An experienced island detective has warned professionals from the finance sector that a ‘financial tsunami is on the way.’
Jail sentences of up to 14 years could await people who fall foul of money laundering.
Detective Sergeant Mike Venables who has been with the Isle of Man Constabulary’s Financial Crime Unit for 12 years, said people working in the island’s financial companies could not afford to take their eye off the ball.
Tighter and more stringent regulations were on the way aimed at stopping criminals laundering money and using professionals to do it.
Speaking to nearly 100 delegates at an event at the Claremont Hotel, Douglas, Mr Venables said: ‘You will have heard there are significant changes on the way.
‘I can’t promise that for the next hour or so I will cheer you up.
‘The last three or four months I’ve been relinquished of my policing duties to concentrate on the national risk assessment, such is the importance the government and the constabulary attaches to that model.’
Mr Venables said that at the heart of the changes is a grouping called Moneyval, which is the Council of Europe’s anti-money laundering committee.
‘For the last two years I have been involved in Moneyval and I’ve been part of the Isle of Man evaluation team with the FSC (Financial Supervision Commission) and Attorney General.
‘There is a financial tsunami on the way.
‘And one of the reasons this financial tsunami is on the way, in my opinion, is that previously when we were evaluated by the IMF [the] evaluation process was cyclical over a five year term.
‘Under the Moneyval regime, unlike the old regime, the evaluation will be continual and perpetual. So there will be no kicking off the shoes.’
Speaking to the Insurance Institute of the Isle of Man’s 2014 Regulatory and Industry Update he warned the audience : ‘The national risk assessment will mean a lot of work for a lot of people for the next year to 18 months.
‘Hopefully what we will have in place after a year to 18 months will be a model that will make all our lives significantly easier.
‘[But]It’s not as simple as that.
‘Certainly law enforcement and regulatory regimes are now going to have to demonstrate and prove well before Moneyval arrives here in 2016 that we are effective in what we do, and of why and how we do it.’
He predicted: ‘For the Financial Crime Unit (FCU) that will mean a huge departure from how things have been done previously.
‘Annually we get more disclosures effectively than Jersey and Guernsey put together.’
Mr Venables told the audience, which included insurance industry workers, advocates and financial advisers: ‘We will continue to prosecute people for money laundering, people who we believe need to be prosecuted.’
Minutes after speaking, Mr Venables told Business News outside the meeting room that the financial tsunami he referred to was ‘an anecdotal expression because what is coming is such a departure from what we had and is so radical that I dare say the people in there will feel engulfed by it when it arrives’.
But he added: ‘Hopefully the processes we are going through now and the educational talks we are giving willprepare people. But I daresay that when it arrives [Moneyval] it’s a different ball game to how the IMF was.
‘From a government perspective and from our unit’s perspective it will be perpetual and ongoing.
‘There will be much closer scrutiny and once this national risk assessment is formulated we won’t be able to put it in a cupboard and forget about it.’
Det Sgt Venables said people often thought money laundering could not happen here.
‘Well it will happen here ,’ he told Business News.
He confirmed the tighter regulations were aimed at ‘stopping criminal money getting into financial institutions. And the criminals have to use professional people to do it. That’s where professional people run the risk.’
In his opinion he felt the Isle of Man was unfairly scrutinised by other jurisdictions such as the United States.
‘There’s a perception that we are a backwater money laundering jurisdiction and in my experience we are anything but that.’
Det Sgt Venables is due to retire from the force next month (December) after a 30-year police career.
In a report published last week Moneyval called on countries to develop financial inclusion policies and initiatives in order to strengthen financial integrity.
The report entitled Strengthening Financial Integrity through Financial Inclusion aims to establish the extent to which financial inclusion is currently taken into account by Moneyval states and and territories.