Is time finally up on Guernsey's no consent SAR regime?

The current regime and a bit of history

Before considering the Consultation Paper, it is useful to consider the current regime and how we got here.

The threshold for suspicion requiring an MLRO to file a suspicious activity report (SAR) with the FIU is very low. Once filed, dealing with suspected proceeds of crime may constitute a money laundering offence unless the FIU grants consent, leaving businesses exposed to potential criminal liability.

Unlike the UK, Guernsey has no deemed consent mechanism if the FIU fails to act. Consent can simply be withheld without further action, potentially leaving assets effectively “frozen” indefinitely and financial institutions acting as de facto law enforcement agencies.

Historically, the FIU took a pragmatic approach to consent, including for business fees and transactions necessary to maintain assets. However, following 2011 Court of Appeal comments about consent being granted in the “interests of law enforcement”, its approach changed markedly. This culminated in the so-called “consent declined” response: where no law enforcement interest is identified, businesses are instead told they may take a risk-based approach – effectively requiring them to assess the risk of committing a criminal offence.

Guernsey’s Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law, 1999 (POCL) was based on the UK’s Criminal Justice Act 1988, rather than the later Proceeds of Crime Act 2002, and therefore did not adopt subsequent reforms including deemed consent. No cogent reason has been given for failing to modernise POCL in this respect, despite later amendments.

The authorities have long been aware of industry concerns and the impact of “no consent” decisions on businesses and Guernsey Plc. Yet there has been little appetite for reform – until now.

how the consultation has come about

The Consultation Paper responds to changes made by Financial Action Task Force (FATF) Recommendations made late last year, specifically that withholding consent or suspension should be subject to a specified maximum duration. While it is recognised Guernsey currently does not comply with this, it is clear from the Paper that authorities would prefer to retain the current regime.

FATF’s November 2025 guidance provides useful context. It states that transaction suspensions should have a maximum duration: long enough for authorities to investigate or take action, but as short as possible to minimise the impact on legitimate customers. Crucially, suspension is an interim measure and “should not be used indefinitely, or as a final measure”.

FATF’s guidance clarifies that determining whether property is criminal should rest with the authorities, not the private sector, in contrast with Guernsey’s current approach.

options proffered

The following four options are proffered in the Consultation Paper:

1.       Maintaining the status quo.

2.       Adopting a deemed consent approach (in whole or part).

3.       Abolishing the consent defence (in whole or part).

4.       Replacing the consent defence with new legislative measures.

options 1 and 3

Options 1 and 3 are, realistically, non-starters as neither provides a maximum duration for a suspension following a SAR as required by the revised FATF Recommendations.

Option 3 is particularly concerning. The authorities suggest that abolishing the consent defence would clarify that businesses, rather than the authorities, should determine whether a transaction exposes them to criminal liability, arguing that institutions are better placed to assess client risk and transactional exposure. Not only does this contradict FATF, the Consultation Paper acknowledges the authorities’ own difficulties obtaining information from foreign law enforcement agencies – information that would be even less accessible to a private business.

option 2

Option 2 introduces a deemed consent regime and, realistically, is the only viable option.

The UK’s deemed consent regime complies with the revised FATF Recommendations, and has operated for more than 23 years without major complaint, making it a logical choice for Guernsey.

While the Consultation Paper seeks to make the distinction that Guernsey SARs more commonly involve foreign criminality that their UK counterparts, making investigations slower and more difficult, no meaningful statistics are included to support that assertion. Guernsey is well set up for foreign investigations via the Economic and Financial Crime Bureau (which was set up a few years ago at considerable cost), which boasts about its links with other foreign law enforcement agencies and has a strategic objective to assist the FIU. In any case, Guernsey need not adopt the UK model exactly, for example time limits could be adjusted to reflect additional complexities of foreign investigations.

Encouragingly though, the Cayman Islands – another offshore financial centre where SARs are more likely to involve foreign criminality – adopted the UK model in January last year, and we are not aware of any major issues being raised.

option 4

Option 4 would abolish the consent defence and replace it with two mechanisms. First, a statutory defence where law enforcement confirms that a proposed activity serves a law enforcement purpose. Second, an administrative freezing power allowing the FIU (at its discretion) to suspend transactions while it investigates and decides whether further action is warranted, subject to a time limit.

The fundamental problem is that, unlike deemed consent, neither resolves the existing issue. A SAR would still be required and dealing with suspected criminal property could still constitute a money laundering offence. If no law enforcement purpose existed and the FIU chose not to impose a suspension, businesses would effectively be back where they started: unable to deal with the assets without risking criminal liability.

Option 4 therefore gives the authorities discretion over whether to investigate, but provides no solution for businesses where that discretion is not exercised. Assets could remain “frozen”, perpetuating the problem the FATF reforms are intended to address.

what next?

Appleby will be submitting a response to the consultation, which ends on 17 December 2026. Home Affairs will then determine its preferred approach and prepare a policy letter for consideration by the States, likely seeking amendments to POCL.

The process will take time but change is inevitable if Guernsey is to comply with the revised FATF Recommendations.

What the change will look like is the big question.