European experts have praised the Isle of Man’s legal system for tackling money laundering and the financing of terrorism, whilst also expressing a number of concerns about how it works in practice.
Today’s report from the Council of Europe’s expert committee on money laundering and the financing of terrorism (MONEYVAL) highlights the good coordination of policies related to money laundering and the financing of terrorism on the island. It says that significant reforms have already been introduced and further improvements are expected (See also the executive summary of the report)
The authorities have a thorough understanding of the Isle of Man’s institutional and legal vulnerabilities in these areas, says the report, as well as those sectors which are most at risk.
At the same time, the report notes some concern over so-called “beneficial ownership” rules – in other words, which individuals actually benefit from owning certain companies or trusts.
The report says there is not enough understanding of the risks involved when financial institutions work with intermediaries, and where risk assessment information is passed on through “information chains”. The number of customers considered “higher risk” also seems to be relatively low given the type of business carried out in or from the Isle of Man.
Furthermore, money laundering convictions on the island are rather limited in relation to its risk profile and the overall value of confiscations remains extremely low. Many aspects of financial intelligence work need to be improved, although major reforms have already begun.