Knowledge

This 'Jersey AML country update' was authored by David Cadin and first published on Thomson Reuters Regulatory Intelligence. The update provides a summary of the relevant AML framework in Jersey'.

Member of the Financial Action Task Force? No.

The Channel Islands (Jersey and Guernsey) and the Isle of Man are not FATF members. They are Crown Dependencies of the United Kingdom (which is a FATF member) and members of the Group of International Finance Centre Supervisors (GIFCS), a body that is an observer to the FATF. The GIFCS conducts evaluations of its members' anti-money laundering and counter-terrorist financing systems. They are subject to evaluation by the Committee of Experts on the Evaluation of Anti-Money Laundering Measures (MONEYVAL).

On FATF blacklist? No.

Member of Egmont? Yes, the Joint Financial Crimes Unit of the States of Jersey Police (JFCU).

AML regime in Jersey

The JFCU is responsible for receiving, collating and analysing reported transactions suspected of being linked to money laundering or the financing of terrorism.

The Jersey Financial Services Commission (JFSC) has the power to set regulatory requirements by virtue of Article 22 of the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008. This enables the JFSC to prepare and issue codes of practice for the purpose of establishing sound principles for compliance with the various laws connected with anti-money laundering, as set out below.

The consequences of non-compliance with the regulatory requirements that are set out in the Supervisory Bodies Law could include: (i) an investigation by or on behalf of the JFSC; (ii) the imposition of regulatory sanctions; (iii) civil penalties; and (iv) criminal prosecution of the business and its employees. The Royal Court of Jersey is obliged to take the contents of the regulatory requirements into account when determining whether a financial services business has complied with the anti-money laundering, legal and regulatory requirements to which that entity is subject.

Legislative framework

The main legislation in Jersey that deals with aspects of money laundering, the proceeds of crime and drug trafficking and terrorism are:

• Civil Asset Recovery (International Co-operation) (Jersey) Law 2007
• Criminal Justice (International Co-operation) (Jersey) Law 2001
• Investigation of Fraud (Jersey) Law 1991
• Misuse of Drugs (Jersey) Law 1978
• Money Laundering and Weapons Development (Directions) (Jersey) Law 2012
• Non-Profit Organizations (Jersey) Law 2008
• Proceeds of Crime (Jersey) Law 1999
• Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008
• Sanctions and Asset-Freezing (Jersey) Law 2019
• Terrorism (Jersey) Law 2002
• EU Legislation (Information Accompanying Transfers of Funds) (Jersey) Regulations 2017
• Money Laundering (Jersey) Order 2008
• Non-Profit Organizations (Jersey) Order 2008
• Proceeds of Crime (Supervisory Bodies) (Designation of Supervisory Bodies) (Jersey) Order 2008
• Proceeds of Crime and Terrorism (Tipping off – Exceptions) (Jersey) Regulations 2014
• Proceeds of Crime (Supervisory Bodies) (Virtual Currency Exchange Business) (Exemption) (Jersey) Order 2016
• Sanctions and Asset-Freezing (Implementation of External Sanctions) (Jersey) Order 2021

The proceeds of crime legislation applies to "financial services businesses" as defined in Schedule two to the Proceeds of Crime Law, which includes all prudentially supervised and regulated businesses as well as a number of other sectors, including the legal and accountancy sectors when carrying out specific activities, estate agents, high-value goods dealers and virtual currency exchange.

The JFSC also issues an anti-money laundering and counter-terrorist financing handbook. The latest version was effective from May 31, 2022.

Risk-based client due diligence approach

A business or person in Jersey that is subject to Jersey anti-money laundering requirements must conduct and document a business risk assessment. In particular, such a business or person must consider, on an ongoing basis, the extent of its exposure to risks by reference to its organisational structure, its customers, the jurisdictions with which its customers are connected, its products and services and how it delivers those products and services. The business risk assessment is expected to be reviewed at least annually or when material events occur that change money laundering and financing of terrorism risk.

CDD requirement

The minimum CDD procedures required involve:

• Identifying an applicant for business and verifying the applicant's identity using reliable and independent source documents, data or information.
• Identifying the beneficial ownership and control of the applicant and taking reasonable measures to verify the identity of the beneficial owners and controllers such that a relevant person is satisfied that it knows who the beneficial owners and controllers are.
• Identifying any direct or indirect third parties (and owners and controllers) on whose behalf the applicant is acting.
• Obtaining information on the purpose and intended nature of the business relationship.
• Keeping the above information up to date, undertaking reviews of existing records, particularly in relation to the higher risk category of customers, and monitoring activity and transactions undertaken throughout the course of a relationship to determine whether the activity or transaction being conducted is consistent with the relevant person's knowledge of the customer.
• Maintaining appropriate policies and procedures for the application of CDD measures, having regards to the degree of risk of money laundering and financing of terrorism.

