Phase 2 sanctions thematic report published

The Isle of Man Financial Services Authority has published the findings of its inspections focusing on compliance with the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Code 2019 in relation to sanctions.

The phase 2 report, which is available to view online, highlights examples of good practice and areas for improvement identified by the Authority during the onsite inspections.

There was an excellent level of cooperation among the inspected firms, including constructive feedback that will be considered as part of the Authority’s commitment to continuous improvement. All firms had in place documented procedures and controls to assist the identification, management and mitigation of sanctions risk. Most were also able to demonstrate clear escalation processes and evidence their transaction monitoring procedures.

The Authority’s inspection teams observed several areas where there is scope for further improvement, including better documentation of decision-making processes, more robust customer due diligence, more effective use of screening tools, and a stronger consideration of sanctions risk within a firm’s Business Risk Assessment.

The inspection findings built on the information gathered during the initial phase of the sanctions thematic review, which saw a questionnaire issued to all supervised entities in the Island. The data will feed into the Island’s National Risk Assessment, as well as informing the Authority’s overall picture of risk to support its work to protect consumers, reduce financial crime and maintain confidence in the finance industry through effective regulation.

All relevant persons in the Island are required to have a comprehensive understanding of their responsibilities in respect of sanctions, which are used by countries to impose restrictions on certain international trade and services.

In line with the Island’s constitutional position, sanctions imposed by the UK Government are automatically implemented and enforced in the Isle of Man by the Customs & Immigration Division of the Treasury, with updates published online.

Stacey Kneen, Manager, AML/CFT Supervision Division, said: ‘We would like to thank all the firms that took part in the second phase of the sanctions thematic exercise. Our officers experienced an exemplary level of cooperation, which ensured the successful completion of the process.’

She added: ‘While the inspections were targeted, the learning points can be applied across all sectors of the Island’s finance industry. Firms are encouraged to read the phase 2 report and consider any action necessary to ensure their own compliance regimes are effective, up-to-date and properly documented.’