Covid fraudsters given warning by regulator
‘WE will come after you.’ That’s the message from the Guernsey Finance Services Commission to anyone seeking to take advantage of older islanders during the Covid-19 crisis.
Director General William Mason issued the warning by highlighting a recent enforcement case where a widow had been exploited as an example of the regulator’s ongoing determination in relation to enforcement to protect individual citizens from ‘greedy people’.
‘We take that case as serving as an example of if anybody thinks it’s a good time to go out and exploit old people when they’re quite isolated, we will come after them. We will take action. If there’s criminality, we will work with our counterparts in Law Enforcement to try to make sure that fraud cases can be brought forward,’ said Mr Mason.
He talked also about the other part of enforcement, about stopping international criminals using the island to launder money, in an interview discussing the regulator’s recently published annual report covering 2019.
The commission was working with a generally collaborative industry to build ‘high walls’ against those who sought to undermine the island’s hard-won reputation for probity. Unfortunately there were still a few people seeking to undermine that.
‘They seem to think that they operate above the law and it’s fine for them to try and make dishonest fortunes by providing financial services to international money launderers,’ said Mr Mason.
‘To put it in perspective, they are a tiny, tiny minority who are letting down all the honest and hard-working people in our financial services industry.
‘Our enforcement function, working with Law Enforcement, and again where there is strong evidence of criminality, is seeking to drive those undesirable people from the industry.’
He also set out the challenges, saying: ‘For example, you go after a wealthy individual who you suspect of having facilitated money laundering or not run an investment fund properly to the huge detriment of his investors, he is very unlikely to put his hands up and say: “It’s a fair cop”.
‘Rather than doing that, he’ll hire expensive lawyers who will do their very best to break your legal processes. They’ll file numerous complaints against your staff and disrupt your attempts to enforce against them. They will generally try to stop your attempts to hold them to account by impossibly extravagant disclosure demands.
‘Why do they do this? They do it because the evidence we assemble is generally pretty strong and they find it very difficult to fight the case on the evidence.’
Such ‘disruption’ techniques meant that the infrastructure the GFSC had to build to protect its investigating officers had to be ‘very robust’.
‘The mental stress on the investigating officers, who are frequently attacked personally as part of legal spoiling tactics, is often quite intense. That is one of the reasons why the enforcement process is costly and time-consuming.’Going forward, the commission is looking at ways to streamline its processes and hopeful that increased fining powers given to the GFSC by the States in relation to wrong-doing after 2017 will in years to come enable it to apply more of a ‘polluter pays principle than we can at the moment’ – with some of those cases starting to come through. ‘The polluter should be paying for their wrong-doing not everybody else being asked to subsidise our costs of nicking them for the wrong-doing,’ said Mr Mason.
