Isle of Man faces renewed scrutiny ahead of Moneyval inspection

Concerns raised over anti-money laundering effectiveness as international assessment approaches

The Isle of Man is facing renewed international scrutiny ahead of a major inspection by Moneyval, which will assess how effectively the Island combats money laundering and the financing of terrorism.

Moneyval, the Council of Europe body responsible for evaluating compliance with global financial crime standards, is expected to carry out detailed checks later this year, including visits to businesses operating in regulated sectors such as e-gaming and financial services.

The inspection was recently spotlighted by the Byline Times, which quotes a senior lecturer in law at the University of Leeds. Dr Ilaria Zavoli warns that weaknesses in the practical application of anti-money laundering controls could place the Island at risk of being "grey-listed".

Grey-listing is an international designation for jurisdictions with strategic deficiencies in tackling financial crime. While it does not carry formal sanctions, it often triggers "de-risking" by international banks, leading to increased compliance costs and restricted access to global financial markets.

The Isle of Man Government has previously acknowledged that a poor assessment could have severe economic repercussions. Modelling by the Financial Services Authority (FSA) suggests that grey-listing could cost the Island up to 11 percent of its GDP. For an economy valued at nearly £6 billion, this would represent a potential loss of £660 million.

While the International Monetary Fund (IMF) estimates that grey-listing typically reduces GDP by 7.6 percent, the impact on the Isle of Man is projected to be higher due to its heavy reliance on the reputation-sensitive finance and insurance sectors.

Moneyval inspections assess not only whether laws and regulations are in place, but whether they are being applied effectively in practice. Inspectors are expected to examine how companies conduct customer checks, report suspicious activity, and manage financial crime risks on a day-to-day basis.

The Byline Times article also references recent international news reports which have raised concerns about the misuse of online gambling platforms and the role of offshore structures in complex fraud and crypto-currency investment scams.

The Isle of Man Government and its regulators have made a series of legislative and supervisory changes in recent years aimed at strengthening the Island’s financial crime framework.

Among these updates is the introduction of the Travel Rule for virtual assets, which mandates that cryptocurrency providers verify and share customer data for transfers. Furthermore, the FSA's December 2025 Handbook update introduced stricter requirements for identifying ‘Commercially Exposed Persons’ (CEPs) and mandated that all firms maintain detailed Technology Risk Assessments to account for cyber-enabled crime.

Government officials have previously maintained that any attempt to exploit the Island's systems is taken "extremely seriously". The Department of Home Affairs has told Manx Radio: "The Island does not tolerate criminal activity and will not hesitate to act to disrupt and prosecute those responsible."

Countries currently on the FATF grey list include Bulgaria, South Sudan, Syria, Venezuela, and Yemen, among others. Though several African nations were recently removed following successful reforms.