## Annex 3. List of All Laws, Regulations, and Other Material Received ## Source details **Canonical URL:** [Annex 3. List of All Laws, Regulations, and Other Material Received](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr09280.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr09280.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr09280.pdf.json) --- ### Executive Summary — Key findings (points 1–12) - Financial services account for approximately half of the total economic activity and a quarter of the workforce (approximately 13,400 employed). - A substantial proportion (believed to be around 90 percent in some sectors) of customer relationships is established with nonresidents. - Jersey has a comprehensive and robust AML/CFT legal framework; key elements first introduced in the 1980s and updated substantially in the last two years. - ML and FT criminalized largely in line with international standard, but technical shortcomings identified that may limit scope of criminal confiscation and effectiveness of freezing terrorist assets procedures. - Joint Financial Crime Unit (JFCU) acts as FIU; receives a satisfactory flow of SARs, mostly from banks and trust businesses (TCBs); consent/nonconsent process can have effect equivalent to a freezing order. - Jersey has adopted a risk-based approach to AML/CFT at all levels. - High level of compliance with FATF Recommendations on preventive measures; concessions allowing reliance on intermediaries and introducers are materially problematic. - AML/CFT requirements for DNFBPs largely same as for financial institutions; for some DNFBPs measures were too recent to assess effectiveness. - Jersey Financial Services Commission (JFSC) is an effective regulator and supervisor; on-site inspections required many institutions to implement CDD remedial measures. - Mandatory registration with Registrar of Companies; more than 34,000 companies registered (close to 34,000 referenced elsewhere as 33,395). - Day-to-day domestic cooperation close and effective; AML/CFT Strategy Group established in 2007. - Legal framework for mutual legal assistance and extradition largely in place and effective; JFCU active in Egmont Group. ### Legal system — criminalization of ML and TF: scope and identified gaps - ML statutes and provisions: - Proceeds of Crime (Jersey) Law 1999 (POCL): Articles 32, 33, 34 central to ML offences. - Drug Trafficking Offences (Jersey) Law 1988 (DTOL): Articles 30, 37, 38 for drug-related ML. - Terrorism (Jersey) Law 2002 (TL): Articles 15–18 and Article 18 money laundering provision. - Identified deficiencies: - Articles 34 POCL and 30 DTOL require purpose to avoid prosecution for predicate offence — narrower than Palermo/Vienna standards; R.1 rated LC. - Articles 33(2) POCL and 38(2) DTOL provide a defense (adequate consideration) that may be open to abuse. - Acquisition/possession/use offences do not extend to self-laundering. - TL Article 18 requires proof of an “arrangement” and thus does not cover full range required by Vienna/Palermo for terrorism-related ML. - Standard of proof to show property stems from an offence: authorities state “beyond a reasonable doubt”; Royal Court in Michel vs. AG affirmed. - Consequences: - R.1: LC; R.2: C; SR.II: LC. - Recommendations include amending Articles 34/30 to add alternative purposes and removing defenses in Articles 33(2)/38(2); amend TL Article 18 to cover Palermo/Vienna elements; extend ML offences to self-laundering. ### Confiscation, freezing, seizing — legal framework and effectiveness (R.3) - Regimes and statutes: - POCL Part 2: value-based confiscation; saisies judiciares (Articles 15–17) as conservatory measures. - DTOL: similar confiscation regime for drug trafficking. - TL: forfeiture and restraint orders for terrorism-related assets (Schedule 3); TL does not provide for equivalent value confiscation as POCL/DTOL do. - Proceeds of Crime (Cash Seizure) (Jersey) Law 2008 (POC(CS)L) provides civil seizure of “tainted cash.” - Informal freezing: - JFCU consent/nonconsent process — consent decisions mostly within 24 to 48 hours; initial nonconsent in about 2 percent of SARs. - Nonconsent can effectively freeze assets; remedies limited to contractual claims or judicial review. - Identified issues: - Equivalent value seizure under POCL/DTOL only available when proceedings instituted or about to be instituted — may allow asset dissipation. - TL lacks equivalent value restraint/confiscation provision. - Recommendation: provide for restraint of equivalent value from beginning of investigations and more direct legal basis for informal freezing/consent. - Data excerpts (Viscount’s Department): - DTOL — Number of new saisies judiciares: 2006: 18; 2007: 35; 2008: 40. - DTOL — Approximate value assets restrained: 2006: £41,924; 2007: £64,497; 2008: £164,336. - POCL — Number of new saisies judiciares: 2006: 6; 2007: 5; 2008: 2. - POCL — Approximate value assets restrained: 2006: £14,958,756; 2007: £49,487,879; 2008: £3,697,899. - POCL — Approximate value of assets under restraint at end of year: 2006: £41,602,728; 2007: £88,154,634; 2008: £103,698,362. ### Financial Intelligence Unit — JFCU functions, resources, statistics (R.26) - Structure and powers: - JFCU is joint Police and Customs unit; acts as Jersey’s FIU with Intelligence, Operations, and Drugs Confiscation Wings. - Legal basis for SAR regime: Articles 32/33/34A/34D POCL; Articles 37/38/40/40A DTOL; Articles 20/22/23 TL; reports in practice directed to JFCU. - On SAR receipt, JFCU may consent or not to proposed activity; consent may provide a defence. - Resources and performance: - JFCU budget projected at 5 percent of Police budget; staffing includes Police, Customs, civilian personnel. - Staffing snapshot (Police totals): 245 full time equivalent officers; JFCU had 13 Police officers, 3 Customs officers, 3 civilians (as of assessment). - Many SARs responded to within 24–48 hours; 98 percent responded within 48 hours. - SAR volume and composition (JFCU statistics 2006–2008): - Total SARs: 2006: 1,034; 2007: 1,517; 2008: 1,404. - By primary disclosure category (2008): Drugs: 139 (9.9%); Crime: 1,250 (89.0%); Terrorism: 15 (1.1%). - By type of business (2008): Banks: 849 (60%); Trust Company: 328 (23%); Funds: 73 (5%); Lawyers: 37 (3%); Accountants: 12 (1%). - Operational workload (as at December 2008): - Active Work Items: Intelligence Wing 360; Operations Wing 141; Drugs Confiscation Wing 55 — Total 556. - Completed, Awaiting Management Review and Sign Off: Intelligence Wing 801; Operations Wing 11; Drugs Confiscation Wing 90 — Total 902. - Total Work Items: Intelligence Wing 1,161; Operations Wing 152; Drugs Confiscation Wing 145 — Total 1,458. - Effectiveness observations and recommendations: - R.26: LC — resource constraints impacted effectiveness of Intelligence Wing. - Recommend adequate staffing for Intelligence Wing; issue periodic reports including statistics, typologies and trends; maintain comprehensive statistics linking SARs to investigative/prosecutorial outcomes. ### Law enforcement, prosecution, and investigative powers (R.27 & R.28) - Legal instruments: POCL, DTOL, TL, POC(CS)L, Police Force (Jersey) Law 1974, PPCEL, IOFL (Investigation of Fraud Law 1991). - Prosecution activity and capacity: - AG and Law Officers’ Department prosecute ML/FT matters; AG had prosecutors and can contract external expertise. - ML prosecutions 2005–08: 12 relevant prosecutions, 10 convictions; 58 percent of investigations resulted in conviction (12 investigations → 10 convictions referenced elsewhere as 17 investigations total historically). - Prosecutions outcomes: Of 12 prosecutions detailed: one terminated during prosecution; one pending; 10 convictions. Sentences ranged from 140 hours community service to nine years imprisonment; average term of imprisonment: 3.7 years. - Investigative powers: - Search, seizure, production orders: POCL Articles 40/41/41A; DTOL Articles 42/44A; TL Article 31 and Schedules. - IOFL provides powers for “serious or complex fraud” investigations. - Regulation of Investigatory Powers (Jersey) Law 2005 authorizes interception under warrant. - Resources and effectiveness: - Police: 245 officers; JFCU staffing levels noted above; Operations Wing had 141 active cases and Drugs Wing 55 — resource adequacy concerns. - R.27: LC recommends increase investigative resources; R.28: C. ### Preventive measures — financial institutions (CDD, R.5–8, R.10, SR.VII) - Legislative basis: - POCL 1999; Money Laundering (Jersey) Order 2008 (MLO); JFSC Handbook for Regulated Businesses (2008) as OEM. - CDD core obligations (MLO/Handbook): - Identification and verification of customers and ultimate beneficial owners; enhanced due diligence for higher-risk customers including PEPs; records retained for at least five years. - One-off transaction thresholds: EUR15,000 general; EUR1,000 for MSBs; EUR3,000 for casinos. - Enhanced measures required for non face-to-face customers (customer not physically present), correspondent banking (Article 15(4B)), and PEPs (Article 15(5A)). - Concessions and reliance on third parties: - Article 16 permits reliance on intermediaries/introducers subject to conditions. - Article 17 provides a concession allowing nondisclosure of underlying customers in limited circumstances — assessors found Article 17 conflicts with FATF R.5 and rated R.5: PC. - Article 18 lists specific low-risk exceptions (Cases A–F). - Assessors recommend risk-based review and tightening of concessions, including requiring immediate access to CDD evidence and spot-testing intermediaries/introducers. - Wire transfers and SR.VII: - Community Provisions (Wire Transfers) (Jersey) Regulations 2007 (WTR) implemented; derogation for U.K. Payment Area applied. - SR.VII: LC — incoming transfers lacking originator information require stricter handling by Jersey institutions. - Records: - Article 19/20 MLO: retain CDD and transaction records for at least five years; R.10: C. ### Internal controls, compliance, audit, and foreign branches (R.15 & R.22) - Requirements: - Article 11 MLO: policies/procedures, MLCO appointment (Article 7), MLRO (Article 8), monitoring/testing, training, employee screening. - Handbook guidance on MLCO independence and duties. - Gaps: - No explicit legal/regulatory requirement to maintain an adequately resourced and independent audit function (R.15: LC). - Article 10A requires branches/subsidiaries to apply measures at least equivalent to MLO, but no explicit requirement to pay particular attention to branches/subsidiaries in countries that do not or insufficiently apply FATF Recommendations (R.22: LC). - Recommendations: - Introduce requirement for independent audit function; clarify MLCO timely access to CDD/transaction data, including third-party-held information; require group-level consistency and heightened attention to out-of-jurisdiction branches/subsidiaries. ### Third parties and introduced business (R.9) — assessors’ conclusions - Article 16/17 framework summarized; assessors’ concerns: - No explicit requirement to obtain immediately certain CDD elements from intermediaries/introducers (Article 16(4) assurances are required but timing not explicit). - Concessions may allow reliance on intermediaries/introducers in secrecy jurisdictions or on recently regulated DNFBPs before AML/CFT measures proven effective. - Recommendations: require immediate availability of CDD evidence; spot-testing of intermediaries/introducers; limit reliance where intermediaries cannot provide CDD evidence due to legal restrictions; eliminate Handbook concession allowing reliance on unregulated group members. - Compliance: R.9: PC. ### Financial institution secrecy/confidentiality (R.4) - No statutory banking secrecy provision; common law client confidentiality applies. - Reporting and disclosure exceptions: Articles 34D POCL, 40A DTOL, 23 TL; Article 22A MLO allows intra-group disclosure. - Gap: No comprehensive statutory exclusion from common law duty to permit FI-to-FI exchange for AML/CFT beyond limited intra-group provision — R.4: LC. - Recommendation: explicitly provide that FI-to-FI customer information exchange for AML/CFT purposes does not breach confidentiality. ### Monitoring of transactions and relationships; countermeasures (R.11 & R.21) - Article 11 and Handbook require scrutiny of complex/unusual transactions and transactions linked to high-risk jurisdictions; Section 5.2 Handbook mandates documentation of findings. - Article 23C empowers Minister to direct countermeasures for jurisdictions to which FATF applied countermeasures, but limitation ties power to FATF action — R.21: LC. - Recommendation: amend power to remove limitation tied to FATF actions. ### Suspicious transaction reporting, protections, tipping-off (R.13, R.14, SR.IV) - Reporting framework: - Articles 34D POCL, 40A DTOL, 23 TL and Article 21 MLO designate JFCU; statutory formulation creates failure-to-report offences rather than direct duty but effect equivalent. - No threshold; includes attempted transactions. - Protections: - Statutory protections exist but are NOT limited to those acting in good faith — assessors recommend narrowing protections to good faith reporters (R.14: PC). - Tipping-off: - Current statutory tipping-off provisions tied to disclosure “likely to prejudice an investigation,” not broad enough — assessed as needing broadening to fully meet standard. - Timeliness: - Scope to improve timeliness of SAR submissions to JFCU — R.13: LC; SR.IV: LC. - Recommendation: limit legal protection to good faith reporters; broaden tipping-off prohibition; enhance timeliness of SAR reporting. ### Preventive measures — DNFBPs (R.12, R.16, R.24–25) - Scope and supervision: - Schedule 2 POCL includes lawyers, accountants, estate agents, high value dealers, TCBs; SBL (September 2008) extended JFSC supervisory remit to DNFBPs. - Handbooks issued: Handbook for Lawyers; Handbook for Accountants; Handbook for Estate Agents and Dealers in High-Value Goods; Handbook for Regulated Businesses (TCBs and MSBs). - CDD and SARs: - DNFBPs subject to same CDD and reporting obligations; effective implementation for lawyers, accountants, real estate agents, and high value dealers not fully tested as supervision recently extended. - TCBs: 186 entities registered; employment estimated about 5,000 in TCB sector. - SARs by DNFBPs (selected totals 2006–2008): - TCBs: 2006: 216 (21%); 2007: 362 (24%); 2008: 328 (23%). - Lawyers: 2006: 12 (1%); 2007: 14 (1%); 2008: 37 (3%). - Accountants: 2006: 9 (1%); 2007: 19 (1%); 2008: 12 (1%). - Estate agents / High-value dealers: no reports recorded in 2006–08. - Specific concerns and recommendations: - Remove concession allowing lawyers to apply reduced/simplified CDD where funds only received/paid to