Although Guernsey’s regulatory approach aligns with the Financial Action Task Force’s (FATF) Recommendation 7, referring to the implementation targeted financial sanctions to prevent the proliferation of weapons of mass destruction (WMDs) in line with relevant UN Security Council (UNSC) resolutions, firms cannot stop with only monitoring such designations and enacting related asset freezes.
Nadia A. Ziani
Institutions should begin by treating proliferation financing as a distinct risk in their Business Risk Assessments (BRAs), much like they do terror financing, political exposure, and other risk. Indeed, while many indicators might be similar, it is key to also place them within the context of proliferation financing.
This means monitoring financial activity that relates to jurisdictions and sectors of concern, the involvement of dual-use goods — on top of existing monitoring of diversion risk — and overly complex ownership structures. Onboarding processes must go deeper than surface-level checks. Understanding where client funds come from, how wealth is generated, whether declared business activities align with financial behaviour, and how proliferation risk manifests in different industries where such issues are more likely to appear, particularly logistics, trade finance, shipping, and chemicals, is essential.
Risk assessments should be tailored and multifactorial. A single red flag does not always signal a high-risk client, but the accumulation of minor concerns might.
Context is key and documentation of every decision strengthens internal controls while mitigating the risk of sanctions by the regulator due to a lack of well-documented justification of decision-making.
Why Guernsey Firms Cannot Afford Complacency
While Guernsey is not considered a high-risk jurisdiction for proliferation financing, indirect exposure remains a concern. Global fund flows, international client structures, and opaque supply chains can all serve as unintended conduits for this type of risk.
As mentioned above, boards must be informed, risk frameworks updated, and documentation consistent and defendable. Most importantly, managing proliferation financing risk must go beyond checklist compliance. Regulators expect firms to demonstrate reasonable, well-considered decision-making when it comes to assessing and mitigating exposure.
Final Thoughts
Proliferation financing is no longer a niche compliance concern but a serious issue that reflects the complexity of global financial crime. In 2025, Guernsey firms have a strategic opportunity to get ahead of the curve, not by starting from scratch, but by refining and reinforcing the systems already in place.
At Sqope Intelligence, we believe in clarity where it matters most. Our enhanced due diligence process integrates key proliferation financing indicators to help firms detect both obvious and more obscure risks alongside potential mitigating factors so they can be addressed before they escalate. Because in today’s regulatory landscape, anticipating risk is no longer optional: It’s the standard for resilient and responsible compliance.