National Risk Assessment
Isle of Man National Risk Assessment 2015
In February 2012, the Financial Action Task Force (FATF), which is the body responsible for setting international standards for Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT), adopted updated standards or ‘Recommendations’ and also published a revised assessment methodology. These revised FATF Recommendations represent a significant re-write from the standards against which the Isle of Man was last assessed by the International Monetary Fund (IMF) in 2008.
Recommendation 1 introduces a new international requirement for countries to conduct assessments of their Money Laundering / Terrorist Financing (ML/TF) risks and to introduce measures to address these. These assessments are referred to as National Risk Assessments (NRA).
The Isle of Man Government AML/CFT Strategic Group, which is responsible for setting the overall direction for AML/CFT matters in the Isle of Man, agreed that the World Bank NRA Self-Assessment Tool should be used to conduct the Isle of Man NRA and in October 2014, an NRA Project Manager was appointed, based in the Cabinet Office, to lead and coordinate the work required. The NRA process for the IOM fully commenced in October 2014 and was substantially concluded by June 2015.
Coordination of the NRA
A voluntary questionnaire provided a starting point for the NRA; this was circulated to industry in August 2014 with a separate questionnaire circulated within Government. This and other information provided a basis for the work. Briefings to key Government officers and industry representatives took place in September 2014 and at the same time seven thematic working groups were established as follows:
- National Level Threats
- National Level Vulnerabilities
- Insurance and pensions
- Other financial institutions
- Designated Non-Financial Businesses and Professions (DNFBPs) including advocates, accountants, online gambling and Trust and Company Service Providers (TCSPs)
The following institutions participated in the national working groups:
- Financial Crime Unit (including the Financial Intelligence Unit)
- Financial Supervisory Authorities (Financial Supervision Commission; the Insurance and Pensions Authority and the Gambling Supervision Commission).
- Customs and Excise Division of Treasury
- Income Tax Division of Treasury
- Department of Home Affairs (IOM Constabulary, AML legislation)
- Attorney General’s Chambers (prosecutions, mutual legal assistance, international)
- IOM Courts of Justice
- Department of Economic Development (trade and commerce including the Business Development Agency; Aircraft, Shipping and Companies Registries).
- Cabinet Office (including good government, international relationships)
- Office of Fair Trading (including registration of money lenders and consumer advice)
The World Bank NRA Self-Assessment Tool provided the Island with a structured model to enable the collection and collation of all required data and evidence. The Isle of Man was responsible for collating the data and evidence for input into the Tool; a team from the World Bank provided advice, training and support during the completion of the NRA and Action Plans.
Each sector working group completed its own module which formed part of the assessment. The National Threat and Vulnerability group used this data and included it with their own assessment of the Isle of Man’s overall ability to combat money laundering. Terrorist financing was considered separately.
Private sector involvement
It was agreed at the outset that private sector involvement would be of considerable benefit to the NRA process and therefore industry representatives were invited to participate in the sector sub-groups. The private sector representatives were from the associations of the relevant sectors and professions, along with some other key individuals.
Further to an initial review of risk, it was determined that there was no need to focus on some sectors owing to a number of factors; this was reflected in the level of engagement that took place thereafter. The following associations participated in the NRA being represented and/or consulted with during the process:
- The IOM Law Society
- IOM Bankers Association
- Association of Corporate Service Providers
- Manx Insurance Industry
- Institute of Chartered Accountants in England and Wales
- IOM Captive Insurance Association
- IOM Funds Association
- Chartered Institute of Securities and Investments
- Manx e-Gaming Association
- Manx Digital Currency Association
- Association of Estate Agents
- IOM Association of Pension Scheme Providers
- Chartered Institute of Taxation
- Association of Chartered Certified Accountants
The feedback from the private sector (and the public sector) during the NRA process and subsequently was positive with views expressed that the public-private sector dialogue had been constructive and had helped to enhance cooperation.
Each group considered the threats and vulnerabilities for their sector. The Working Group Chairs and NRA Project Manager met together regularly to ensure that there was a consistent and coherent approach to modelling and review taking place. At key junctures the AML/CFT Strategic Group, joined by key stakeholders from across Government, received presentations from each of the sub-group Chairs, on progress and findings. Information and updates were also provided to the National Strategy Group which is a sub-Committee of the Council of Ministers.
Communication and Publication
Feedback on progress was ongoing, both internally and also externally with discussion on the NRA taking place with wider industry at a number of different forums and events. Further to completion of the NRA, meetings began with industry and professional associations in July 2015 to feedback the findings of the NRA with presentations to members ongoing throughout later 2015 and early 2016.
In March 2016 the Council of Ministers gave approval to the publication of the Isle of Man National Risk Assessment 2015. A link to the document can be found here.
At the same time, the Council of Ministers also gave approval to the adoption and publication of the Isle of Man AML/CFT National Strategy 2016-2018 (which contains actions arising from the NRA process). A link to the strategy document can be found here.
Further information is also available on the Cabinet Office website www.gov.im/co.