account in customer’s name. - Repeal concession allowing lawyers and accountants to self-certify identity of existing clients. - Sustain close supervision of TCBs and continue on-site monitoring of SAR reporting by lawyers, accountants, and estate agents. - Compliance: R.12: PC; R.16: PC; R.24: LC; R.25: C. ### Legal persons and arrangements; beneficial ownership (R.33 & R.34) - Companies and registration: - Companies (Jersey) Law 1991 governs companies; COBO (Control of Borrowing (Jersey) Order 1958) requires JFSC consent and beneficial ownership disclosure prior to issuing shares. - Company counts as of December 31, 2008: 33,395 companies registered — 32,081 private companies; 1,314 public companies; includes 570 cell companies (specific figures provided). - Transparency and access: - Companies register information publicly accessible online; JFSC holds beneficial ownership data under COBO not publicly available but accessible to supervisory agencies or by court order. - Financial institutions have access to Registrar information; no automatic mechanism for FIs to access JFSC-held COBO beneficial ownership data. - Trusts and legal arrangements: - Trusts governed by Trusts (Jersey) Law 1984; no general registration for trusts; TCBs required to obtain, verify and retain beneficial ownership information for client legal arrangements; no statistics maintained on number/volume of trusts. - Protectors, enforcers, flee clauses allowed; Trusts Law permits settlor considerable powers and settlor or trustee can be beneficiary. - Assessors’ findings: - Package of measures (COBO, Registrar, MLO obligations on TCBs) places Jersey in strong position to ensure transparency of legal persons; R.33: C. - Gaps for legal arrangements: no measures to ensure beneficial ownership information for trustees not covered by registration; beneficial ownership for general partnerships not consistently obtained — R.34: LC. - Recommendations: - Ensure beneficial ownership information available for legal arrangements administered by trustees not covered by registration; ensure beneficial ownership for all general partnerships. ### Non-profit organizations (SR.VIII) - Non-Profit Organizations (Jersey) Law 2008: - Registration with JFSC commenced August 8, 2008; registration period closed November 8, 2008. - Registered NPO information includes funds raised/disbursed and basic categorization. - JFSC to analyze sector to identify FT vulnerabilities; recommendation to analyze FT vulnerability based on registration data. - Compliance: SR.VIII: C. ### National and international cooperation, MLA and extradition (R.35–39, SR.V) - Conventions and UNSCRs: - Jersey has implemented most Vienna and Palermo provisions relevant to FATF; some Palermo/Vienna provisions not fully implemented (R.35: LC). - Implementation of UNSCRs 1267 and 1373 largely sufficient, but no formal procedures to receive/assess foreign designation requests and definition of “funds” does not expressly refer to jointly/indirectly owned/controlled assets — SR.III: LC. - Mutual Legal Assistance (MLA): - Primary domestic instruments: Criminal Justice (International Co-operation) (Jersey) Law 2001 (CJ(IC)LJ), Investigation of Fraud (Jersey) Law 1991; Regulations for enforcement of confiscation orders (2008). - AG is designated authority for MLA; practice average timeframe ~2.8 months (2003–2007); more detailed 2003–2008 average time given as 2.68 months in statistics. - MLA statistics 2003–2008: - New requests received annually: 2003: 104; 2004: 101; 2005: 107; 2006: 77; 2007: 77; 2008: 91. - Requests granted: 2003: 79; 2004: 97; 2005: 76; 2006: 42; 2007: 42; 2008: 59. - Requests refused: total 25 over 2003–2008. - Underlying offenses 2003–2008 totals: ML: 63; Terrorism: 5; Fraud: 210; Pure Fiscal Offenses: 69; Drug Trafficking: 37; Theft/Deception: 54; Corruption: 33. - Identified limitations: deficiencies in ML/FT criminalization may limit MLA where dual criminality applies; R.36: LC; R.38: LC; SR.V: LC. - Extradition: - Extradition (Jersey) Law 2004 models UK Extradition Act 2002; dual criminality required; AG handles requests; formal designated/non-designated territory scheme; average procedures and safeguards described. - Deficiencies in ML/FT criminalization may impede extradition where dual criminality applies — R.39: LC. - Other cooperation: - JFCU active in Egmont; JFCU exchanges info in approx. 10 percent of cases; JFSC cooperates with foreign supervisors subject to safeguards; Customs and Police have bilateral cooperation with UK agencies. - R.40: C; SR.V: LC. ### Cross-border currency reporting and Customs (SR.IX) - Customs and Excise (Amendment No.6) (Jersey) Law 2008 (in force January 9, 2009) empowers officers to require disclosure of cash in excess of EUR10,000 for persons entering/leaving Jersey (Articles 36G, 37B, 37C, 37D). - Proceeds of Crime (Cash Seizure) Law 2008: authorized officer may seize tainted cash; initial seizure up to 48 hours; Bailiff order can detain up to 3 months; aggregate maximum retention 2 years (Article 4; Article 5; Article 6). - SR.IX: LC — newly-established disclosure system in place; effectiveness not yet demonstrable. ### Supervisory and oversight system — JFSC powers, resources, and sanctions (R.17, 23, 25, 29) - JFSC: - Statutory body corporate; accountable to States through Minister for Economic Development. - Headcount: permitted 118; end-December 2008 employed 95 full time and 11 part time staff. - AML Unit formed in 2007 — 4 staff (headed by a deputy director). - Conducted increasing AML/CFT-themed on-site inspections: 2004: 55; 2005: 126; 2006: 113; 2007: 155; 2008: 197. - Powers: - SBL and regulatory laws provide powers to require information, conduct on-site examinations, issue directions, place conditions on licenses, revoke registration, issue public statements, apply to Royal Court for injunctions and remedies. - Criminal and civil sanctions available; JFSC currently lacks administrative power to impose monetary fines — assessors recommend consideration to add monetary fines (R.17: LC). - Enforcement activity snapshot (selected): - Total enforcement cases worked: 2006: 140; 2007: 201; 2008: 136. - Enforcement actions 2006–2008 totals: words of advice: 8; notices: 66; directions: 14; public statements: 33; referrals to JFCU/AG: 19; regulatory actions: 167. - Compliance: R.23: C; R.25: C; R.29: C; R.17: LC. ### Money service businesses (SR.VI) - Legal framework: - MSBs defined under Schedule 2 POCL and FSJL; registration and Codes of Practice introduced July 2007. - Turnover exemption threshold for bureaux de change set at under GBP300,000. - Supervision and findings: - JFSC supervised all registered independent MSBs; outreach; identified incomplete AML/CFT understanding among staff but no serious compliance issues. - SR.VI: LC — additional training and experience needed for full effective implementation. ### Key cross-cutting recommendations (prioritized) - Amend ML and TF offenses (POCL, DTOL, TL) to align with Palermo and Vienna Conventions: remove problematic purpose requirement, eliminate the “adequate consideration” defense, criminalize self-laundering, and ensure TL Article 18 covers required elements. - Provide for restraint/confiscation of equivalent value in TL; enable earlier equivalent value restraints under POCL/DTOL. - Formalize legal basis for JFCU consent/nonconsent informal freezing arrangement and consider judicial review safeguards. - Tighten concessions permitting reliance on intermediaries/introducers (Articles 16–18) — require immediate access to CDD evidence, spot-testing, limit use with intermediaries in secrecy jurisdictions and newly regulated DNFBPs. - Narrow reporting protection to those acting in good faith and broaden tipping-off prohibition to fully meet R.14. - Ensure JFCU Intelligence Wing and Operations Wings adequately resourced; JFCU to publish periodic statistics, typologies, and case outcomes. - Introduce statutory requirement for an adequately resourced independent audit function for FI AML/CFT compliance. - Amend Article 23C to allow countermeasures not strictly tied to FATF formal countermeasures. - Continue JFSC on-site supervision of newly regulated DNFBP sectors; remove specified concessions for lawyers/accountants regarding self-certification and limited CDD. ### Selected factual and statistical highlights (preserve exact figures) - Resident population end-2007: 90,800. - Total surface area: 45 square miles. - GVA 2007 estimated at GBP4.1 billion. - GNI estimated at GBP3.7 billion; GNI per head about GBP41,000. - Number of registered companies as of December 31, 2008: 33,395 (32,081 private; 1,314 public; 570 cell companies included). - Trust Company Business registrations: 186 entities; employment estimated about 5,000 in TCB sector. - SAR totals: 2006: 1,034; 2007: 1,517; 2008: 1,404. - JFCU response: consent not initially granted in about 2 percent of SARs; majority of responses within 24–48 hours. - Seizure and confiscation data (POCL & DTOL) — see Confiscation section above for exact annual figures. *Source: Annex 3 and selected chapters/executive summary of the IMF assessment report materials contained in content unit _cr09280.* ### Preface ................................................................................................................ ### Preface ### Executive Summary - Executive Summary (page 9) ### 1. General - 1. General (page 15) - 1.1. General Information on Jersey (page 15) - 1.2. General Situation of Money Laundering and Financing of Terrorism (page 16) - 1.3. Overview of the Financial Sector (page 17) - 1.4. Overview of the DNFBP Sector (page 18) - 1.5. Overview of commercial laws and mechanisms governing legal persons and arrangements (page 22) - 1.6. Overview of strategy to prevent money laundering and terrorist financing (page 24) ### 2. Legal System and Related Institutional Measures - 2. Legal System and Related Institutional Measures (page 28) - 2.1. Criminalization of Money Laundering (R.1 & 2) - 2.1.1. Description and Analysis (page 28) - 2.1.2. Recommendations and Comments (page 37) - 2.1.3. Compliance with Recommendations 1 & 2 (page 37) - 2.2. Criminalization of Terrorist Financing (SR.II) - 2.2.1. Description and Analysis (page 38) - 2.2.2. Recommendations and Comments (page 43) - 2.2.3. Compliance with Special Recommendation II (page 43) - 2.3. Confiscation, freezing and seizing of proceeds of crime (R.3) - 2.3.1. Description and Analysis (page 43) - 2.3.2. Recommendations and Comments (page 52) - 2.3.3. Compliance with Recommendation 3 (page 52) - 2.4. Freezing of funds used for terrorist financing (SR.III) - 2.4.1. Description and Analysis (page 53) - 2.4.2. Recommendations and Comments (page 58) - 2.4.3. Compliance with Special Recommendation III (page 58) - 2.5. The Financial Intelligence Unit and its Functions (R.26) - 2.5.1. Description and Analysis (page 58) - 2.5.2. Recommendations and Comments (page 67) - 2.5.3. Compliance with Recommendation 26 (page 67) - 2.6. Law enforcement, prosecution and other competent authorities—the framework for the investigation and prosecution of offenses, and for confiscation and freezing (R.27, & 28) - 2.6.1. Description and Analysis (page 68) - 2.6.2. Recommendations and Comments (page 73) - 2.6.3. Compliance with Recommendations 27 & 28 (page 73) - 2.7. Cross Border Declaration or Disclosure (SR.IX) - 2.7.1. Description and Analysis (page 74) - 2.7.2. Recommendations and Comments (page 75) - 2.7.3. Compliance with Special Recommendation IX (page 75) ### 3. Preventive Measures—Financial Institutions - 3. Preventive Measures—Financial Institutions (page 77) - 3.1. Risk of money laundering or terrorist financing (page 77) - 3.2. Customer due diligence, including enhanced or reduced measures (R.5 to 8) - 3.2.1. Description and Analysis (page 83) - 3.2.2. Recommendations and Comments (page 104) - 3.2.3. Compliance with Recommendations 5 to 8 (page 105) - 3.3. Third Parties And Introduced Business (R.9) - 3.3.1. Description and Analysis (page 106) - 3.3.2. Recommendations and Comments (page 111) - 3.3.3. Compliance with Recommendation 9 (page 111) - 3.4. Financial Institution Secrecy or Confidentiality (R.4) - 3.4.1. Description and Analysis (page 112) - 3.4.2. Recommendations and Comments (page 113) - 3.4.3. Compliance with Recommendation 4 (page 113) - 3.5. Record keeping and wire transfer rules (R.10 & SR.VII) - 3.5.1. Description and Analysis (page 113) - 3.5.2. Recommendations and Comments (page 118) - 3.5.3. Compliance with Recommendation 10 and Special Recommendation VII (page 119) - 3.6. Monitoring of Transactions and Relationships (R.11 & 21) - 3.6.1. Description and Analysis (page 119) - 3.6.2. Recommendations and Comments (page 122) - 3.6.3. Compliance with Recommendations 11 & 21 (page 122) - 3.7. Suspicious Transaction Reports and Other Reporting (R.13-14, 19, 25 & SR.IV) - 3.7.1. Description and Analysis (page 122) - 3.7.2. Recommendations and Comments (page 128) - 3.7.3. Compliance with Recommendations 13, 14, 19 and 25 (criteria 25.2), and Special Recommendation IV (page 128) - 3.8. Internal Controls, Compliance, Audit and Foreign Branches (R.15 & 22) - 3.8.1. Description and Analysis (page 128) - 3.8.2. Recommendations and Comments (page 132) - 3.8.3. Compliance with Recommendations 15 & 22 (page 132) - 3.9. Shell Banks (R.18) - 3.9.1. Description and Analysis (page 133) - 3.9.2. Recommendations and Comments (page 133) - 3.9.3. Compliance with Recommendation 18 (page 133) - 3.10. The Supervisory and Oversight System—Competent Authorities and SROs. Role, Functions, Duties, and Powers (Including Sanctions) (R. 23, 29, 17 & 25) - 3.10.1. Description and Analysis (page 134) - 3.10.2. Recommendations and Comments (page 146) - 3.10.3. Compliance with Recommendations 17, 23, 25 & 29 (page 146) - 3.11. Money or Value Transfer Services (SR.VI) - 3.11.1. Description and Analysis (summary) (page 147) - 3.11.2. Recommendations and Comments (page 149) - 3.11.3. Compliance with Special Recommendation VI (page 149) ### 4. Preventive Measures—Designated Non-Financial Businesses and Professions - 4. Preventive Measures—Designated Non-Financial Businesses and Professions (page 150) - 4.1. Customer Due Diligence and Record-keeping (R.12) - 4.1.1. Description and Analysis (page 150) - 4.1.2. Recommendations and Comments (page 160) - 4.1.3. Compliance with Recommendation 12 (page 161) - 4.2. Suspicious Transaction Reporting (R.16) - 4.2.1. Description and Analysis (page 161) - 4.2.2. Recommendations and Comments (page 167) - 4.2.3. Compliance with Recommendation 16 (page 167) - 4.3. Regulation, Supervision, and Monitoring (R.24-25) - 4.3.1. Description and Analysis (page 167) - 4.3.2. Recommendations and Comments (page 171) - 4.3.3. Compliance with Recommendations 