Simon Gaudion, director of its enforcement division, said implementing global regulatory standards in a ‘proportionate and reasonable manner’ was needed to ensure Guernsey passed international assessments of its finance sector and secured its future.
‘What is the aim or purpose of enforcement? Firstly and most emphatically, it is not to persecute firms and individuals for trivial matters and just for the sake of it,’ he said at the finance sector regulator’s latest annual update to industry at St James.
‘However, I would like to emphasise what I’ve said many times previously, which is that for a matter to be referred to the enforcement division, it has to be serious. In addition, all such cases are referred to my team by one of the supervisory directors. The enforcement division has no mandate to initiate its own cases.’
Mr Gaudion sought to clear up a number of myths, starting with an upcoming visit from Moneyval, the international body tasked with assessing compliance with standards to counter money laundering and the financing of terrorism.
‘There is absolutely no appetite or desire to look for trophy cases with regard to the impending Moneyval visit,’ he said.
‘Another one we hear quite frequently is that we act as judge, jury and executioner. That again is simply just not true.
‘The commission, as you know, introduced the senior decision-makers panel to ensure there was a degree of independence and fairness to the decision-making proceedings by having senior legal practitioners preside over matters.
‘Furthermore, any party who is dissatisfied with the outcome of the case can appeal the decision to the Royal Court.’
Enforcement action in cases of serious wrongdoing was necessary to maintain the jurisdiction’s reputation, with the Cayman Islands an example of what happens when that went wrong.
The Caribbean jurisdiction has been ‘grey-listed’ for its regulatory regime by an international body, to the cost of its finance industry and wider economy.
Mr Gaudion told the packed event that the commission wanted to ensure it struck the ‘right balance’ to protect good businesses so they could prosper and make Guernsey as a safe place to do business – something the courts were ‘very much alive too’.
Plans to simplify the enforcement process in line with the approach adopted by other similar sized-jurisdictions were also being developed.
Not all cases referred to his enforcement division were taken forward.
Out of 54 cases completed since its inception in 2013, 18 were placed back in the hands of the relevant supervisory division after further investigatory work by the enforcement team.
There could be some ‘remediation work’ needed by that company or enhanced monitoring until matters were resolved to the supervisory division’s satisfaction.
The very small percentage of cases out of more than 2,000 licensed entities referred to the GFSC’s enforcement division was positive for the Bailiwick, said Mr Gaudion, because it indicated the majority of firms were running good business models operating within the regulatory framework that protected everyone.
The event also heard how the commission’s enforcement division had increasingly engaged with the police as cases crossed the threshold to what appeared to be more criminal behaviour.
Parallel investigations were carried out by the GFSC depending on what was identified, although it may not be able to publish the facts for fear of prejudicing any ongoing criminal investigation if the commission concluded matters it was concerned with first.