Financial Crime Risk Intermediary Return Guidance

Financial Crime Division
152. Financial Crime Risk –
Intermediary Annual Return
Guidance for Completion

Financial Crime Division 152. Financial Crime Risk – Intermediary Annual Return Guidance 20 February 2020 Contents Page 2 Contents
Glossary of Terms......................................................................................................................3
Introduction................................................................................................................................4
Purpose of the Guidance ....................................................................................................4
Start Page ...................................................................................................................................5
Scheme Information Page ..........................................................................................................5
Intermediary Statistics Spreadsheet ...........................................................................................6
Start....................................................................................................................................6
Scheme Details...................................................................................................................6
Location .............................................................................................................................9
Declaration.................................................................................................................................9

Financial Crime Division 152. Financial Crime Risk – Intermediary Annual Return Guidance 20 February 2020 Glossary of Terms Page 3 Glossary of Terms ‘Commission’ The Guernsey Financial Services Commission ‘Firm’ Firm refers to the financial services business completing the Return. ‘Handbook’ The Handbook on Countering Financial Crime and Terrorist Financing ‘Helpdesk’ The Commission’s Online Portal Helpdesk, which can be contacted via telephone on +44 1481 732706 or e-mail: support@gfsc.gg. ‘Intermediary’ A financial services business, or a firm of lawyers or estate agents operating in Guernsey, which is considered by the Firm as being the client to identify and verify when establishing a business relationship, in accordance with section 9.8. of the Handbook. ‘Investor’ A shareholder/unit holder/limited partner recorded on the share register of a collective investment scheme. ‘Online Portal’ The Commission’s Online Submissions Portal, accessible via: https://submit.gfsc.gg/. ‘Reporting Period’ 1 April to 31 March each year. ‘Schedule’
Schedule 3 to the Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law,
1999 as amended.
‘The Return’
The 152. Financial Crime Risk – Intermediary Annual Return, accessible via the Online Portal. Each scheme will have a 152 ‘a’ return, which itself is not editable. The Firm must submit a 152 ‘b’ return, for one or more schemes.

Financial Crime Division 152. Financial Crime Risk – Intermediary Annual Return Guidance 20 February 2020 Introduction Page 4 Introduction Following the initial data collection in early 2018, the Commission is continuing to collect information and statistics on the use made of intermediary arrangements on collective investment schemes. This will assist in determining on an ongoing basis whether the use of Intermediaries is exposing the Bailiwick to an increased risk of money laundering or terrorist financing because of the anonymity it offers the underlying investor. The Commission will not be publishing individual Firm or collective investment scheme information and statistics. It may however, make available aggregated but anonymised information and statistics to discuss with the sector and other relevant parties To capture this information the Commission is introducing the Return, to be completed by all firms responsible for one or more collective investment scheme in line with the Form 141 – Designated Manager Quarterly Return. The aim of the Return is to capture data on the extent to which intermediary relationships are used on collective investment schemes. It asks the same questions to those sought in the exercise in 2018. During the second half of 2019 the Commission commenced discussion with the Guernsey Investment Fund Association regarding the collection of this information on an annual basis commencing with 2019/2020 data being collected in 2020. The Return will become available on the Firm’s Online Portal timeline from 1 April annually and should be completed by 31 May. Purpose of the Guidance This guidance has been issued to assist the Firm in the completion and submission of the Return. Further guidance on the use of the Online Portal and how to begin completion of the Return can be found here: https://submit.gfsc.gg/faq/

Financial Crime Division 152. Financial Crime Risk – Intermediary Annual Return Guidance 20 February 2020 The Return Page 5 Start Page Having selected to complete the Return from the Online Portal, the form will open on the ‘Start’ page. The ‘Start’ page provides details about the background to the Return. This section lists all collective investment schemes (“schemes”) for which the Firm is responsible (i.e. for which it submits a Form 141 – Designated Manager Quarterly Return) that has a corresponding 152 ‘a’ return due, for the same period. Please select all schemes to be included in the submission. The schemes can be split across multiple 152 ‘b’ submissions if desired. Note: Schemes that were active as at the period end require data to be submitted. If you cannot select a scheme in the list, it may mean that your user permissions do not allow for preparation or submission of a Return for that particular scheme, in which case please contact your Online Portal super user. It may also be that a 152a has already been submitted, or does not exist for that scheme. Please check the individual scheme’s timeline. Once all desired schemes have been selected, ensure the ‘Annual Return for the Period Ended’ displays the correct period end date and click ‘Create’. Scheme Information Page This page lists the selected schemes and contains a link to download an Excel spreadsheet containing each scheme’s name and its GFSC reference number. Click on the ‘Download Selected Schemes’ button to generate an Excel file containing the selected scheme details. This information may be copied and then pasted as values into the ‘Scheme Details’ tab of the intermediary statistics spreadsheet attached to the Return. Attached to the Return is a spreadsheet template with three tabs for completion. The spreadsheet can be downloaded by clicking on the hyperlink under the Intermediary Statistics heading of the ‘Scheme Information’ page and requires completion for all selected schemes. Further guidance on the specific information to be provided is included below. Once all of the requested information has been provided, the completed spreadsheet should be uploaded back to the Return by clicking on the ‘Upload a document’ button within the Return.