24 & 25 (criteria 25.1, DNFBP) (page 171) - 4.4. Other Non-Financial Businesses and Professions—Modern-Secure Transaction Techniques (R.20) - 4.4.1. Description and Analysis (page 171) - 4.4.2. Recommendations and Comments (page 173) - 4.4.3. Compliance with Recommendation 20 (page 173) ### 5. Legal Persons and Arrangements & Non-Profit Organizations - 5. Legal Persons and Arrangements & Non-Profit Organizations (page 174) - 5.1. Legal Persons—Access to Beneficial Ownership and Control Information (R.33) - 5.1.1. Description and Analysis (page 174) - 5.1.2. Recommendations and Comments (page 178) - 5.1.3. Compliance with Recommendations 33 (page 178) - 5.2. Legal Arrangements—Access to Beneficial Ownership and Control Information (R.34) - 5.2.1. Description and Analysis (page 178) - 5.2.2. Recommendations and Comments (page 181) - 5.2.3. Compliance with Recommendations 34 (page 181) - 5.3. Non-Profit Organizations (SR.VIII) - 5.3.1. Description and Analysis (page 182) - 5.3.2. Recommendations and Comments (page 184) - 5.3.3. Compliance with Special Recommendation VIII (page 184) ### 6. National and International Co-operation - 6. National and International Co-operation (page 185) - 6.1. National Co-Operation and Coordination (R.31 & R. 32) - 6.1.1. Description and Analysis (page 185) - 6.1.2. Recommendations and Comments (page 186) - 6.1.3. Compliance with Recommendation 31 (page 186) - 6.2. The Conventions and UN Special Resolutions (R.35 & SR.I) - 6.2.1. Description and Analysis (page 186) - 6.2.2. Recommendations and Comments (page 188) - 6.2.3. Compliance with Recommendation 35 and Special Recommendation I (page 188) - 6.3. Mutual Legal Assistance (R.36-38, SR.V) - 6.3.1. Description and Analysis (page 188) - 6.3.2. Recommendations and Comments (page 203) - 6.3.3. Compliance with Recommendations 36 to 38 and Special Recommendation V (page 203) - 6.4. Extradition (R.37, 39, SR.V) - 6.4.1. Description and Analysis (page 203) - 6.4.2. Recommendations and Comments (page 207) - 6.4.3. Compliance with Recommendations 37 & 39, and Special Recommendation V (page 208) - 6.5. Other Forms of International Co-Operation (R.40 & SR.V) - 6.5.1. Description and Analysis (page 208) - 6.5.2. Recommendations and Comments (page 213) - 6.5.3. Compliance with Recommendation 40 and Special Recommendation V (page 213) ### 7. Other Issues - 7. Other Issues (page 214) - 7.1. Resources and Statistics (page 214) - 7.2. Other relevant AML/CFT Measures or Issues (page 214) - 7.3. General Framework for AML/CFT System (see also section 1.1) (page 214) ### Tables - Table 1. Rating of Compliance with FATF Recommendations (page 215) - Table 2. Recommended Action Plan to Improve the AML/CFT System (page 220) ### Statistical Tables - Statistical Table 1. Jersey–Financial Activity by Type of Financial Institution–December 31, 2008 (page 17) - Statistical Table 2. Jersey–Designated Non-Financial Businesses and Professions–December 31, 2008 (page 18) ### Annexes - Annex 1. Authorities’ Response to the Assessment (page 226) - Annex 2. Details of All Bodies Met During the On-Site Visit (page 228) - Annex 3. List of All Laws, Regulations, and Other Material Received (page 229) *Preface — content listing from the source PDF* ### Annex 3. List of All Laws, Regulations, and Other Material Received....................................... 231 ### Annex 3. List of All Laws, Regulations, and Other Material Received ### Overview and Scope - Assessment basis: Forty Recommendations 2003 and the Nine Special Recommendations on Terrorist Financing 2001 of the Financial Action Task Force (FATF), using the AML/CFT assessment Methodology 2004, as updated in February 2008. - Assessment mission: on-site from October 29 to November 13, 2008; materials supplied by authorities and subsequent verifiable information considered. - Assessment team: staff of the International Monetary Fund (IMF) and experts under IMF supervision. Team leader: Terence Donovan (LEG). LEG consultants: Mr. John Abbott; Ms. Gabriele Dunker; Mr. Peter Fennell (Office of the Attorney General, Australia); Mr. Gary Sutton (U.S. Treasury). Ms. Margaret Cotter (LEG) contributed to legal aspects. - Scope of review: institutional framework; AML/CFT laws, regulations, guidelines and other requirements; regulatory and other systems to deter and punish ML and FT through financial institutions and DNFBPs; capacity, implementation, and effectiveness. ### Key Findings (Executive Summary points 1–12) - 1. Financial services significance: - Financial services account for approximately half of the total economic activity and a quarter of the workforce (approximately 13,400 employed). - Dominant sectors: banking, fund administration, and trust company sectors; supported by legal and accountancy practices. - 2. Customer base and exposure: - A substantial proportion (believed to be around 90 percent in some sectors) of customer relationships is established with nonresidents. - Inherent exposure to money laundering, particularly in layering and integration phases; no particular vulnerability to terrorism financing noted. - 3. Legal framework: - Jersey has a comprehensive and robust AML/CFT legal framework with a high level of compliance with almost all aspects of the FATF Recommendations. - Key elements first introduced in the 1980s and updated substantially in the last two years to reflect the 2003 FATF revision and EU Third AML Directive implementation. - 4. Criminalization of ML and FT: - Both ML and FT are criminalized largely in line with the international standard and implemented effectively. - Some technical shortcomings identified that may limit scope of criminal confiscation and effectiveness of freezing of terrorist assets procedures. - 5. Financial Intelligence Unit: - The Joint Financial Crime Unit (JFCU) carries out FIU role effectively and is benefiting from increased resources. - JFCU receives a satisfactory flow of suspicious activity reports (SARs), mostly from banks and trust businesses (TCBs). - Scope to improve timeliness of SAR submission and broaden types of reporting entities. - Upon receipt of a SAR, JFCU can consent or not to the financial activity; nonconsent has same effect as a freezing order. - 6. Risk-based approach: - Jersey has adopted a risk-based approach to AML/CFT at all levels (scope, implementation, supervision). - High level of awareness of AML/CFT risks and requirements across the financial sector. - 7. Preventive measures compliance: - High level of compliance with FATF Recommendations on preventive measures; most deficiencies technical. - CDD requirements for legal entities, trusts, and PEPs largely comply with the international standard. - Material issue: concessions allowing reliance on intermediaries and introducers do not fully comply with international standard; risk partially mitigated by strong JFSC supervision. - 8. DNFBPs: - AML/CFT requirements for DNFBPs largely the same as for financial institutions. - For some DNFBPs (except TCBs), measures were too recent to assess implementation effectiveness. - 9. Supervisor—JFSC: - JFSC is an effective regulator and supervisor for financial institutions and TCBs; AML/CFT role extended to all DNFBPs and MSBs. - On-site inspections required many institutions to implement CDD remedial measures. - Sanctions largely effective, proportionate, and dissuasive; could be enhanced by power to apply monetary fines. - 10. Beneficial ownership and registrations: - Mandatory registration with Registrar of Companies; more than 34,000 companies registered, most private companies. - Trusts: no statistics maintained; acting as trustee generally regulated and subject to AML/CFT requirements including beneficial ownership information. - 11. Domestic cooperation: - Day-to-day cooperation on AML/CFT between domestic authorities is close and effective. - AML/CFT Strategy Group established in 2007 to coordinate policy and FATF implementation. - 12. International cooperation: - Legal framework for mutual legal assistance (MLA) and extradition largely in place and effective. - JFCU is active in the Egmont Group and exchanges information with other FIUs. - JFSC active in international cooperation and able to share information subject to safeguards. - No statutory banking secrecy provision. ### Legal Systems and Related Institutional Measures (Executive Summary points 13–16) - 13. Criminalization details and limitations: - ML and FT criminalized largely in line with international standard; all relevant offences under the standard are criminalized. - Shortcomings: - Acquisition, possession, or use offences do not extend to self-laundering. - Scope of “concealing or disguising” and “converting or transferring” is not sufficiently wide due to requirement those acts be carried out with purpose of avoiding prosecution for a predicate offence. - For terrorism-related ML, not all elements of Palermo and Vienna Conventions are covered. - FT offence does not extend to all offences under the FT Convention. - These omissions impact scope of criminal confiscation. - Further steps needed to improve effectiveness of freezing procedures for terrorist assets. - 14. UNSCRs implementation: - Implementation of UNSCRs 1267 and 1373 largely sufficient. - Attention needed on procedures for receipt and assessment of foreign requests and clarity on coverage of jointly or indirectly owned/controlled assets. - 15. JFCU role and resourcing: - JFCU (joint police/customs unit) performs FIU role effectively. - Authorities provided additional resources to handle expanding workload, provide guidance, and improve statistical database. - Most SARs from banks or TCBs. - JFCU consent to activity can provide a defense against ML charge; absence of consent inhibits service completion, effectively freezing assets and potentially exposing reporting institution to litigation. - 16. Investigation, prosecution, and disclosure: - Legal framework for investigation and prosecution of ML and FT operates effectively. - Resource constraints had impacted JFCU capacity to conclude investigations and develop prosecution cases. - AG prepared to pursue ML-related cases: in period 2005-08, there were 12 relevant prosecutions, of which 10 resulted in a conviction for ML; substantial funds seized and confiscated. - Jersey introduced a disclosure system for cross-border currency movements in January 2009 (post-assessment; effectiveness not assessed). ### Preventive Measures — Financial Institutions (Executive Summary points 17–18) - 17. Legislative foundation: - Primary foundation: Proceeds of Crime (Jersey) Law 1999 (POCL), which defines ML to also include FT offences. - Specific requirements: Money Laundering (Jersey) Order 2008 (MLO). - Supplemented by a 2008 JFSC Handbook (qualifies as other enforceable means (OEM)) with further requirements and guidance. - 2008 updates followed extensive industry consultations and aimed to address international standard details. - 18. CDD requirements and concessions: - CDD requirements comply with FATF Recommendations in most respects; identified deficiencies largely technical. - Material concern: concessions permitting reliance on intermediaries and introducers constitute an overly-generous interpretation of international standard and may increase abuse risk. - JFSC on-site inspections test compliance; some reporting institutions applying additional controls in practice when availing concessions. *Source: Annex 3 and Executive Summary of the assessment report materials received and summarized in the provided content.* ### 19. Customers and ultimate beneficial owners are required to be identified in all relevant cases ### 19. Customers and ultimate beneficial owners are required to be identified in all relevant cases ### Customer due diligence (CDD) and recordkeeping - Customers and ultimate beneficial owners are required to be identified in all relevant cases (subject to the concessions mentioned above). - Detailed CDD requirements apply to legal entities and trusts. - Enhanced due diligence is required for higher risk customers, including politically exposed persons (PEPs). - Records of customer identification and of transactions must be retained for at least five years. - All suspicious activity in relation to ML or FT is required to be reported to the JFCU. ### Suspicious activity reporting and protections - Volume of SARs reported to the JFCU appeared satisfactory, but there is some scope to improve the timeliness of reporting. - Banks and TCBs accounted for the bulk of the reported SARs, although efforts were being made to encourage other reporting entities to increase filing rates. - Legal protection for those filing should be limited to those acting in good faith. - The tipping-off offence needs to be broadened to comply with the international standard. - There was no requirement for financial institutions to have an independent audit function to test for AML/CFT compliance. ### Supervision and implementation by financial institutions and TCBs - Implementation of AML/CFT measures by Jersey financial institutions is generally strong. - Assessors found a high level of awareness of AML/CFT risks and requirements among authorities and the private sector, including banks and other financial institutions, trust company businesses, lawyers, and accountants. - The JFSC: - Demonstrated that it is an effective regulator and supervisor for financial institutions and TCBs in Jersey. - Had its AML/CFT role extended in 2007 to cover money service business and in 2008 to include the remainder of the DNFBPs, in particular lawyers and accountants. - Has been delivering an active program of on-site inspections, including for AML/CFT. - Many financial institutions and TCBs were required to implement remedial measures to bring their CDD information, including on beneficial owners, into line with the latest requirements. - Serious deficiencies in some TCBs resulted in sanctions, including termination of businesses in Jersey in some cases. - The range of available sanctions was found to be largely effective, proportionate, and dissuasive, but could be enhanced by providing the JFSC with the power to apply monetary fines. ### Designated Non-Financial Businesses and Professions (DNFBPs) - CDD obligations for DNFBPs are largely the same as for financial institutions. - Trust company business is defined as a “financial service business” and has been supervised with increasing rigor by the JFSC since 2000. - Trust and corporate-related business may represent the highest overall reputational risk to Jersey’s financial services sector; continued close monitoring is important. - With the extension in scope in 2008 to include the remaining DNFBPs, Jersey is well placed to achieve full compliance with the international standard. - Lawyers and (to