The Guernsey Financial Services Commission has published its 2022 annual report and financial statements.

The annual report discusses the increased risks faced by the financial services sector as a result of high inflation and rising interest rates, the Commission’s development of digital technology, its work with Guernsey Finance and others, and preparations for the impending MONEYVAL inspection.

Key points

Digital projects
The Commission continued to develop its use of augmented intelligence with the creation of an early warning system that helps supervisors recognise smaller entities that are displaying certain patterns of possible concern.

It also made progress with a data project to review its overall data strategy and start creating a design framework for a data platform that will transform its IT infrastructure. 

Environmental issues 
The Commission launched the Natural Capital Fund framework, a regulatory designation for funds to help channel investment into biodiversity and natural capital projects that make a positive contribution and/or significantly reduce harm to the natural world.

It also published anti-greenwashing guidance for the investment sector to ensure that adequate disclosures are made to investors in respect of any environmental sustainability claims made.

Legislation
The Commission implemented recommendations from an audit it underwent against the Financial Action Task Force’s criteria.

It also worked with the States of Guernsey to deliver MONEYVAL-related legislation – including the Lending, Credit and Finance Law, which brings crypto assets and personal loans inside the regulatory perimeter for the first time, advancing AMLCFT practices and consumer protection.

Commission Director General William Mason (pictured) said: “While the bailiwick’s international financial centre remained in good health in 2022, those in it, along with all other global capital providers, face a number of challenges as interest rate increases stop money being effectively free – slowing economic growth in an attempt to tame inflation. 

“At the same time geopolitical and sustainability-related risks appear to be increasing.

“We would urge all boards and managers to remain vigilant as the shape of this ‘new normal’ develops, while at the same time not neglecting the AI developments that may change the shape of the financial services sector.”

• The full report and financial statements can be found here