Overworked compliance officers being extra-cautious – advocate

The FIS reported a 26% increase in SARs in 2020, three-quarters of which came from the e-gambling/e-gaming sector.

Mr Dunster said there were two possible reasons for the increase.

Firstly, he said, the number of sophisticated electronic reporting and monitoring programmes was growing.

Secondly, he said compliance officers were becoming increasingly cautious.

‘Suspicion is a low test, and a lot of officers are very concerned about the potential action of the GFIS, so anything they’re slightly unsure about is reported,’ said Mr Dunster.

With regard to the e-gambling and e-gaming sector, Mr Dunster cited a number of possible factors, saying it relied on a unique business model. Traditional trust and investment firms may have anywhere from 25 to 2,000 clients, but firms in this area had more than 100,000 in some cases. He thought the sheer number of clients was one reason SARs for this sector were higher.

The sector was also highly driven by technology. He explained that electronic reporting and monitoring programmes can catch red flags on a scale individual officers cannot compete with.

Lastly, he said the e-gambling and e-gaming sector in Alderney had been a great success and a real credit to the Bailiwick, with a large number of high-profile companies based in the GFIS’s jurisdiction.

In conclusion, Mr Dunster said there was absolutely no correlation between the increase in SARs and the quality or standard of business in Guernsey.

‘We implement international standards in Guernsey and in most cases, you’ll find our standards are as good as or better than larger places,’ said Mr Dunster.

All regulated firms in Guernsey must have a reporting and compliance officer, he said, and that officer has certain duties by law. Officers must be satisfied with SARs reporting procedures and officers must file SARs if they are suspicious of a client.

‘It’s an onerous job. If you get it wrong, you could go to prison. If you don’t keep up with new legislation or if you’re overworked and make a mistake, it could be disastrous.’

There are several hundred people involved in compliance in Guernsey and, he said, a large number were very worried.

‘In most jobs, if you make a mistake, you might pay some money in damages and move on. It’s very rare in professional life to make a mistake and risk professional ruin and even prison time,’ Mr Dunster said.

‘I think the GFIS does a good job representing Guernsey on an international stage and on the law enforcement front, but I think they could do better at recognising the difficulties of the job and engaging officers in a more helpful way,’ Mr Dunster said.