‘Less than £500m. of direct Russian exposure’

Director-general William Mason said that considerably more would be invested into Russia through entities in EU countries, which were then invested onward into Russia.

Between £9bn and £12bn from the local investment funds sector is understood to be invested in assets in Russia.

In terms of Russian money coming into Guernsey, the GFSC noted that total flows from Russia to Guernsey in the last quarter for which it has the data – Q3 of 2021 – totalled some £75m., which comprised just 0.12% of the total flows into Guernsey during those three months.

With sanctions now imposed after the invasion of Ukraine, and Russia’s economy severely impacted, Mr Mason said direct and indirect investment from the Guernsey funds sector, some 3-4% of assets under management, was now difficult to value, but could be worth less than half of its value at the end of 2021.

Mr Mason said that care was needed with Russian dealings and managing sanctions, but it was not the case that all Russian money was illegitimate.

‘Everything changed when Russia invaded Ukraine. Prior to that there was an awful lot of legitimate Russian money in a lot of jurisdictions,’ he said.

‘We need to be careful to remember that while the Russian government, led by Mr Putin, has invaded Ukraine, that doesn’t suddenly make every Russian person who may have worked for many years in the west a nasty person and a firm supporter of the Ukrainian invasion.

‘There’s certainly a need for discernment here between those are clearly very close to Mr Putin and intricately involved in his policy-making, and the vast mass of the Russian people, who at worst are merely obeying orders and at best are being very courageous and protesting on the streets in Russia against the Ukrainian invasion despite the fact that they get arrested for doing so.’

Sanctions, Mr Mason said, had been imposed as part of British foreign and national security goals – which the commission supported as the Bailiwick comes under the UK’s umbrella for defence and foreign policy. Sanctioned money was different, he said, from the proceeds of financial crime in so much that it was legitimate until sanctions were imposed, whereas criminal money had always been criminal money.

‘Sanctions are an exercise in statecraft and statecraft is different from just catching corrupt criminals.’

He said that the finance industry in Guernsey was ‘very committed to playing their role as part of the British family’ in ensuring UK government sanctions were implemented fully locally. He was aware that international finance centres linked to Russian money would be criticised.

‘They like to degrade the reputation of places which work with people who have money. People can have money through hard work, through legitimate inheritance, through good quality entrepreneurship. I think we need to be very careful not to accept their narrative that anybody with money is automatically dirty.’

The GFSC would take robust enforcement action against Guernsey firms found to be handling ‘dodgy money’, and its track record demonstrated that.

‘Sadly other regulators don’t have the operational independence and the number of skilled staff we have, so are less able to do that in some other countries,’ he added.