2008
- Criminal Justice (Money Laundering)(Amendment) Code 2008
- Proceeds of Crime Act 2008
- Terrorism (Finance) Act 2009
- Proceeds of Crime (Money Laundering) Code 2010
- Proceeds of Crime (Money Laundering - Online Gambling) Code 2010.
- Proceeds of Crime (Money Laundering) (Amendment) Code 2010.
- Prevention of Terrorist Financing Code 2011.
Copies of some pieces of primary and secondary legislation can be found on the Government's Infocentre. The Proceeds of Crime (Money Laundering) Code 2010 ("the AML Code") and the Prevention of Terrorist Financing Code 2011 ("the CFT Code") can be found at Appendix A of the Anti-Money Laundering and Countering the Financing of Terrorism Handbook ("AML/CFT Handbook"). For other pieces of legislation please contact the Tynwald Library on 685520.
The Commission issued updated guidance to its licenceholders in 1991, extending the application of guidance to the new investment business licenceholders, as well as to banks. The introduction of the Drug Trafficking Act 1996 led to a further revision of the Commission's guidance to licenceholders in the same year.
The introduction of the Criminal Justice (Money Laundering Offences) Act 1998 extended the definition of money laundering to cover all serious crimes, leading to its informal title of "the all crimes legislation". In addition, it led to the creation of the Anti-Money Laundering Code 1998, which came into force on 1st December 1998. The Anti Money Laundering Code 1998 was replaced by the Criminal Justice (Money Laundering) Code 2007 in September 2007, subsequently replaced by the Criminal Justice (Money Laundering) Code 2008 (“the 2008 Code”) which came into effect on the 18 December 2008. On 1 September 2010 this was superseded by the Proceeds of Crime (Money Laundering) Code 2010. This has been supplemented by the Prevention of Terrorist Financing Code 2011 which came into effect on 1 Septemeber 2011. Schedule 1 of the AML Code and the CFT Code Code lists the businesses that it applies to. The requirements of the AML Code and CFT Code include:
- A risk based approach to customer due diligence including enhanced customer due diligence for higher risk customers;
- Identification and verification of identity of applicants for business and beneficial owners - for example, through satisfactory evidence of name, date of birth, address, and nationality;
- Provisions dealing with relationships involving Politically Exposed Persons (“PEP”) - including determining whether any applicant for business, beneficial owner or existing customer is a PEP and requiring approval of senior management to continue or commence a business relationship with a PEP;
- Provisions concerning correspondent banking services – additional steps to be taken where relationships involve correspondent banking services and prohibition from entering or continuing relationships with shell banks;
- Provisions with respect to foreign branches and subsidiaries – ensuring measures taken by foreign branches and subsidiaries are consistent with the AML Code and CFT Code;
- Ongoing monitoring of existing business relationships – including reviews of customer due diligence information and scrutiny of transactions;
- Report suspicious transactions and attempted transactions - when merited, following a robust assessment of the circumstances;
- Maintain adequate records - in terms of completeness, format, location and period of retention, including a register of all enquiries made to the institution by the investigating authorities;
- Adopt adequate internal controls and communication procedures - written procedures for preventing money laundering, and a register of all disclosures made by the relevant person to the investigating authorities;
- Maintain procedures and controls to prevent the misuse of technological developments for money laundering or terrorist financing;
- Screen staff - In order to be satisfied as to the integrity of new directors or partners and new appropriate employees;
- Provide appropriate training for employees - to educate them on a regular basis about money laundering and terrorism financing techniques, their obligations under the law, the internal procedures to forestall and prevent money laundering and the financing of terrorism, and the procedures to follow where money laundering or terrorism financing is known or suspected; and
- Establish internal reporting procedures - paragraph 20 of the AML Code and the CFT Code requires that relevant businesses establish written internal reporting procedures covering:-
- to whom staff should report suspicious transactions;
- the establishment of a reporting chain;
- the appointment of a Money Laundering Reporting Officer ("MLRO");
- the MLRO having access to all relevant information, and that the MLRO takes account of it;
- the reporting of suspicious transactions, or suspicious attempted transactions, by the MLRO as soon as is practicable, to the Financial Crime Unit;
- and the establishment of registers recording certain minimum information.
The provisions of Part 9 of the Financial Services Rule Book 2008 have now all been incorporated in the 2010 Code. Part 9 of the Financial Services Rule Book 2008 was removed with the coming into effect of the Financial Services Rule Book 2009 on 1 January 2010. The remaining provision on anonymous accounts moved to paragraph 6.6 of the Financial Services Rule Book 2009.
To accompany the Anti Money Laundering Code 1998, in January 1999 the Commission issued fully revised draft Anti-Money Laundering Guidance Notes ("AMLGN") to licenceholders, which went into force in April 2000. To reflect evolving international standards, new legislation on the Island, and the new licensed status of Corporate Service Providers, the AMLGN were further revised in December 2001, and April 2003.
Following the introduction of Part 9 of the Financial Services Rule Book 2008 and new requirements brought in with the 2007 Code, the Commission issued the Anti-Money Laundering and Countering the Financing of Terrorism Handbook on 1 August 2008. This Handbook replaced the Anti-Money Laundering Guidance Notes. The AML/CFT Handbook has been continuously updated with the coming into effect of the 2008 Code and the AML Code and the CFT Code.
