Countries/Jurisdictions of Primary Concern - Isle of Man
Isle of Man (IOM) is a British crown dependency, and while it has its own parliament, government, and laws, the UK remains responsible for its defense and international representation. Offshore banking, manufacturing, and tourism are key sectors of the economy, and the government has actively encouraged the diversification of its economy, offering incentives to high-technology companies and financial institutions that locate on the island. Consequently, it now hosts a wide range of sectors including aviation and maritime services, clean-tech and bio-tech, creative industries, e-business and e-gaming, high-tech manufacturing and tourism.
Its large and sophisticated financial center is potentially vulnerable to money laundering. Most of the illicit funds in the IOM are from fraud schemes and narcotics trafficking in other jurisdictions, including the UK. Predicate offenses to charge money laundering are minimal within the jurisdiction; however, there is concern over value-added tax crimes and the growing risk of cybercrime in its various forms, including identity theft and internet abuse.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: //2009-2017.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: NO
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: YES
KYC covered entities: Banks; building societies; credit issuers; financial leasing companies; money exchanges and remitters; issuers of checks, traveler’s checks, money orders, electronic money, or payment cards; guarantors; securities and commodities futures brokers; portfolio, and asset managers; estate agents; auditors, accountants, tax advisors, lawyers, and notaries; insurance companies and intermediaries; payroll agents; casinos and bookmakers; high-value goods dealers and auctioneers; safe custody facilities for cash or liquid securities
Number of STRs received and time frame: 1,321 in 2014
Number of CTRs received and time frame: Not applicable
STR covered entities: All businesses
money laundering criminal Prosecutions/convictions:
Prosecutions: 4 in 2014
Convictions: 3 in 2014
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: YES
With other governments/jurisdictions: YES
Compliance with international standards was evaluated by the International Monetary Fund’s Financial Sector Assessment Program. The report can be found at: http://www.imf.org/external/pubs/ft/scr/2009/cr09275.pdf
The Isle of Man now formally participates in the mutual evaluation procedures of the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), a FATF-style regional body. MONEYVAL has not yet evaluated the IOM.
Enforcement and implementation issues and comments:
In 2015, the IOM carried out its first AML/CFT national risk assessment with the assistance of an international donor. Isle of Man legislation provides powers to constables, including customs officers, to investigate whether a person has benefited from any criminal conduct and to obtain information about that person’s financial affairs. There are statutory powers to restrain and recover criminal assets in response to domestic and external requests.
In 2015, the Government of the Isle of Man amended the Proceeds of Crime Act 2008 so it covers bitcoin companies, such as exchanges, operating from the island. The Terrorism and Other Crime (Financial Restrictions) Act 2015 came into effect on January 1, 2015; this Act consolidates, updates, and strengthens previous IOM legislation. The Anti-Money Laundering and Countering the Financing of Terrorism Code 2015, which updates and replaces the 2013 Code, came into effect on April 1, 2015. The Designated Businesses (Registration and Oversight) Act 2015 came into effect on October 26, 2015; the Act provides for designated non-financial businesses and professions to be registered with the IOM’s financial services regulator and for there to be appropriate oversight of these bodies for AML/CFT purposes. The IOM’s financial services regulator is now the Isle of Man Financial Services Authority following the merger of the Financial Supervision Commission and the Insurance and Pensions Authority on November 1, 2015.
There is limited evidence from suspicious transaction reports (STRs) of suspicion that money from domestic public corruption is being passed through accounts on the IOM. Five of the 1,321 STRs filed in 2014 related to bribery and corruption. The financial intelligence unit believes there are few indications that trade-based money laundering occurs in the IOM.
Recognizing that the nature of tax cooperation has evolved and automatic exchange of information is becoming the global standard, the IOM is making commitments to international co-operation for tax purposes. It has had a Tax Information Exchange Agreement with the United States since 2004 and has a strong working relationship with the Internal Revenue Service. The IOM has a similar intergovernmental agreement with the UK.
IOM is a Crown Dependency and cannot sign or ratify international conventions in its own right unless entrusted to do so. Rather, the UK is responsible for IOM’s international affairs and, at IOM’s request, may arrange for the ratification of any convention to be extended to the Isle of Man. The UK’s ratification of the 1988 UN Drug Convention was extended to include IOM in 1993; its ratification of the UN Convention against Corruption was extended to include IOM in 2009; its ratification of the International Convention for the Suppression of the Financing of Terrorism was extended to IOM in 2008; and its ratification of the UN Convention against Transnational Organized Crime was extended to the IOM in 2012. In 2003, the United States and the UK agreed to extend to the IOM the U.S. - UK Treaty on Mutual Legal Assistance in Criminal Matters.