Short Summary of the Isle of Man Financial Services Authority Proliferation Financing Questionnaire Report
The Isle of Man Financial Services Authority has published the findings of a questionnaire issued to supervised entities relating to proliferation financing (PF).
The questionnaire was issued during January 2024 and received responses from 586 firms, representing a 98% Response rate. Information submitted by industry provides an insight into the level of understanding of PF among firms and the training provided to members of staff. The findings will help inform the Island’s next National Risk Assessment.
Good practice examples of remaining up to date:
- Subscribing to RSS feeds from Customs and the Authority website.
- Regular horizon scanning for any new guidance or typologies.
- The MLRO and other relevant staff attending industry training sessions.
- Use of third-party providers for screening purposes, who have a global reach and provide relevant updates to the business, such as World Check and KYC 360.
- Engaging in relevant continuous learning and training to develop knowledge and understanding of financial crime.
- Utilising professional networks and forums to engage in discussions, share insights and learn from the experiences of other industry professionals.
Good practice examples on how businesses communicate to staff:
- Circulation of relevant news and developments updated to all staff, regularly.
- Developments are communicated in a timely manner.
- Covering PF as a separate topic within a firm’s regular staff AML/CFT training and the AML/CFT Manual.
Further good practice points & recommended next steps:
The findings will allow the Authority, together with other Government agencies, to determine what additional outreach and guidance is needed to assist firms in enhancing their understanding.
The Authority aims to conduct more outreach and engagement with industry to raise awareness of PF. The publication of the Island’s PF risk assessment will also aid understanding in this area.
It is vital senior management / leadership is aware of PF risks and adequate escalation of PF issues should be in place for each firm.
All firms must refer to PF separately within their Business Risk Assessment. A separate PF BRA is not required, but PF matters should be incorporated into a firm’s existing BRA.
Firms should refer to PF explicitly within their AML/CFT Manual.
The delivery of PF training as part of the firm’s training programme, will be integral in mitigating PF risks to the firm. It may be more suitable for a firm’s MLRO and DMLRO to receive stand-alone training that is more in depth.
It is vital for employees to learn the relevant sanctions regimes in place to combat proliferation and PF.
The PF risks a firm is exposed to will vary depending on the nature of their business and therefore a clear understanding of the vulnerabilities of the business, and potential risk indicators is required.
Examples of measures to mitigate a firm’s PF risk include:
- Improved onboarding processes for customers (including beneficial owners).
- Enhanced CDD procedures.
- Effective maintenance of customer data.
- Regular controls to ensure effectiveness of procedures for sanctions screening.
- Leveraging the existing compliance programmes (including internal controls) to identify potential sanctions evasion.
The full report can be found here.