Financial Crime Division 152. Financial Crime Risk – Intermediary Annual Return Guidance 20 February 2020 The Return Page 6 Intermediary Statistics Spreadsheet Start The ‘Start’ tab has three mandatory fields to complete, being the name of the Firm, its GFSC reference number, and the reporting period end date. Only the green cells within the spreadsheet require completion. Scheme Details The ‘Scheme Details’ tab should be completed on a per-scheme basis and should include details for all schemes and cells which the Firm selected previously, including those which have no Intermediaries acting on behalf of one or more underlying investor as at the period end. ‘Name of collective investment scheme’ & ‘GFSC reference of collective investment scheme’ The Firm should paste (as values) the name and GFSC reference number of each scheme from the scheme details spreadsheet downloaded from the Return. Alternatively, the scheme name and GFSC reference number could be entered manually (though this is not recommended, as data errors will cause the file upload to fail). ‘Name of cell’ Where a scheme is a PCC or ICC, the name of the scheme should be entered on each row for each corresponding cell being entered. Below is an example reflecting how a fund with three cells should be recorded:
‘Scheme Type (Open-Ended/ Closed-Ended/ Non-Guernsey Scheme)’ Please indicate, from the drop-down list provided, whether the scheme is an open-ended, closed-ended or non-Guernsey scheme. ‘Frequency of dealing’ Please indicate, from the drop-down list provided, the dealing frequency for the scheme/cell. ‘Total number of Investors’ Please provide the total number of Investors (i.e. shareholders/unit holders/limited partners recorded on the scheme’s register) as at the end of the Reporting Period i.e. as at 31 March. The figure provided in this field should match that given in response to the same question in the relevant scheme’s Form 141 as at the same period end.

Financial Crime Division 152. Financial Crime Risk – Intermediary Annual Return Guidance 20 February 2020 The Return Page 7 ‘Number of Investors covered under an intermediary arrangement’ Please indicate how many Investorsrecorded on the scheme’s/cell’s register fall within the intermediary provisions of section 9.8 of the Handbook as at the Reporting Period end. As an example, where one Intermediary has control of ten designated accounts, each recorded as an Investor on a scheme’s register, the figure provided should be 10. ‘Number of Intermediaries acting for one or more Investor’ Further to the previous question, of the total number of Investors recorded on the share register falling within the intermediary provisions of section 9.8 of the Handbook as at the Reporting Period end, please provide the total number of Intermediaries controlling those shareholdings. Using the previous example, where one Intermediary has control of ten designated accounts on a scheme’s register, the
figure provided should be 1.
Where ‘0’ was entered for the previous question (i.e. there are no Investors covered under an intermediary arrangement), this cell will turn black and should be left blank. ‘Number of Intermediaries holding alone >25% of the scheme/cell’ With regard to the number of Intermediaries provided in response to the previous question, please confirm how many of those Intermediaries, through the aggregated total of accounts controlled by them, alone control greater than 25% of the specific scheme or cell as at the Reporting Period end. Continuing with the previous example, if one Intermediary has control of ten designated accounts each holding 4% of the scheme, the aggregated holding of the Intermediary would be 40%, therefore the Firm would enter 1 as its answer to this question. Where two Intermediaries each hold more than 25% of the specific scheme or cell, the Firm would enter 2, and so forth. As with the previous question, where there are no Investors covered under an intermediary arrangement this cell will turn black and should be left blank. ‘Percentage of scheme/cell held through intermediary arrangements’ Please provide the total aggregated percentage of the scheme/cell held by all Intermediaries on behalf of third parties as at the Reporting Period end. Following on from the example above, where, in addition to the Intermediary controlling 40% of the scheme, there is one other Intermediary with an aggregated holding of 20% of the scheme, the Firm should give an answer of 60% to this question. As with the previous question, where there are no Investors covered under an intermediary arrangement this cell will turn black and should be left blank. ‘Percentage holding of largest Intermediary’ Please provide the percentage holding of the single Intermediary with the largest aggregated holding in the scheme/cell as at the Reporting Period end. As with the previous question, where there are no Investors covered under an intermediary arrangement this cell will turn black and should be left blank.