a lesser extent) accountants are heavily engaged in providing trust, investment, and wealth-management services, mainly to nonresident clients, and have been subject to prudential oversight for some time. - As auditing, accounting, legal services and other DNFBP activities (estate agents, high value dealers) have only recently become subject to AML/CFT oversight, effectiveness of implementation could not be fully tested at the time of assessment. - The JFSC has established an AML unit to address the new responsibilities; initial progress appears positive, but additional resources might be warranted as the work expands. - There are no casinos in Jersey, though recent legal changes mean some support services could be based there in future. ### Legal persons, trusts, and non-profit organizations - Company registration and the establishment of trusts are significant activities in Jersey and are subject to strong AML/CFT requirements. - Jersey law allows for incorporation of public and private companies and limited liability partnerships (LLPs), subject to registration with the Registrar of Companies. - Close to 34,000 companies were registered at the time of the assessment, a large majority being private companies. - All information from the companies’ register is publicly available, including online. - Pursuant to the Control of Borrowing (Jersey) Order 1958 (COBO), beneficial ownership information must be provided to the JFSC in respect of all registered companies; this information is not publicly available but may be accessed by court order. - Jersey requires its TCBs to obtain, verify, and retain beneficial ownership information on client legal entities; the JFSC monitors compliance with this requirement. - Jersey trusts are governed by the Trusts (Jersey) Law 1984 and are highly flexible; settlors can maintain significant influence over trust property through available mechanisms. - There is no requirement for all trusts to be registered or to file information with a central authority, but TCBs must obtain, verify, and retain beneficial ownership information on client legal arrangements; the JFSC monitors compliance. - The JFSC may require production of information, answers to questions, and access to premises of supervised persons. - No statistics are maintained on the number of Jersey trust arrangements or the volume of trust assets administered in Jersey. - Non-profit organizations became subject from August 2008 to a requirement under the Non-Profit Organizations (Jersey) Law 2008 to register with the JFSC. - Following the closing of the registration period in November 2008, the authorities should proceed to analyze the sector to seek to identify any FT vulnerability. ### National and international cooperation - Legal framework for mutual legal assistance (MLA) and extradition is largely in place and effective. - More than 70 percent of MLA requests received were granted within three months. - Where dual criminality is required, technical deficiencies in the ML and FT offenses may limit Jersey’s ability to provide MLA, including in extradition cases. - The Jersey authorities established in 2007 an AML/CFT Strategy Group to coordinate policy in implementing the FATF Recommendations. - Day-to-day cooperation between domestic authorities is close and effective; formal gateways are in place to facilitate exchange of information. - The JFCU is an active member of the Egmont Group and frequently exchanges information with other financial intelligence units. - The JFSC is active in international cooperation and shares information subject to appropriate safeguards. - There is no statutory banking secrecy provision; information sharing is subject to the common law duty of client confidentiality. ### Other issues and resources - Jersey has been among the pioneers of Tax Information Exchange Agreements (TIEAs). - Jersey voluntarily applies measures equivalent to the EU Savings Tax Directive offering the option of using the retention tax approach. - Tax evasion is not a separate statutory offense under Jersey law, but such conduct could be prosecuted as “serious fraud” and thus constitutes a predicate offense for money laundering. - The level of resources allocated to AML/CFT matters appeared generally adequate, taking into account the decision by the authorities to approve additional resources for the JFCU. - The AG and JFSC are in a position to acquire additional legal expertise on contract to handle increases in case-load. - JFSC resources may need to be increased somewhat to adequately cover its expanded areas of AML/CFT responsibility, while maintaining the level of AML/CFT supervision of financial institutions and TCBs. - Relevant statistics are generally available and well maintained, though the JFCU would need to develop its statistical collection system to demonstrate what action results from submitted SARs, particularly as its workload increases. ### Context: general information and ML/TF situation (selected statistics and characteristics) - Location: 14 miles (22.5 kilometers) off the north-west coast of France and 85 miles (137 kilometers) from the English coast. - Total surface area: 45 square miles. - Resident population officially estimated at end-2007 at 90,800. - Residential qualification: 85 percent of the population has become “residentially qualified” through a period of residence (10 years for persons born locally; 12 years continuous residence for someone born outside Jersey). - Annual real gross value added (GVA) growth averaged 3.8 percent over 2003–07. - GVA in 2007 is estimated at GBP4.1 billion. - Gross national income (GNI) is estimated at GBP3.7 billion. - GNI per head is about GBP41,000 (44 percent more than in the U.K.). - Jersey is a low-crime environment overall; on average over the past five years, approximately 10 percent of suspicious activity reports filed with the FIU were drug-crime related. - A significant component of suspicious reporting related to proceeds of (mainly) foreign fraud and corruption, including in relation to nonresident politically exposed persons. - Characteristics increasing vulnerability to ML/FT: - A substantial proportion—believed to be around 90 percent in some sectors—of customer relationships and of financial services business conducted are on a non face-to-face basis for nonresidents of Jersey. - Business relationships often established through intermediaries or introducers (Jersey or foreign) that are subject to varying levels of regulation. - Financial services provided include private banking facilities for nonresidents. - Use of legal persons and arrangements such as trusts is prevalent and can create difficulties in identifying customers and ultimate beneficial owners or controllers. *Source: _cr09280 - 19. Customers and ultimate beneficial owners are required to be identified in all relevant cases* ### 46. The independent money services sector in Jersey is small. Bureau de Change services are ### _cr09280 - 46. The independent money services sector in Jersey is small. Bureau de Change services are ### Independent money services sector - Bureau de Change services are offered by offices of major travel agencies and by the Jersey Post. - Some hotels recently curtailed exchange services to avoid the threshold for regulation. - Bureaux de Change typically deal with the public and for transactions that are well within the EUR15,000 threshold of Recommendation 5. - They do not customarily handle exchange transactions for retail or commercial clients. - Money transmission services (other than through banks) are provided by agents of Western Union and MoneyGram. - Jersey Post offers MoneyGram services but does not otherwise provide postal money transmission services. - Outbound transmissions dominate; a major portion of the business are remittances to Poland, Madeira, and Latvia by ethnic groups working in the Jersey service sector. - The authorities and the money service sector are not aware of any hawala-style remittance arrangements operating in Jersey. ### Overview of the DNFBP sector (Designated Non-Financial Businesses and Professions) — status as of December 31, 2008 - JFSC’s supervisory responsibilities were being extended to include supervision for AML/CFT of DNFBP categories beyond Trust Company Businesses (TCB). - Table (categories and estimated numbers as provided by JFSC): - Lawyers, notaries, and other independent legal professionals: 27 - Accountants: 25 (estimated in table) - Real estate agents: 15 - Dealers in precious metals / precious stones: Nil (none registered at end-December 2008) - Casinos: Nil - Trust and company service providers (Trust Company Business): 186 affiliation leaders (actual); 889 affiliation leaders and participating members (actual) - No estimates available for assets held by Jersey trusts, but they are understood to be very substantial. ### Trust Company Business (TCB) - Definition under Financial Services Jersey Law 1998 (FSJL): persons providing company administration services, or trustee or fiduciary services who also carry on a prescribed activity. - Sector size and structure: - 186 entities registered to carry on the trust company business. - Employment in the TCB sector is estimated to be about 5,000. - TCBs vary widely in services, size, and corporate structure; some are affiliates of Jersey law firms or banks; many are unaffiliated Jersey companies with offices in other jurisdictions. - The majority of employment in the sector is accounted for by bank affiliated TCBs. - Typical business lines: company and trust administration; private wealth management for high (and ultra high) net worth clients; formation and administration of structured finance products; employee benefit solutions. - Client geography: U.K. accounts for a large share, with clients also across Europe, the Middle East, Latin America, Africa, and to a lesser extent Asia. - Private client work is core, with corporate client work (pension and employee benefit structures) growing rapidly. ### Lawyers - Jersey legal profession: advocates (right of audience before all Jersey Courts) and solicitors (right of audience in the Petty Debts Court). - Admission requirements provided in the Advocates and Solicitors (Jersey) Law 1997. - Foreign-law-qualified lawyers may operate in Jersey but may not practice Jersey law. - Notaries: limited number active; do not handle services in respect of property transactions; to become a notary must pass the notaries examination. - Services provided: litigation, corporate and commercial law, real estate law, will and estate planning, court representation in criminal and civil cases. - Many law firms provide trust and company services through a separate legal entity licensed as a TSCP. - Profession size at time of assessment: - 350 members total, of whom 25 percent were solicitors and 75 percent advocates. - In addition, 200–250 lawyers qualified under a foreign jurisdiction (in particular the UK) and around 30 notaries were operating in Jersey. ### Accountants - Approximately 42 firms in Jersey offer accountancy services, including offices of the Big Four and smaller local firms and sole practitioners. - Larger firms provide audit, tax, insolvency, and advisory services; audit work for multi-national financial institutions represents a large share of their work. - A significant number of accountants work for Jersey trust companies; some local accounting practices include a trust company. - Audit firms with a large international client base tend to avoid direct involvement in the trust business due to potential customer conflicts. - The Jersey Society of Chartered and Certified Accountants (JSCCA) is a professional association, but there is no Jersey professional body that can issue its own code of ethics, set standards, certify qualifications, or discipline members. - Many in the profession are members of external bodies (e.g., Institute of Chartered Accountants of England and Wales) and come under those disciplinary frameworks. - With the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008 (SBL) coming into force in September 2008, Jersey accountants as defined in Schedule 2 of the Proceeds of Crime (Jersey) Law 1999 (POCL) are subject to regulation by the JFSC for AML/CFT compliance. - As of October 28, 2008, some 22 persons had requested registration. - Application for registration extended through December 19, 2008, at which date 25 accountancy firms had registered. ### Real estate agents - Main activities: local and overseas property transactions and lettings. - Jersey adopts the FATF definition of estate agents covering buying and selling of real estate. - Conveyancing is always handled by a Jersey lawyer; no movements of funds are conducted by estate agents. - Market structure: - Three large firms account for about two thirds of total business. - Ten or twelve mid-size firms competing actively for business. - Around a dozen mid-sized firms (text repeats) and around 20 small offices conducting limited business. - At December 31, 2008, 15 estate agents had registered with the JFSC, with the remainder registering in 2009. - Local residential property market: ownership and occupancy tightly controlled; all property conveyances require housing consent and must be recorded, approved, and registered by the Royal Court, with careful scrutiny of identity, employment, and residency. ### Dealers in precious metals and precious stones (high value dealers) - Category consists of about a dozen long-established jewelry stores. - Client base includes a significant proportion of international visitors attracted by high quality products and international brands at low-tax prices. - High value sales paid by debit and credit cards are not uncommon. - Regulatory approach: - From September 2008, all high value dealers who accept cash payments of EUR15,000 or more are subject to the Money Laundering (Jersey) Order 2008 (MLO) and required under the Proceeds of Crime (Supervisory Bodies) (Designation of Supervisory Bodies) (Jersey) Order 2008 (SBO) to register with the JFSC. - Prior to the new requirements, high value cash purchases of EUR15,000 were not common but noticeable among dealers in automobiles, jewelry, and yachts, and occasionally at hotels. - Some dealers initially indicated they might register to be allowed to accept high value cash payments; after the August publication of the Handbook for the Prevention and Detection of Money Laundering and the Financing of Terrorism for Estate Agents and Dealers in High-Value Goods, most dealers revised plans and told the JFSC they will cease accepting cash payments of EUR15,000 or more. - To date, no dealers have registered with the JFSC to be dealers in high value goods. ### Casinos and remote gambling - Casino gaming is illegal