GUERNSEY Law and Practice Contributed by: Matthew Brehaut and Tom Carey, Carey Olsen
• A VASP licensee must not, without the GFSC’s written agreement, outsource any
try participants. The most common example of this is where a collective investment scheme is in operation. The designated administrator (a Guernsey licensee firm) is obligated to ensure that the scheme is operated in accordance with its scheme documentation and in accordance with the applicable rules. Accountants and audit firms have an obligation to report in accordance with their relevant stand - ards. However, they do not “review” the activities of industry participants as such. 2.13 Conjunction of Unregulated and Regulated Products and Services Generally, industry participants like to segregate their regulated business from their non-regulated business in a separate entity for a variety of rea - sons, including: • calculation of regulatory capital requirements; • reporting to the GFSC; • accounting; • segregation of assets and liabilities (and will therefore house the regulated element of their business); and • so that ancillary activities (eg, employing personnel and renting office space) can be undertaken by a non-regulated entity. The GFSC have not issued any formal guidance on the preferred approach. However, it makes the division of responsibilities clearer for the GFSC and makes regulatory supervision easier. 2.14 Impact of AML and Sanctions Rules See 1.1 Evolution of the Fintech Market . 2.15 Financial Action Task Force Standards AML and sanctions rules in Guernsey generally follow the standards imposed by the Financial
function outside Guernsey. 2.9 Gatekeeper Liability
Guernsey does not impose any overarching responsibility on fintech providers for the activi - ties of participants on their platforms. If the fintech provider constitutes “financial services business” within the scope of the Guernsey AML Law, it will be subject to Guernsey’s AML legisla - tion and therefore required to satisfy client due diligence/KYC obligations and report suspicious transactions. 2.10 Significant Enforcement Actions There have been no significant enforcement actions by the GFSC in the fintech space. 2.11 Implications of Additional, Non- Financial Services Regulations As a small jurisdiction, Guernsey has not seen a plethora of non-financial services regulations to deal with privacy, cybersecurity, social media content, or software development. However, Guernsey has implemented data protection legislation – namely, the Data Protection (Baili - wick of Guernsey) Law 2017 – and is deemed an “equivalent country” by the EU for the purposes of the EU’s data protection laws. The GFSC has extensive investigation and enforcement powers. If the GFSC learns that a particular business’ behaviour is likely to cause reputational damage to Guernsey, it will not hesi - tate to step in. 2.12 Review of Industry Participants by Parties Other than Regulators To the extent that a third-party licensee is appointed, that third-party licensee may have obligations to monitor the activities of indus -
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