GUERNSEY Law and Practice Contributed by: Matthew Brehaut and Tom Carey, Carey Olsen
Action Task Force (FATF). A recent report by MONEYVAL, the Council of Europe’s permanent monitoring body, confirmed that Guernsey takes a robust approach to counter money laundering, terrorist financing and proliferation financing. Guernsey’s 2024 assessment marked the fifth round of the evaluation, which started in 2010 and focuses on technical compliance and the effectiveness of the island’s measures against money laundering and terrorist financing. Fol - lowing the evaluation, Guernsey became one of the few jurisdictions to pass all 40 technical The laws in Guernsey allow for otherwise regu - lated products and services to be offered from another jurisdiction under a reverse solicitation scenario (without triggering domestic regula - tions in Guernsey). Where restricted activities are conducted by a firm without a base in Guernsey at the initiation of the client – ie, on a reverse solicitation basis – then a licence is not required. compliance recommendations. 2.16 Reverse Solicitation 3. Robo-Advisers 3.1 Requirement for Different Business Models See 2.2 Regulatory Regime . The provision of investment advice in or from within Guernsey to any person in their capacity as an investor or potential investor in relation to the merits of any assets that are classified as “controlled investments” under the POI Law requires a licence under the POI Law (subject to any available exemptions). The definition of “controlled investments” is widely drafted and includes various securities (including shares in companies and debentures) and derivatives, but not fiat cash or cryptocurrencies ‒ although
investment advice on these is likely to be caught by the LCF Law as “financial firm business” and licensed accordingly. In order to set up an investment business in Guernsey, a company would need to have Guernsey staff and premises, including at least two or three appropriately qualified and experi - enced local directors (depending upon whether or not the investment business will control client assets) and its own local compliance function. The staff and premises requirements can be out - sourced. The position is the same regardless of whether the investment advice is provided via a tradi - tional investment advisory model or by using an automated system such as a robo-adviser. 3.2 Legacy Players’ Implementation of Solutions Introduced by Robo-Advisers The authors’ experience in Guernsey is that, even though a small number of local investment platforms deal in investments on an automated basis with little or no manual intervention, the use of robo-advisers is not widespread. 3.3 Issues Relating to Best Execution of Customer Trades The GFSC has published The Licensees’ (Con- duct of Business) Rules and Guidance 2021 (the “CoB Rules” ), which contains a number of high- level principles with which all POI Law licensees must comply. The CoB Rules cover matters such as corporate governance, compliance, account - ing, fitness and propriety, client relations, record- keeping, client categorisation, complaints, client assets, and conflicts of interest. The CoB Rules are significantly less prescrip - tive than the equivalent regulations in many oth - er jurisdictions, such as the UK. They include
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