The island still needs to take further steps to prevent money laundering and terrorist financing, but it is largely compliant with Council of Europe recommendations.
In its fourth follow-up report, the The Council of Europe’s committee of experts on money laundering and the financing of terrorism – known as Moneyval – said the island remains compliant in 39 out of 40 recommendations.
Published this morning, the report shows that Moneyval ‘considered the Isle of Man to comply or mostly comply with 39 out of 40 Financial Action Task Force (FATF) recommendations’. The only area where the island remains only ‘partially compliant’ is recommendation 23, which focuses on technical compliance, where some ‘moderate deficiencies’ remain.
Moneyval said that the island was only partially compliant because ‘there was no specific requirement in the Anti-Money Laundering (AML)/Counter-Terrorist Financing (CTF) or Gambling Codes in relation to having an independent audit function.
‘There was no specific requirement in the AML/CFT Code for groups to have group-wide programmes against money laundering or terrorist financing.’
In its report, Moneyval said that under the Gambling Code, there is a requirement for both compliance management arrangements and testing of the systems involved.
It said: ‘However, the capacity in which “testing” is to be conducted is not clearly expressed and appears closer to the type of monitoring that is carried out as part of a compliance role rather than to establish the effectiveness of overall AML/CFT policies and processes and the quality of risk management (objective of an independent audit).
‘Responsibility for compliance management and testing rests with the same person at management level – pointing to testing having a compliance rather than audit focus. This is because the same person cannot be responsible for both putting compliance arrangements in place and then testing/auditing their effectiveness.’
The Isle of Man was invited to submit a fourth enhanced follow-up report in April 2024. However, following a change to the interpretative note to recommendation 23, the 63rd Plenary ‘agreed that this fourth enhanced follow-up review should be considered instead via written procedure’.
As such, it is expected that the island will next report back to Moneyval in three years’ time.