Suspicious activity reporting

There is a requirement under Jersey law to send suspicious activity reports (SARs) to the JFCU directly or, in the case of financial services businesses, to a nominated officer who may then determine whether to send the report to the JFCU using an approved form.

Tipping off and interference with material

To prevent individuals and financial services businesses from warning the subjects of a suspicious activity report that they have made a SAR, money laundering legislation criminalises "tipping off". Where a person knows or suspects that a SAR has been made to a police officer, for example, it is an offence to disclose to any other person that such a disclosure has been, or will be, made or to disclose any information otherwise relating to such a disclosure. It is also an offence to interfere with material which is likely to be relevant to an investigation, which includes falsifying, concealing, destroying or disposing of it.

Wire transfer

The wire transfer provisions require that wire transfers be accompanied by certain information about the payer and the payee. Payment service providers must also ensure that they have procedures in place to detect transfers of funds that lack the required information.

Recent developments

The JFSC issued a new consolidated anti-money laundering and counter-terrorist financing handbook, effective from May 31, 2022, to replace the previous sector-specific handbooks. The scope of the handbook has been extended, so that compliance with its codes of practice is now mandatory for all supervised persons.

The Sanctions and Asset-Freezing (Amendment No. 2) (Jersey) Law 2022 came into force on June 8, 2022. It amended the Sanctions and Asset-Freezing Law with regards to reporting obligations and civil immunities provision, as well as inserting a number of new definitions. Sanctions guidance has also been updated to reflect the changes.

Two pieces of legislation which came into force on April 29, 2022 sought to strengthen the civil financial penalties regime. The Financial Services Commission (Amendment No. 8) (Jersey) Law 2021 extended the regime to include key persons and persons who perform or performed a senior function, whilst the Financial Services Commission (Financial Penalties) (Amendment No. 2) (Jersey) Order 2022 removed the absolute penalty caps for legal entities.

On March 25, 2022, the Proceeds of Crime (Supervisory Bodies) (Amendment No. 2) (Jersey) Law 2022 came into force, amending the Supervisory Bodies Law to remove the different levels of registration and provide for all applicants for registration to meet the same requirements.

The earlier Proceeds of Crime (Supervisory Bodies) (Amendment) (Jersey) Law 2021, which took effect on October 8, 2021, imposed a duty on supervisory bodies to use a risk-based approach in the performance of their duties under the Supervisory Bodies Law.

The Proceeds of Crime (Amendment No. 4) (Jersey) Law 2021 also came into force on 8 October 2021, amending Article 37(1) of the Proceeds of Crime Law to give the Minister for External Relations and Financial Services the power to prescribe measures for preventing and detecting money laundering to be taken by persons, acting as trustees, who do not carry on financial services business.

The Proceeds of Crime (Provision of Information by Trustees) (Jersey) Order 2021 came into force at the same time, setting out the circumstances in which a trustee must state that they are acting as trustee of a trust and not in their own capacity. It also specifies the information which must be provided by the trustee in relation to a trust.

The Proceeds of Crime (Amendment No. 5) (Jersey) Law 2022 came into force on April 21, 2022 as part of a package of new legislation designed to provide for post-conviction instrumentalities forfeiture orders. The package also included the Proceeds of Crime (Enforcement of Confiscation Orders) (Amendment) (Jersey) Regulations 2022, the Court of Appeal (Amendment No. 9) (Jersey) Law 2022 and the Court of Appeal (Criminal) (Confiscation Order Appeals) (Amendment) Rules 2022.

The Proceeds of Crime (Amendment No. 7) (Jersey) Law 2022 came into force on June 24, 2022. It amended the Proceeds of Crime Law to introduce new offences in relation to failure to prevent a person associated with a financial services business committing a money laundering offence and the liability of a relevant person for an offence committed by a financial services business when committed with the consent or connivance of that person.

Amendments have also been made, by the Proceeds of Crime (Amendment of Law) (No. 2) (Jersey) Regulations 2021, which came into force on July 7, 2021, to the effect that the lawful production, supply, use, export or import of cannabis or any of its derivatives is no longer considered criminal conduct provided that it is lawful and occurs in a jurisdiction specified in the Proceeds of Crime (Cannabis Exemption – List of Jurisdictions) (Jersey) Order 2021.

In addition, the Proceeds of Crime (Amendment No. 6) (Jersey) Law 2022 has been approved by the States Assembly and is, at the time of writing, awaiting the appointment of a date on which it will come into force. The Amendment is largely concerned with those sections of the Proceeds of Crime Law which specify the activities and operations which, when conducted as a business, constitute financial services business and the JFSC's powers in relation thereto.

First published on Thomson Reuters Regulatory Intelligence on 13/7/22