GUERNSEY - FAILURE TO PREVENT OFFENCES  [corruption - tax evasion - money laundering - terrorist financing]

In June 2022, Jersey became the first common law jurisdiction to introduce a failure to prevent a money laundering offence.

Not to be outdone, Guernsey has followed and established comprehensive Failure to Prevent Offences (FTPs), to address

• Corruption,
• Tax evasion,
• Money laundering, and
• Terrorist financing.

INTRODUCTION

The introduction of the FTPs is

• to hold corporate entities liable for the acts of associated persons (and indeed the senior management of the organisations) is a result of issues identified in the NRAs.
• FTPs aim to resolve past difficulties in proving corporate criminal responsibility. 
• Under the identification doctrine applicable in Guernsey, a corporate entity would previously only be liable for a criminal act if an individual who committed the offence could be identified as the "directing mind and will" of that entity.

It is important to note for senior management of organisations in Guernsey where an offence under any of Guernsey's Failure to Prevent Offences is committed by an incorporated or unincorporated body and is proved to have been committed with the consent or connivance of, or can be attributable to any neglect they will be guilty of the same offence and may be proceeded against accordingly.

These laws emphasise the importance of having robust prevention procedures and holding corporations accountable for the actions of their associated persons. 

THE LAWS

On 30 September 2022, the States of Guernsey introduced an offence in respect of failure to prevent bribery and passed

• The Prevention of Corruption (Bailiwick of Guernsey) (Amendment) Law, 2023 (the PC Law), which came into effect on 26 April 2024. 

Additionally, the States of Guernsey introduced “failure to prevent”[FTPs] for tax evasion, money laundering, and terrorist financing.

1. Failing to Prevent Tax Evasion: The Criminal Justice (Miscellaneous Amendments – Preventative Offences) (Bailiwick of Guernsey) Ordinance, 2023,
1. Includes offences for failing to prevent the facilitation of both Guernsey and foreign tax evasion.
2. Corporations can be liable if their employees, agents, or service providers facilitate tax evasion
2. Failing to Prevent Money Laundering: The Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law, 1999, was amended to include
1. Offences for failing to prevent money laundering.
2. Licensees are required to have prevention procedures in place to avoid being held liable
3. Failing to Prevent Terrorist Financing: Similarly, the Terrorism and Crime (Bailiwick of Guernsey) Law, 2002, was amended to include
1. Offences for failing to prevent terrorist financing.
2. Licensees must implement measures to prevent associated persons from engaging in terrorist financing

GUIDANCE AS TO FAILURE TO PREVENT

The Preventative Offences Ordinances and the PC Law provide for the States of Guernsey to issue guidance about appropriate prevention procedures which organisations may take to tackle financial crime.

For the offences of failure to prevent bribery and tax evasion, the States of Guernsey Committee for Home Affairs issued guidance in April 2024.

• failure to prevent bribery = https://gov.gg/CHttpHandler.ashx?id=177403&p=0
• tax evasion = https://www.gov.gg/CHttpHandler.ashx?id=177404&p=0

In respect of the offences of failure to prevent money laundering and terrorist financing, the GFSC has updated the Handbook on Countering Financial Crime to include guidance on these matters.  

In addition, the States of Guernsey Committee for Home Affairs guidance provides six guiding principles for organisations:-

1. Which applies to the offences of failure to prevent bribery and tax evasion, upon which commercial organisations should focus to fulfil the relevant approaches to managing such risks.
2. Based on the same principles which exist in the relevant UK guidance documents for the same offences.
3. It makes clear that commercial organisations, regardless of their size, should adopt a risk-based approach to managing bribery risks.  

LIABILITY OF OFFICERS

It is important to note for senior management of organisations in Guernsey where an offence under any of Guernsey's Failure to Prevent Offences is committed by an incorporated or unincorporated body and is proved to have been committed with the consent or connivance of, or can be attributable to any neglect on the part of any of the below, they will be considered to be guilty of the same offence and may be proceeded against accordingly:  

• Any director, manager, secretary or other similar officer or any foundation official of the body's corporate 
• Where a partnership commits the offence, any partner of the partnership 
• Where the offence is committed by any other unincorporated body, any officer of that body who is bound to fulfil any duty any breach of which is an offence or, if there is no such officer, any member of the committee or similar governing body 
• Any person purporting to act in any capacity described above 

SOURCES

• https://www.gov.gg/CHttpHandler.ashx?id=167900&p=0
• https://www.gov.gg/CHttpHandler.ashx?id=168571&p=0
• https://gov.gg/finance-guidance