Financial Crime Division 152. Financial Crime Risk – Intermediary Annual Return Guidance 20 February 2020 The Return Page 8 ‘Number of disclosures made by the Firm connected with Intermediary relationships within this scheme’ Please provide the number of disclosures made by the Firm (made under the Disclosure (Bailiwick of Guernsey) Law, 2007 as amended and the Terrorism and Crime (Bailiwick of Guernsey) Law, 2002 as amended) during the Reporting Period, which were connected with Intermediary relationships within the specific scheme. ‘Number of requests for information from FIS or other Bailiwick Law Enforcement Agencies connected with Intermediary relationships’ Please provide the number of the following during the Reporting Period which were connected with Intermediary relationships within the specific scheme:
 Section 2A Requests (made under Sections 2A of the Disclosure (Bailiwick of Guernsey) Regulations, 2007 as amended and the Terrorism and Crime (Bailiwick of Guernsey) Regulations, 2007)  Mutual Legal Assistance requests  Production Orders ‘Number of Intermediary relationships exited during the reporting period, based on either concerns relating to compliance with the requirements of the Handbook or wider financial crime concerns’ Please provide the number of instances during the Reporting Period where, as a result of concerns relating to compliance with the requirements of the Handbook, or wider financial crime concerns, the Firm has sought to exit a business relationship with an Intermediary within the specific scheme. Exited means the Firm closed its relationship with the Intermediary and any underlying customers. ‘Number of Intermediary relationships cancelled during the reporting period, based on either concerns relating to compliance with the requirements of the Handbook or wider financial crime concerns’ Please provide the number of instances during the Reporting Period where, as a result of concerns relating to compliance with the requirements of the Handbook, or wider financial crime concerns, the Firm has sought to cancel a business relationship with an Intermediary within the specific scheme. Cancelled means the Firm gathered CDD on any underlying investors and closed its relationship with the Intermediary, instead continuing relationships directly with the underlying Investors. ‘Number of Intermediary relationships declined during the reporting period, based on either concerns relating to compliance with the requirements of the Handbook or wider financial crime concerns’ Please provide the number of instances during the Reporting Period where, as a result of concerns relating to compliance with the requirements of the Handbook, or wider financial crime concerns, the Firm has declined a business relationship with an Intermediary for the specific scheme. Declined means the Firm refused to establish a relationship with an Intermediary. ‘Number of disclosures made as a result of Intermediary relationships that have been exited, cancelled or declined’ Please provide the number of disclosures made to the FIS during the Reporting Period as a result of an Intermediary relationship being exited, cancelled or declined for the specific scheme.

Financial Crime Division 152. Financial Crime Risk – Intermediary Annual Return Guidance 20 February 2020 The Return Page 9 ‘Comments regarding instances where the firm has sought information from an Intermediary about the identity of its customers’ Please provide details of any instances during the Reporting Period where the Firm has had reason to seek information from an Intermediary about the identity of one or more of its underlying customers ultimately invested in a collective investment scheme. Where such an event has occurred, please provide the following information:
 What was the location of the Intermediary?
 What was the reason prompting the request?
 Was the information requested provided by the Intermediary?
 If the request was refused, what was the Intermediary’s reason for refusal? Location On this tab, please provide the total number of Intermediaries based in each of the jurisdictions provided as at the Reporting Period end. The total across all jurisdictions should match the field ‘Number of Intermediaries Acting for One or More Underlying Investor’. Please provide any additional/relevant details in the ‘Comments’ field Completion Once all of the requested information has been provided, the completed spreadsheet should be saved and uploaded back to the Return by clicking on the ‘Upload a document’ button within the Return. Please do not encrypt (password protect) the version of the spreadsheet that is uploaded. The portal uses a secure HTTPS connection to encrypt all communications. Declaration Once the Firm is satisfied that the Return has been fully completed, the user should select the ‘I agree to the above’ field and click ‘Submit’. If the form has been successfully submitted the user will be taken to a new page confirming the date and time of submission.