in Jersey under the Gambling (Jersey) Law 1964, as amended, though Jersey companies may carry on such business outside Jersey. - Under Schedule 2 of the POCL, “the business of operating a casino” is an activity subject to the MLO. - Articles 4 and 13 of the MLO require identification procedures for any transaction amounting to not less than EUR3,000 carried out in the course of operating a casino, in addition to identification when any business relationship is formed. - Gambling (Remote Gambling Disaster Recovery) (Jersey) Regulations 2008 (Gambling Regulations) allow remote gambling operators to locate servers in Jersey only as part of business continuity in a verified disaster in their home jurisdiction. - Gambling Regulations require gambling operators and local hosting facility providers to be licensed. - Regulation 25 conditions remote gambling facility provider’s license on compliance with laws relating to money laundering, drug trafficking, data protection, and terrorist financing. - As of the on-site visit, JFSC was not aware of any Jersey companies operating casinos outside Jersey. - At the time of the on-site visit, only one application for a remote gambling facility provider had been received (hosting) and was subject to due diligence checks by the Economic Development Department. ### Companies and partnerships — legal persons and governance - Companies governed by Companies (Jersey) Law 1991 (CL); allows incorporation of public and private companies. - Companies that circulate a prospectus relating to their own securities or with more than 30 shareholders are treated as public companies under CL and must have annual shareholder meetings (unless dispensed by members in writing) and submit audited accounts and details of directors to the Registrar. - Shareholder liability: may be limited or unlimited. - Company forms: par value or non par value, guarantee company, limited life company, cell company. - Partnerships: - Limited Liability Partnerships (LLP) registered under Limited Liability Partnerships (Jersey) Law 1997. - Limited Partnerships (LP) registered under Limited Partnership (Jersey) Law 1994. - General partnerships operate based on customary law. - Only LLP has legal personality; LPs and general partnerships are legal arrangements; only limited partnerships are registered with the Registrar of Limited Partnerships. - Incorporation and registration formalities: - Jersey companies, LPs, and LLPs set up by registration with the Registrar of Companies. - Documents required: memorandum and, if applicable, articles of association; statement with address of registered office in Jersey; for public companies, particulars of company director(s). - LLPs require a declaration with name, registered office address, and name and address of each partner. - Governance requirements: - Public companies require at least two shareholders and two directors. - Private companies require at least one shareholder and one director. - All companies require a registered office in Jersey and one secretary. - A company may act as director of a Jersey company only if registered to conduct such activity pursuant to the FSJL and has no corporate director. - Company secretary may be the same natural or legal person as the company director unless sole director. - LLPs require a registered office but no secretary. - Transparency: - All information and documentation provided to the Registrar pursuant to the CL is public information and available to any person, including online. - Beneficial ownership and access to information: - JFSC obtains and administers beneficial ownership information pursuant to Control of Borrowing (Jersey) Order 1958 (COBO); information held by JFSC pursuant to COBO is not publicly available but may be disseminated to other supervisory agencies pursuant to Article 36 FSJL or accessed on the basis of a court order. - Registered trust and company service providers are required under the MLO to obtain, verify, and retain beneficial ownership information on legal persons. - Article 8 of the SBL and equivalent provisions grant the JFSC wide investigative powers to access any information and documentation held by such persons. - Law enforcement authorities may apply for a court order to access information and documentation held by TCBs. - Company counts as of December 31, 2008: - 33,395 companies were registered in Jersey, of which 32,081 were private companies and 1,314 were public companies. - Included in the total are 570 cell companies. ### Trusts — legal arrangements and flexibility - Trusts governed by Trusts (Jersey) Law 1984 (Trusts Law) or, for foreign trusts, by foreign jurisdiction trust laws. - Trusts Law does not require use of a Jersey registered TCB in administering a Jersey trust, nor is there a registration requirement for trusts. - English law principles of trust law and equity are applied and recognized insofar as not contrary to statutory law or local precedent. - Definition and creation: - A trust is a legal arrangement whereby a settlor transfers assets to a trustee who holds legal title: 1. for the benefit of another whether or not yet ascertained or in existence; or 2. for any purpose which is not for the benefit only of the trustee; or 3. for both. - Jersey trusts are generally set up by deed, declaration or will, but the Trusts Law allows trusts to be created in any manner, including oral declaration. - Features and settlor powers: - Jersey trusts are highly flexible and allow the settlor to maintain a wide range of direct powers over management and administration of trust property. - Jersey law allows both the settlor and the trustee to be a trust beneficiary, including the sole beneficiary. - The settlor may reserve a wide range of powers, including to amend or revoke the trust terms; give binding instructions with respect to management of trust property; appoint or remove trustees, beneficiaries, enforcers, and protectors; change the law of the trust; and restrict trustee powers by requiring consent of the settlor or any third person before any action may be taken. *Source: IMF country report text provided in the content unit.* ### 73. Protectors, enforcers, as well as flee clauses are allowed under Jersey law, although the latter ### _cr09280 - 73. Protectors, enforcers, as well as flee clauses are allowed under Jersey law, although the latter ### Trusts and related legal recognition - Protectors, enforcers, as well as flee clauses are allowed under Jersey law, although the latter seems to be used only to a very limited extent. - The Convention on the Law Applicable to Trusts and on their Recognition has been extended to Jersey. - Jersey law recognizes foreign trusts through Article 3 of the Trusts Law. - The authorities do not maintain statistics or information pertaining to the number of trust arrangements or the amount of trust assets administered in Jersey. ### Non-Profit Organizations (NPOs) oversight and data - Jersey does not yet have a body that is charged with the oversight of charities. - On June 5, 2008, the States approved the Non Profit Organizations (Jersey) Law 2008 (NPO Law). - Registration with the JFSC started on August 8, 2008; following completion of registration of NPOs in December 2008, information on: - the number of NPOs (with breakdowns by size), - form of NPOs (with numbers of entities in each category), - estimated financial flows through the sector, - details of NPOs with international ties will be available for analysis. - Known indicators prior to registration completion: - The Association of Jersey Charities has just over 200 members. - The Comptroller of Income Tax is aware of some 1,000 charities that have historically enjoyed tax exempt status. - The Economic Development Department issues around 200 permits each year to charities, associations and clubs to run lotteries and bingo events on a noncommercial basis. ### AML/CFT strategy and priorities - Jersey has established an AML/CFT Strategy Group to coordinate AML/CFT efforts and in October 2008 published “An Island Strategy to Counter Money Laundering and the Financing of Terrorism.” - The Strategy Group composition: - Chaired by the Chief Executive of the States. - Comprises the Chief Minister’s Department, the Economic Development Department, the Law Officers’ Department, the JFSC, the JFCU, and the Shadow Gambling Commission. - The strategy document: - Outlines significance of AML/CFT measures to Jersey and roles/commitment of authorities. - Discusses key AML/CFT vulnerabilities for Jersey and coordination basis, including an annual review process. - Notes progressive application of AML/CFT requirements to the trust sector from 1999 onwards. - Topics and vulnerabilities of strategic interest include: - Dealing with requests for assistance regarding assets in Jersey linked to insider dealing and market manipulation abroad. - Consideration of introducing a basis for civil confiscation. - Expansion of AML/CFT coverage to additional relevant businesses, including lawyers and accountants. - Stated goals of the strategy: - Raise awareness of obligations set out in legislation and Codes of Practice in those sectors considered to have lower awareness. - Raise awareness of typologies relevant to Jersey including risks arising from the nature of the customer base and products associated with Jersey as an international finance centre. - Raise awareness of the importance of considering the competence and probity of employees at the time of recruitment and on an ongoing basis thereafter. - Work in progress actions: - Develop a picture of the size and nature of the NPO sector (CFT-related legislation came into force on August 8, 2008), identify NPOs more vulnerable to use in terrorist financing, and work with such NPOs to reduce that vulnerability. - Preparation for the application by States of Jersey Customs and Immigration Service (Customs) officers of controls on carrying cross-border cash in excess of EUR10,000, and the planned implementation of Special Recommendation IX. ### Institutional framework for combating ML/TF - Overall political responsibility rests with the Chief Minister, assisted by an AML/CFT Strategy Group. - Minister for Home Affairs is responsible for the States of Jersey Police and Customs. - JFSC is accountable to the States through the Minister for Economic Development, including oversight of NPOs that raise and disburse funds in Jersey. - The Minister for Treasury and Resources is responsible for requirements placed on persons carrying on financial services business by the MLO and for determining which persons are covered through Schedule 2 of the POCL. Joint Financial Crime Unit (JFCU) - Responsible for collection, analysis and dissemination of intelligence under AML/CFT reporting. - Partnership between the Police and Customs. - Along with the Law Officers’ Department, conducts money laundering and terrorist financing investigations. Attorney General / Law Officers’ Department - The Attorney General (AG) is head of the Law Officers’ Department, Jersey's prosecution service, and legal adviser to the Crown and the States. - Law Officers and the JFCU work closely on intelligence sharing, case identification, investigations, and mutual legal assistance information. Customs and Excise - Customs Service polices Jersey’s border and provides three officers within the drugs proceeds confiscation wing of the JFCU, responsible for financial investigations relating to drug trafficking. - Responsible for seizing illicit drugs and ‘tainted cash’ as defined in the Proceeds of Crime (Cash Seizure) (Jersey) Law 2008 (POC (CS) L). - Able to require cash disclosures from individuals entering and leaving Jersey (as of January 2009). Jersey Financial Services Commission (JFSC) - Independent statutory body responsible for registration and prudential oversight of banks, insurance companies, fund services businesses, investment businesses, trust company businesses, general insurance mediation businesses, money service businesses, and fund products. - Responsible for oversight of AML/CFT compliance for the above sectors and checking effective systems to implement UN and EU sanctions legislation. - Issues and maintains the Handbook for the Prevention and Detection of Money Laundering and the Financing of Terrorism for Financial Services Business Regulated under the Regulatory Laws (Handbook for Regulated Businesses). - Operates Jersey’s Companies Registry and administers the Control of Borrowing (Jersey) Law 1947. - AML/CFT oversight remit extended in July 2008 by the SBL to cover other persons carrying on financial services business not prudentially supervised. - Responsible for registering NPOs under the NPO Law (came into force in August 2008). Shadow Gambling Control Commission - Formed to develop legislation to extend and regulate gambling activities. - Current legislation does not permit casinos to operate in Jersey. ### Risk-based approach to AML/CFT - Jersey has adopted the risk-based approach at all levels: - Determining scope of AML/CFT coverage. - Direction to industry to take risk into account in designing and applying CDD measures. - Supervisory approach of the JFSC. - JFSC guidance on risk-based approach provided in Sections 2 and 3 of their Handbook for Regulated Businesses: - Section 2: assessment and management of risk at business level. - Section 3: application of a risk-based approach on a customer by customer basis. - JFSC expects each financial institution to develop a risk-based AML/CFT strategy and has been testing implementation via focused on-site examinations. - Early-stage implementation results are mixed; institutions are often instructed by the JFSC to further develop risk analysis and models. - AML/CFT Strategy Group considers vulnerabilities and sources of risk to the Jersey financial sector on an ongoing basis. - Assessors commend Jersey authorities for professional implementation of effective risk-based measures, emphasis on training and awareness-raising, and programs of on-site internal controls and external supervision. - Noted that much work remains to fully achieve effective implementation across all entities subject to AML/CFT requirements, but impressive progress has been made due to strong commitment from public and financial sector participants. ### Progress since the last IMF assessment - Last IMF assessment of Jersey’s AML/CFT measures was in 2002 (report published in 2003). Authorities published an action plan to address recommendations; most have been addressed in whole or in part. - Some recommendations overtaken by substantive revisions to FATF Recommendations in 2003. - Points carried forward from 2002 assessment include: - Extension of the U.K.’s ratification of the Convention against Transnational Organised