As a regulated business on the Isle of Man, you may have heard the buzzword of the year: MONEYVAL. You may have also detected how businesses and the Authority are behaving differently, as we lead up to the next round of MONEYVAL evaluations.
What does this mean for your business? How best should you navigate the ever-changing landscape in the world of compliance?
What is MONEYVAL?
MONEYVAL is a monitoring body of the Council of Europe. It assesses compliance with international standards to counter money laundering and the financing of terrorism and the effectiveness of their implementation. It also makes recommendations to national authorities to improve their systems.
MONEYVAL’s assessment of the Isle of Man in 2016 – a turning point
You may recall that in 2016, MONEYVAL carried out an assessment of the Isle of Man. They examined the Island’s technical framework, including legislation, policies, and procedures, as well as the effectiveness of those measures.
Following the mutual evaluation, the Isle of Man was placed into an ‘enhanced follow-up’ process. The Island’s progress in improving its AML/CFT procedures was monitored.
You might have noticed that this was the pivotal moment that transformed the way regulated businesses on the Island interacted with the Authority. Since then, there has been a rise in enforcement and actions by the Authority. It considers this necessary to align with global standards, especially with the upcoming MONEYVAL evaluations in a few years.
In 2020, the Isle of Man Cabinet Office published a report: Anti-Money Laundering and Countering the Financing of Terrorism in the Isle of Man. It highlighted the Government and Authority’s actions post-MONEYVAL 2016 and reviewed ‘progress’ made in delivering outcomes and defeating financial crime.
The actions and enforcements continue until today. At the Manx State of the Nation (MSOTN) earlier this year, the Authority explained that this was all crucial to ‘safeguarding the Island’s reputation’.
On the receiving end, these changes are sending a ripple of concern amongst the business community
The once open-door policy by the Authority has now been replaced by a more ‘big brother’ approach, causing a great deal of uncertainty.
In a recent poll on Impact’s LinkedIn, an overwhelming 71% of participants expressed concern over the Isle of Man Financial Services Authority’s use of a ‘stick and carrot’ approach to regulatory compliance.
It seems that this change, from trust to suspicion, has put many businesses on edge, wondering what the future holds.
Has the Authority’s role changed? Have they gone too far?
At the MSOTN the Authority stressed that as gatekeepers to the finance sector, it is within their role to introduce a broad range of remediation and enforcement tools, as well as take action where appropriate.
No one argues that. In fact, it is in line with the Authority’s objectives: ‘protecting consumers, reducing financial crime, and maintaining confidence in the finance sector through effective regulation.’
But one wonders if they have taken it one step too far.
Supervisory visits are now known as supervisory inspections. Is this change only a matter of semantics or does it reveal something more meaningful about how the Authority perceives its role today?
Interestingly, at the MSOTN the Authority also pointed out that ‘collaboration is key to achieving our common goal’. However, to truly collaborate, all parties need to be transparent and clear about the process by which they can achieve a goal together.
One might argue that the clarity and transparency required here are absent.
The Isle of Man remains in ‘enhanced follow-up’
In the more recent report: MONEYVAL Follow-Up Report Isle of Man 2022, MONEYVAL acknowledged that the Isle of Man has made some progress in addressing its technical compliance deficiencies. But the Island still hasn’t made sufficient progress to be re-rated. As a result, the Isle of Man remains in enhanced follow-up.
With the upcoming MONEYVAL evaluation in the next few years, are we expected to see increased changes leading to more uncertainties in the industry?
Are these changes part of an organic change in the industry or is it a direct result of the MONEYVAL evaluation? How will it affect the Island’s competitive position?
Get support from experts to help with your compliance programme
It is the responsibility of regulated businesses like yours to do your best to strengthen your AML/CFT measures. You should strive to improve your effectiveness and be able to prove it when questioned by the Authority. But it is challenging to carry out your responsibilities when the goalpost keeps moving.
The penalties for compliance failures are becoming increasingly common and detrimental– not only through financial penalties but also from a reputational standpoint.
This is where the team of experts at Impact Professional Services can help you. Through our health checks, you can feel confident that your business is well prepared and in a state of good regulatory health.
They enable your compliance team to be proactive around your policies, systems and frameworks rather than reactive following regulator feedback or scrutiny.
We are your expert outsourced compliance solution – here to support you in this ever-changing landscape. If you need support, here’s how you can get in touch:
- Call us on 01624 820601
- Email us on [email protected]
- Book your complimentary compliance consultation straight into the diary here.
