Introduction
Providing services as a director in Guernsey is, in principle, subject to licensing under the Regulation of Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2020 (the “Fiduciaries Law”). However, there are various exemptions available, including for directors of a Guernsey regulated company and certain listed companies. There is also an exemption for a person who acts as a director of six or less companies where the directorships are not otherwise exempt (the "Six Directorship Exemption").
From 8 July 2023, the Fiduciaries Law has additional exemptions, and The Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law, 1999 ("POCL") has been amended to include a new AML/CFT registration regime for directors using the Six Directorship Exemption.
The new registration regime for persons relying on the Six Directorship Exemption has been launched by the GFSC today.
The new exemptions
Acting as a director of a fund that is regulated by, or a general partner that is licensed by, the Guernsey Financial Services Commission ("GFSC") is already exempt. However, the exemption did not extend to acting as a director of certain companies connected to a regulated fund (unless the fund was a company and the other company was a subsidiary of that fund).
One of the new exemptions is for acting as a director of a company that is "connected to" a fund. This applies where the company in question is:
- connected to a GFSC regulated fund (e.g. a carry vehicle, co-investment vehicle or subsidiary SPV);
- subject to the GFSC's AML/CFT regime; and
- administered by the same administrator as the fund who is responsible for ensuring that the company complies with that AML/CFT regime.
To benefit from the exemption, the director must be an individual and must also be a director of the regulated fund (where the fund is a company) or the regulated fund's general partner (where the fund is a limited partnership).
Another notable exemption is for acting as director of a company which undertakes banking, insurance or investment activities where those activities are supervised by a supervisory authority which is a signatory to the International Organisation of Securities Commission's' Multilateral Memorandum of understanding.
There are also exemptions for acting as a director of a “family company” or a States’ owned company, and as a member of the Guernsey Banking Deposit Compensation Board.
The new registration regime
Directors relying on the Six Directorship Exemption have always been subject to POCL and AML/CFT obligations, including corporate governance, risk assessment, identification and other due diligence measures, monitoring of transactions and activity, the reporting of suspicion, employee screening, training, and record keeping. However, these directors were not subject to monitoring or verification of those obligations by the GFSC.
The new registration regime introduces a requirement for those directors relying on the Six Directorship exemption to register with the GFSC. This new regime is part of an expansion to the GFSC's monitoring powers to cover directors relying on the Six Directorship Exemption so that the GFSC can monitor and verify compliance with those obligations.
The registration process requires the submission of a registration form with certain personal details to allow the GFSC to perform risk assessments and payment of a fee of £75 prior to registration. Details provided as part of the registration process will not be publicly available.
Why are the new regulations being introduced?
The New Regulations have been implemented as a response to the 2015 Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL) recommendations, and will ensure effective compliance with AML and CFT obligations of those relying on certain exemptions from licensing.
Walkers’ comment
Directors relying on the Six Directorship Exemption will need to register with the GFSC, but will not need to apply for a license under the Fiduciaries Law. Directors who are relying on other exemptions are not required to register with the GFSC, and are generally subject to the GFSC's full enforcement powers by virtue of the nature of the companies that they are directors of.
The extension of the exemption for acting as a director of companies connected to a fund is welcome, and will reduce the number of directors who are relying on the Six Director Exemption. These changes allow the GFSC to have full enforcement powers where POCL has been contravened by directors relying on the Six Directorship Exemption.
Directors who are relying on the Six Directorship Exemption must register with the GFSC by 1 October 2023.