Crime to include Jersey is still awaiting action in the U.K. - While substantive action was taken, some issues remain regarding the effectiveness of the obligation to report suspicious activities. - Broad conclusion: Jersey has made substantial progress in addressing recommendations of the 2002 assessment and in the context of the latest FATF revision. ### Criminalization of money laundering — legal framework and analysis - Jersey has criminalized money laundering through: - the Proceeds of Crime (Jersey) Law (POCL), - the Drug Trafficking Offences (Jersey) Law 1988 (DTOL), - the Terrorism (Jersey) Law 2002 (TL). - Scope: - POCL covers money laundering related to all predicate offenses except drug trafficking offenses and offenses under the TL. - DTOL limited to predicate offenses involving drug trafficking. - TL’s money laundering offense differs in language and is discussed separately. - International convention ratification: - As a Crown Dependency, Jersey cannot sign or ratify international conventions; the U.K. is responsible for international affairs and may arrange extension of ratifications to Jersey upon request. - The U.K.’s ratification of the Vienna Convention was extended to Jersey on July 7, 1998. - Jersey requested extension of the Palermo Convention on July 2, 2008; at the time of the onsite visit the U.K. had not yet granted the extension. - POCL and DTOL substantive provisions: - Articles 34 POCL and 30 DTOL: person guilty of money laundering if he (1) conceals or disguises any property that is, or in whole or in part directly or indirectly represents, the person’s proceeds of criminal conduct/drug trafficking or converts or transfers that property or removes it from the jurisdiction for the purpose of avoiding prosecution for an offense; or if the person (2) knows or has reasonable grounds to suspect that any property is, or in whole or in part directly or indirectly represents another person’s proceeds from criminal conduct/drug trafficking and conceals or disguises that property or converts or transfers that property or removes it from the jurisdiction for the purpose of assisting any person to avoid prosecution for an offense/a drug trafficking offense. - Articles 34(3) and 30(3): references to concealing or disguising any property include concealing or disguising the nature, source, location, disposition, movement, or ownership or any rights with respect to it. - Articles 33 POCL and 38 DTOL: person guilty if, knowing that any property is, or in whole or in part directly or indirectly represents another person’s proceeds of criminal conduct/drug trafficking, he acquires or uses that property or has possession of it; expressly stated that “having possession of any property shall be taken to be doing an act in relation to it.” - Articles 33(2) and 38(2): defense if a person acquired or used the property or had possession of it for adequate consideration; defines “inadequate consideration” as where value of consideration is significantly less than the value of the property, and vice versa for use/possession. This exception is beyond the standard set forth in the Vienna and Palermo Conventions. - Identified limitations versus international standards: - Articles 34 POCL and 30 DTOL require proof that the purpose of the act is to avoid prosecution for a predicate offense; by contrast, Palermo and Vienna Conventions require proof that the purpose is either to conceal or disguise the illicit origin or to help evade criminal liability, and do not require a specific purpose for concealment or disguise. Therefore Articles 34 and 30 are not sufficiently wide to fully meet the international standard due to the requirement to prove the outlined purpose in all cases. - Certain situations where purpose cannot be proven could be covered by the offense of “assisting another to retain the benefit” of a predicate offense, but that offense does not extend to self-laundering and requires proof of an “arrangement.” - Articles 33(2) POCL and 38(2) DTOL create a reverse burden of proof for a defense where the defendant can establish elements of the defense to the civil standard; this raises concern because the defense could be available even where the defendant knew the property stems from a predicate offense. - Authorities argued that such cases could be prosecuted under Articles 32 POCL or 37 DTOL, but assessors disagreed because: - Articles 32 POCL and 37 DTOL require proof of an “arrangement,” an element that must be proven beyond reasonable doubt. - Articles 33 POCL and 38 DTOL extend to self-laundering, whereas Articles 32 POCL and 37 DTOL are limited to third-party laundering. - Whether a defendant will invoke the defense is generally unknown until charges are brought; avoiding abuse of Articles 33(2) and 38(2) would not be feasible by prosecution abstention as that would render Articles 33 and 38 irrelevant. - Articles 32 POCL and 37 DTOL provide that a person is guilty of money laundering if he enters into or is concerned in an arrangement whereby retention or control by or on behalf of another of that person’s proceeds of criminal conduct/drug trafficking is facilitated or used to secure funds for that person, and if he knows or suspects that the person is or has been engaged in criminal conduct/drug trafficking or has benefited from it. The first part overlaps with Articles 34 POCL and 30 DTOL, but Articles 32/37 require proof of an “arrangement” whereas Articles 34/30 require proof of a specific purpose. *Source: IMF content unit _cr09280 - 73. Protectors, enforcers, as well as flee clauses are allowed under Jersey law, although the latter* ### 101. Therefore, even though the outlined provisions cover all the material elements of the money ### _cr09280 - 101. Therefore, even though the outlined provisions cover all the material elements of the money ### Coverage of money laundering offenses and identified legal gap - The assessors find that the outlined provisions cover all the material elements of the money laundering offenses as defined in the Palermo and Vienna Conventions, but: - The defense in Articles 33(2) of the POCL and 38(2) of the DTOL "may be open to abuse by money launderers to avoid criminal liability for the acquisition, possession, or use of criminal proceeds." - Terrorism financing offenses are explicitly excluded from the scope of the POCL; money laundering offenses based on terrorism financing therefore may not be prosecuted under POCL/DTOL provisions. ### Terrorism-related money laundering provisions (TL) - The TL 2002 contains a money laundering provision applicable to terrorism related predicate offenses. - Article 18 of the TL makes it an offense to "enter into or become concerned in an arrangement which facilitates the retention or control by or on behalf of another person of terrorist property," including by concealment, removal from the jurisdiction, transfer to nominees, or by any other way. - Elements required to be proven under Article 18 of the TL: 1. the existence of an arrangement; 2. terrorist property; 3. that the arrangement facilitates the retention or control of another’s terrorist property; 4. that the perpetrator knew or should have known at the time the arrangement was made that the property constituted terrorist property. - Limitation: Article 18 does not permit application to the full range of situations required by the Vienna and Palermo Conventions where all three elements cannot be established beyond reasonable doubt (e.g., conversion or transfer to disguise illicit origin, or concealment/disguising of source/location/disposition/rights) unless an "arrangement" is proven. ### Definition and scope of laundered property - Articles 32 of the POCL and 37 of the DTOL 1988 define “proceeds” as “any property which in whole or in part, directly or indirectly, represent [...] proceeds of criminal conduct/drug trafficking”. - Article 1 of the POCL and of the DTOL: “property” includes “all property, whether moveable or immoveable, vested or contingent, and whether situated in Jersey or elsewhere.” - Article 3 of the TL defines “terrorist property” as any property which wholly or partly, directly or indirectly represent the proceeds of acts of terrorism, including payments or other rewards in connection with its commission. Article 1 of the TL: “property” includes “all property, whether moveable or immoveable, vested or contingent and whether situated in Jersey or elsewhere.” - Although provisions do not expressly refer to corporeal and incorporeal property and legal documents evidencing title, established Jersey legal distinctions (moveable vs immovable) and commentary (e.g., “Jersey Insolvency and Asset Tracking”) indicate interpretation to cover tangible and intangible property, “new economy assets” (website domain names and software licenses), and legal documents or instruments evidencing title or interest. ### Proving that property stems from crime - The POCL, DTOL, and TL do not require a conviction for a predicate offense to prove that property constitutes proceeds of crime. This was confirmed by the Royal Court in Michel vs. AG. - Standard of proof for establishing that property stems from a specific predicate offense: authorities stated it would have to be established “beyond a reasonable doubt”; Royal Court in Michel vs. AG held the same. - Authorities identified the high standard of proof as a main challenge in obtaining convictions for stand-alone money laundering, particularly where the predicate offense occurred abroad. ### Scope of predicate offenses - Money laundering offenses of the POCL extend to offenses sanctioned with imprisonment of one year or more, except drug trafficking offenses and offenses under the TL. - The report lists FATF-designated categories of predicate offenses with corresponding domestic statutory or customary law sources (e.g., transnational organized crime, terrorism Articles 12-18, 50, 51 TL; Misuse of Drugs (Jersey) Law 1999 for narcotics; Corruption (Jersey) Law 2006; Financial Services (Jersey) Law 1998 for insider trading and market manipulation; and numerous customary law offenses). - All FATF designated categories of predicate offenses are covered. - Tax evasion is not a separate statutory offense but would be prosecuted as “serious fraud” and thus constitute a predicate offense (Michel vs. AG conviction for stand-alone money laundering based on tax evasion committed abroad). ### Threshold approach for predicate offenses - Jersey uses a threshold approach based on imprisonment penalty: Article 1 of the POCL defines “criminal conduct” as conduct constituting any offense sanctioned with imprisonment for one year or more. - For statutory crimes penalties are indicated for each offense; for customary law offenses penalties are always unlimited, thus all customary offenses constitute predicate offenses for money laundering. ### Extraterritorial predicate conduct and dual criminality - POCL, DTOL, and TL cover conduct that would have constituted a predicate offense if it had occurred in Jersey (Article 1 of POCL and DTOL; Article 19 of TL). - Dual criminality is not required. - No jurisdictional provisions require other links (e.g., citizenship, residence) as long as the laundering offense was committed in Jersey. ### Self-laundering and acquisition/possession/use offenses - Articles 34 of the POCL and 30 of the DTOL make it an offense to conceal, disguise, transfer, or convert criminal proceeds whether the property stems from another or the person himself. - Acquisition, possession, or use of proceeds is criminalized only if property stems from another person’s criminal behavior and does not extend to self-laundering. - Authorities confirmed no fundamental principle of Jersey law preventing criminalization of self-laundering, but it is not currently criminalized in these provisions. - The TL does not extend money laundering to terrorists/terrorist financers who themselves conceal or transfer property to maintain control; TL covers persons acting for or on behalf of somebody else. ### Ancillary liability (aiding, abetting, attempt, conspiracy) - Article 42 of the POCL and Article 62 of the TL: aiding, abetting, counselling, or procuring the commission of an offense under the cited laws yields criminal liability. - Common law offenses of attempt and conspiracy apply to statutory offenses (Martins vs. AG) and therefore to money laundering offenses. - Article 1 of the DTOL also provides criminal liability for attempts to commit or conspiracy to commit DTOL-defined offenses. - Persons committing ancillary offenses may be liable in the same manner as principals. ### Liability for acts overseas that would be predicate if domestic - All three statutes define money laundering to cover conduct that would have constituted a predicate offense had it occurred in Jersey (Article 1 POCL and DTOL; Article 19 TL). Dual criminality is not required. ### Liability of natural persons and mental element - Money laundering offenses require intent and apply to persons who knowingly engage in the conduct. - Required mens rea varies by act: - Concealing, disguising, converting, transferring: prosecution must establish beyond a reasonable doubt that the person "knew or had reasonable grounds to suspect" the property stems from crime. - Acquisition, possession, use: required mens rea is actual knowledge that the property constitutes criminal proceeds. - Assisting another to retain benefit of crime: prosecution must establish beyond a reasonable doubt that the perpetrator "knew or suspected" the other had engaged in or benefited from criminal conduct; defendant has a defence and right to acquittal if he/she can establish by preponderance of evidence that he did not actually have knowledge of criminal nature. - For terrorism-based ML under TL: TL does not expressly stipulate mental element for nature of property but provides a defence if defendant can prove by a preponderance of evidence that he did not know and objectively had no reasonable cause to suspect arrangement related to terrorist property. - At minimum, intentional action with knowledge that property stems from a criminal source meets Vienna and Palermo Conventions’ minimum standard. ### Mental element: objective inferences - The Acts do not clarify whether mental element may be inferred from objective factual circumstances. - English common law principle allowing reasonable inferences from objective facts (confirmed in Michel vs. AG) applies. - For concealing/disguising/converting/transferring acts it is sufficient for prosecution to show perpetrator had reasonable grounds to suspect property constituted proceeds of crime; provision expressly allows intentional element to be inferred from objective circumstances. ### Liability of legal persons and parallel sanctions - Money laundering provisions apply to any “person”; Interpretation (Jersey) Law 1954 Article 3 extends “person” to legal persons unless stated otherwise. - Language does not preclude parallel criminal, civil, or administrative sanctions against legal entities. - Authorities confirm both criminal and civil/administrative actions could be instituted simultaneously; in practice criminal proceedings take priority under customary law maxim "le criminel tient le civil." - At assessment time no legal entities had been held criminally liable for money laundering in Jersey; a TCB had been prosecuted and held criminally liable for breach of CDD obligations under the Money Laundering Order. ### Sanctions for money laundering - Sanctions applicable to natural and legal persons convicted for money laundering: - imprisonment for a term not exceeding 14 years or a fine, or both (Articles 32(6), 33(9), 34(4) POCL; Articles 30(4), 37(6), 38(9) DTOL; Article 18(3) TL). - Sanction comparators: - Corruption, insider dealing, and market manipulation: up to ten years imprisonment and a fine. - Terrorism financing: imprisonment of up to 10 to 14 years. - Jersey’s sanctions for money laundering are identical to those of the U.K. and the Isle of Man. - The strictest sanction actually imposed by Jersey courts at assessment time was nine years imprisonment for the stand-alone money laundering offense. ### Effectiveness: investigations and prosecutions (as of assessment mission) - Jersey had conducted 17 investigations for money laundering: - three investigations were terminated before charges were brought; - two investigations are ongoing; - 12 investigations led to prosecutions. *Source: _cr09280 - 101. Therefore, even though the outlined provisions cover all the material elements of the money* ### 133. Of the 12 prosecutions, one case was terminated during prosecution, one case was pending, ### _cr09280 - 133. Of the 12 prosecutions, one case was terminated during prosecution, one case was pending, ### Prosecutions, outcomes, and sentences - Of the 12 prosecutions: - one case was terminated during prosecution - one case was pending - 10 cases resulted in a conviction - Charges basis: - In 3 cases, charges were brought based on Article 34 of the POCL - In 1 case, charges were brought pursuant to Article 38 of the DTOL - In all other cases, charges were brought based on Article 32 of the POCL or Article 37 DTOL - Sentences imposed: - Range: 140 hours community service to nine years imprisonment - Average term of imprisonment: 3.7 years ### Suspicious Activity Reports (SARs) and effectiveness of money laundering prosecutions - Lack of complete and accurate statistics on the number of SARs resulting in an investigation for money laundering (including cases terminated) complicates assessment of effective application of Jersey’s money laundering provision. - Many SARs filed related to money laundering where the predicate offenses were committed abroad and the offender was not located in Jersey; assessors agree this situation may make prosecution of money laundering more difficult in Jersey. - Conclusion: the number of SARs filed would not necessarily be an indicator for the appropriate number of domestic investigations or prosecutions. ### Jurisprudence and conviction rates for money laundering - Jersey has developed jurisprudence on money laundering, including autonomous money laundering. - When comparing domestic investigations and prosecutions with convictions obtained for money laundering (including autonomous money laundering), criminal provisions appear to be implemented effectively. - 58 percent of investigations for money laundering resulted in a conviction. ### Recommendations and comments (extracted) - Amend Articles 34 of the POCL and 30 of the DTOL to: - provide for two alternative purposes for the acts of converting and transferring proceeds, namely to avoid prosecution for the predicate offense or to conceal the illicit origin of the funds, and; - to eliminate the purpose requirement for the acts of converting and transferring proceeds of crime. - Eliminate the defense (payment of adequate consideration) currently provided for in Articles 33(2) of the POCL and 38(2) of the DTOL, since it is not provided for in the Vienna and Palermo Conventions and may allow money launderers to avoid criminal liability for acquisition, possession, or use of criminal proceeds. - Amend Article 18 of the TL to cover all material elements of the money laundering provisions of the Palermo and Vienna Conventions. - Amend the offenses of acquisition, possession, or use of the POCL and DTOL, as well as the money laundering offense contained in the TL 2002, to include criminal proceeds obtained through the commission of a predicate offense by the self-launderer. - Authorities should assess whether the level of proof applied to show that property stems from the commission of a specific predicate offence poses a barrier to obtaining convictions for stand-alone money laundering. ### Compliance with Recommendations 1 & 2 — Ratings and underlying factors - R.1: LC - Articles 34 of the POCL and 30 of the DTOL are not sufficiently wide to fully meet the international standard due to the requirement that acts of “concealing or disguising” and “converting or transferring” are carried out with the purpose of avoiding prosecution for a predicate offense. - The defense (payment of adequate consideration) in Articles 33(2) of the POCL and 38(2) of the DTOL is not consistent with the Vienna and Palermo Conventions and may allow abuse to avoid criminal liability for acquisition, possession, or use of criminal proceeds/proceeds. - Article 18 TL does not cover all material elements of the money laundering provisions of the Palermo and Vienna Conventions. - The offenses of acquisition, possession, or use of the POCL and DTOL as well as the money laundering offense contained in the TL do not extend to self-laundering. - R.2: C ### Criminalization of Terrorist Financing (SR.II) — Legal framework and analysis - Jersey law criminalizes the financing of terrorism through Articles 13–17 of the TL. - Jersey is a Crown Dependency and cannot sign or ratify international conventions in its own right; the U.K. is responsible for Jersey’s international affairs and may arrange for ratification of any Convention to be extended to Jersey. - The U.K.’s ratification of the International Convention for the Suppression of the Financing of Terrorism (“FT Convention”) was extended to Jersey on September 25, 2008. - Of 15 remaining international counter-terrorism legal instruments, the Unlawful Seizure Convention, the Civil Aviation Convention, the Diplomatic Agents Convention, the Hostage Taking Convention, and the Nuclear Material Convention have been extended to Jersey. ### Criminalization of financing of terrorism (c. II.1) — Offense provisions - Article 15 TL: main terrorism financing offense — makes it an offense to receive or provide or invite another to provide property where the person either intends that the property will be used or has reasonable grounds to suspect that the property may be used for the purpose of terrorism. - Article 16 TL: criminalizes the use of property for terrorism purposes and possession of property where the possessor either intends to use it for terrorism or has reasonable cause to suspect that it may be used for terrorism. - Article 17 TL: offense to enter into or become concerned in an arrangement resulting in property being made available to another where the person knows or has reasonable cause to suspect it will or may be used for terrorism. - Article 3 TL: “terrorist property” extends to property likely to be used for terrorism, including property of a proscribed organization, as well as proceeds of the commission of terrorist acts and acts carried out for the purpose of terrorism. - Article 1 TL: “property” includes all property whether movable or immovable, vested or contingent, and whether situated in Jersey or elsewhere. ### Scope of terrorist acts (c. II.1 — Terrorist Acts) - Article 2 TL defines “terrorism” where: - (1) the act involves serious violence against a person or damage to property, endangers a person’s life other than that of the person committing the act, creates a serious risk to the health or safety of the public or a section thereof, or is designed to interfere with or seriously disrupt an electronic system, and - (2) the use or threat is designed to influence a government or to intimidate the public or a section thereof and is for the purpose of advancing a political, religious, or ideological cause. - Exception: if acts listed under (1) involve firearms or explosives and are committed for the purpose of advancing a political, religious, or ideological cause, they are terrorism regardless of whether (2) is met. - FATF standard: “terrorist acts” include offenses in the nine Conventions and Protocols listed in the Annex to the FT Convention and other acts intended to cause death or serious bodily injury to civilians (or others not taking active part in hostilities) when intended to intimidate a population or compel a Government or international organization to act or abstain. - Observations: - Article 2 TL covers most aspects of the FATF definition but does not reference international organizations. - Article 2’s requirement of serious violence or threat may not capture some offenses in the Conventions and Protocols that do not require violence (e.g., the Nuclear Material Convention’s offense to possess nuclear material with a prescribed mental element). - Jersey has criminalized all offenses defined in the nine Conventions and Protocols, but the scope of the terrorism financing offense is defined based on Article 2’s definition of “terrorism,” which may not extend to all FATF-defined “terrorist acts.” ### Terrorist organizations, individual terrorists, and prosecution scope - Article 2(5) TL: references to “action taken for the purpose of terrorism” include action for the benefit of a proscribed terrorist organization; Articles 15–17 apply where an organization is proscribed (listed in Schedule 1 to the TL). - No generic statutory definition of “terrorist organization” in the TL. - Article 15 TL also applies where a person collects or provides funds he/she has reasonable cause to suspect may be used for terrorism; funding to non-proscribed organizations may be prosecutable under this standard. - The terrorism financing provisions of the TL have not been tested in court; unclear in what circumstances property is considered “used for terrorism” (e.g., costs of living, education expenses). - AG’s office representatives indicated such cases might be prosecuted as ancillary offenses only if an act has at least been attempted. - Financing of individual terrorists: - TL does not expressly criminalize financing of individual terrorists nor define “terrorist.” - Articles 15–17 extend to funds a person has reasonable cause to suspect may be used for terrorism; authorities indicate providers to individual terrorists would be assumed to have reasonable cause to suspect and could be held criminally liable. - The standard of “reasonable cause to suspect” that funds “may” be used for terrorism is relatively low, but statutory language does not set forth the assumption and evidence can rebut it; no jurisprudence exists. - Provision of living/private expenses to individual terrorists may also be criminal under: - Al-Qa’ida and Taliban (UN Measures) (Channel Islands) Order 2002 - Terrorism (UN Measures) (Channel Islands) Order 2001 - These Orders apply to individuals and entities designated pursuant to UN Resolution 1373 and extend to any person within Jersey and any British citizen elsewhere ordinarily residing in Jersey or body corporate established under Jersey law. ### Property scope and ancillary offenses - Article 15(5) TL: “provision of property” includes property being given, lent, or otherwise made available, whether or not for consideration. - Article 1 TL: “property” extends to all property whether movable or immovable, vested or contingent, and whether situated in Jersey or elsewhere. - Terrorism property as defined in Article 3 (with Article 1) extends to property from illegal as well as legitimate sources. - Interpretation: terms are expected to cover corporeal and incorporeal assets and legal documents or instruments evidencing title to or interest in such assets. - The terrorism financing provisions do not require that funds provided are actually used to carry out or attempt a terrorist act or linked to a specific terrorist act; intent or reasonable cause to believe they will be used for terrorism suffices. - Article 62 TL: ancillary offenses of aiding, abetting, counseling, or procuring the commission of terrorist financing. - Common law offenses of attempt and conspiracy apply to statutory offenses and therefore to TL terrorism financing offenses (Martins vs. AG). - Persons committing ancillary offenses may be liable in the same manner as the principal offender. ### Predicate offense for money laundering and jurisdictional reach - Offenses under the TL are expressly excluded from the money laundering offenses of the POCL. - Article 18 TL contains a money laundering offense exclusively applicable where the funds involved constitute terrorist property (see section 1.1 for further element shortcomings). - Jurisdiction: - Article 19 TL: person may be held criminally liable for acts committed outside Jersey that would have constituted terrorist offenses under Articles 15–17 had they occurred in Jersey. - “Action” includes any action outside Jersey; “person or property” includes any person or property wherever situated; “the public” extends to any place or country other than Jersey. - Terrorist financing offenses apply regardless of whether the alleged perpetrator is in the same or a different country from the terrorist/organization or the terrorist act; no jurisdictional provisions require links such as citizenship or residence. ### Mental element of the terrorist financing offense - The TL requires that the perpetrator either: - knows or intends that the funds are being used for a terrorist act, or - has reasonable cause to believe that they may be used for terrorism purposes, including for the benefit of proscribed terrorist organizations. *Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr09280.pdf* ### 166. As in the case of the POCL and the DTOL, the TL does not expressly provide that the ### _cr09280 - 166. As in the case of the POCL and the DTOL, the TL does not expressly provide that the ### Intentional element and inferences - The TL does not expressly provide that the intentional element required for the commission of the terrorism offense may be inferred from objective factual circumstances. - The English common law principle regarding the ability to make reasonable inferences from objective factual circumstances, confirmed by the Royal Court in Michel vs. AG, applies with respect to the terrorism financing offense. ### Liability of legal persons (applying c. 2.3 & c. 2.4 in R.2) - The terrorism financing offenses of the TL apply to any “person” without differentiating between legal and natural persons. - Article 2(4)(b) provides that the reference extends to any person, wherever situated. - Article 3 of the Interpretation (Jersey) Law 1954 applies the definition of “person” to both legal and natural persons. - Article 63 of the TL expressly provides that where an terrorism offense is committed by a legal person, the natural person in charge of managing the legal person may be held liable in the same manner as the legal person to the penalty provided for the offense. - The language of the terrorism financing offenses does not preclude parallel criminal, civil or administrative sanctions for legal entities; both criminal and civil/administrative action could be instituted against legal persons at the same time. - In practice criminal proceedings would always take priority under the customary law maxim of le criminel tient le civil. - There would be close cooperation between the JFSC and the AG’s office to ensure administrative action did not prejudice criminal investigations or proceedings. ### Sanctions for terrorist financing (applying c. 2.5 in R.2) - Sanctions applicable pursuant to the TL: imprisonment for a term of up to 14 years or a fine or both. - Jersey’s sanctions for terrorist financing are identical to those of the U.K. and the Isle of Man. - There has never been a conviction for terrorist financing on Jersey; no sanctions have ever been imposed. ### Effectiveness - There have been no investigations or prosecutions relating to domestic terrorism financing and the terrorism financing offense has therefore never been tested before the courts in Jersey. ### Recommendations and comments (2.2.2) - Amend Article 2 of the TL to include a reference to international organizations. - Amend the definition of “terrorism” in Article 2 of the TL to extend to all terrorism offenses as defined in the nine Conventions and Protocols listed in the Annex to the FT Convention. - Consider the impact of including in the FT offense “intention of advancing a political, religious or ideological cause” on Jersey’s ability to successfully prosecute in the factual settings contemplated by the FT Convention. ### Compliance with Special Recommendation II (2.2.3) - SR.II Rating: LC - Factors underlying rating: - Article 2 of the TL does not contain a reference to international organizations. - The definition of “terrorism” in Article 2 of the TL does not extend to all terrorism offenses as defined in the nine Conventions and Protocols listed in the Annex to the FT Convention. ### Confiscation, freezing and seizing of proceeds of crime (R.3) — Legal framework (2.3.1) - No single statutory instrument covers all instances of seizure and confiscation of criminal assets or proceeds. - Relevant provisions found in three Acts: - DTOL (confiscation and seizing of the proceeds of drug trafficking offenses), - TL (freezing and forfeiture of terrorism related assets), - POCL (confiscation and seizing of the proceeds of all offenses, other than drug offenses, including TL offenses). ### Confiscation of property related to ML, FT or other predicate offenses including property of corresponding value (c. 3.1) - General regime (POCL, Part 2): - A confiscation order is issued by the Royal Court upon conviction, ordering the defendant to pay the lesser sum of the benefit obtained, or the realizable amount at the time the order is made. - Offender must be found guilty of an offense detailed in schedule 1 of the POCL, carrying a penalty upon conviction of one or more years. - Relevant period: a period of six years that ends when the current proceedings are instituted against the defendant. - “To benefit from an offense” defined as to obtain property as a result of, or in connection with the conduct forming the predicate offense (POCL Article 1(1)). - Court may order imprisonment in default of payment for a specified period not to exceed ten years (POCL Article 11 (1) and (2)). - Court may issue a ‘saisie judiciare’ or freezing order (POCL Article 15(1)(a)) and empower the Viscount to realize realizable property (POCL Article 17(1)(a) and (d)). - POCL Article 5 sets rules where multiple offenses in the relevant period are considered. - Drugs (DTOL): - Confiscation regime similar to POCL. - DTOL provides possibility of confiscation of benefits upon conviction for drug trafficking, on application of the AG or if the Royal Court considers it appropriate. - Assessment rules similar to POCL; ancillary offenses under Articles 30, 37 or 38 allow consideration only of aggregate benefits/payments/rewards received in connection with the ancillary offense. - Procedures for noncompliance and enforcement of drug-related confiscation orders are no different from POCL. - Terrorism (TL Articles 15–18): - TL provides for forfeiture orders upon conviction for terrorism offenses, including financing of terrorism and laundering of terrorist property. - TL uses the term “forfeiture” rather than “confiscation” because orders relate to money and other property the offender possesses or controls at the time of the offense intended to be used for terrorism purposes or where he had reasonable cause to suspect it would be used for that purpose. - Payments and rewards in connection with terrorism offenses are also subject to forfeiture. - Forfeiture orders are at the Court’s discretion and do not require a prior application by the prosecutor. - TL Schedule 3 requires property to be handed to the Viscount and empowers the Viscount to dispose of property to satisfy the order. - Schedule 3 provides for the Royal Court to issue a ‘restraint order’ to prohibit any person from dealing in any property liable to a forfeiture order. ### Instrumentalities - General (Criminal Justice (Forfeiture Orders) (Jersey) Law 2001, Article 6): - Any property (intended to be) used for or facilitating the commission of an offense by a person convicted can be forfeited by the Court. - Forfeited property is taken into the possession of the Police. - Forfeiture under this law applies to all crimes, including drug trafficking and terrorism. - Drugs (Misuse of Drugs (Jersey) Law 1978, Article 29): - Court may forfeit anything shown to relate to the drug offense, to be destroyed or dealt with as ordered. - Terrorism (TL Articles 26(2)(b) and 26(3)(b)): - Forfeiture of terrorism-related instrumentalities may also be captured under TL, forfeiting all property intended to be used for terrorism purposes (including raising funds for and financing of terrorism). ### Equivalent value and differences between regimes - POCL and DTOL confiscation regimes are essentially equivalent value-based: payment of a sum reflecting the value of the proceeds (“benefits”) of crime; execution on the offender’s assets (“realizable property”) irrespective of relation to the offense. - TL forfeiture provisions specifically target money and other property related to the terrorism offense and in the possession or under control of the offender when he committed the offense. - TL 2002 does not provide for equivalent value confiscation or forfeiture; rules regarding value confiscation in POCL or DTOL do not apply to TL situations. ### Confiscation of property derived from proceeds of crime (c. 3.1.1) - Under POCL and DTOL (value based), Court will take into account all benefits derived directly or indirectly, including substitute assets, investment yields and other profits. - It does not matter if proceeds are held by the offender or by a third party. - If no voluntary payment, Court may issue a ‘saisie judiciare’ seizing realizable property vested with the Viscount. - “Realizable property” defined as “any property held by the defendant and any property held by a person to whom the defendant has directly or indirectly made a gift caught by this Act, and any property to which the defendant is beneficially entitled”. - Proceeds of FT offenses subject to forfeiture under TL, Article 26, are defined in Article 3 as property wholly or partly and directly or indirectly representing the proceeds of terrorism-related activity, covering payments and other rewards and all immediate and derived benefits. - Forfeiture of instrumentalities relates to identified objects, whether or not the property of the offender. ### Provisional measures to prevent dealing in property subject to confiscation (c. 3.2) - Police seizure at investigation stage: general power of seizure where reasonable grounds that items are product of crime or have evidentiary value (PPCEL Article 21). - Police seizure of assets unrelated to the offense under investigation (equivalent value seizure) is not possible under the PPCEL. - General (POCL Articles 15 and 16 — saisie judiciare): - Conservatory measures to preserve assets and prevent dissipation are found in POCL Articles 15 and 16. - Saisies judiciares issued by the Royal Court prohibiting any person from dealing with realizable property, available only if criminal proceedings have been, or are about to be instituted and confiscation proceedings have not been concluded and either a confiscation order has been made or the court expects a confiscation order may be made. - Saisies judiciares can be varied to take into account future changes in circumstances (Articles 13, 14 and 19). - Drug trafficking (DTOL Articles 24 and 25): - Use of saisies judiciares similar to POCL; must be instituted for a drug trafficking offense and meet the same procedural conditions (Sections 13, 14, and 19). - Terrorism financing (TL 2002, Article 26(8) and Schedule 3 paragraphs 3–6): - Royal Court may issue a restraint order prohibiting any person from dealing with any property liable to a forfeiture order once proceedings have been instituted against a person for a terrorist funding offense. ### Informal freezing (Consent/Nonconsent by JFCU arrangement) - Outside formal judicial process, JFCU SAR handling can have the same effect as a freezing order: JFCU may consent or not to the financial activity mentioned in the SAR. - Process overseen by JFCU managers; consent may provide a defense under Articles 32 and 33 of the POCL (and equivalent provisions in the DTOL and TL); absence of consent inhibits service provider from completing financial service. - Most JFCU responses are issued within 24 to 48 hours. - Consent is not granted initially in about two percent of SARs, but in about half of these, consent is granted within a short period of time. - The longest current nonconsent arrangement dates back to 2002 and is due to protracted investigation and prosecutorial action. - Remedies for a person affected by a nonconsent decision: - Commence proceedings against the financial services provider for breach of contract and/or mandate (practical difficulty if lawful provenance cannot be shown). - File a case in the Royal Court seeking judicial review of an administrative decision in common law; applicant must prove no reasonable Police officer could withhold consent, but access to protected investigative information is generally unavailable. ### Seizure of cash — terrorism and general - Proceeds of Crime (Cash Seizure) Law 2008 POC(CS)L, Article 4 provides for seizure and detention of “tainted cash”, extending to any financial instrument convertible into cash (Article 1). - Meaning of ‘tainted cash’: cash used or intended to be used in unlawful conduct, or obtained in the course of, from the proceeds of, or in connection with, unlawful conduct. - Offenses against the POCL, DTOL and TL resulting in ‘tainted cash’ can trigger seizures under this law. *Source: _cr09280 - 166. As in the case of the POCL and the DTOL, the TL does not expressly provide that the* ### 194. An “authorized officer” (Customs, Police ) may seize “tainted cash” for an initial period of 48 ### _cr09280 - 194. An “authorized officer” (Customs, Police ) may seize “tainted cash” for an initial period of 48 ### Seizure, detention and initial retention - An “authorized officer” (Customs, Police) may seize “tainted cash” for an initial period of 48 hours, after which an order of the Bailiff is required to detain the cash for a period of up to three months, with a total maximum retention period of 2 years. (Paragraph 194) - Seizure during an investigation and of other terrorism related items as “evidence” can be effectuated under the relevant provisions of the PPCEL, Article 21. (Paragraph 195) ### Equivalent value restraint - Restraint of assets of equivalent value is covered by the restraint order provisions of POCL and DTOL; such restraints support eventual value-based confiscation of realizable property and do not require relation with the offense. (Paragraph 196) - It is not clear if equivalent value conservatory measures are available under TL. (Paragraph 196) - Equivalent value restraints pursuant to POCL Article 16 and DTOL Article 16 can only be issued when proceedings have been instituted, or are about to be instituted against a defendant, which may allow persons under investigation to dispose of assets once alerted. (Paragraphs 208–209) ### Ex parte applications for provisional measures - Current legislation allows ex parte applications to freeze or seize property under saisies judiciare (POCL and DTOL) and for restraining orders under TL. (Paragraph 197) - Such applications are made ex parte to the Bailiff in chambers by the AG; once an order is made, notice is provided to persons affected. (Paragraph 197) ### Identification and tracing of property subject to confiscation - The JFCU/FIU plays a first and important role as the receiving agency of suspicious activity reports under AML/CFT legislation. (Paragraph 198) - Police investigative powers and remedies available via Bailiff application: - Production order: POCL Article 40, DTOL Article 42, TL Article 31 and paragraph 4 of Schedule 5. (Paragraph 199) - Search warrant: POCL Article 41, DTOL Article 31, TL Article 31 and paragraphs 1-1 and 6-10 of Schedule 5. (Paragraph 199) - Financial Information Order (by Police officer of or above chief inspector): POCL Article 41A and Part 1 of Schedule 3, DTOL Article 44A and Part 1 of Schedule 2, TL Article 32 and Schedule 6. (Paragraph 199) - Account Monitoring Order (by Police officer of or above chief inspector): POCL Article 41A and Part 2 of Schedule 3, DTOL Article 44A and Part 2 of Schedule 2, TL Article 33 and Schedule 7. (Paragraph 199) - Special procedure for “serious or complex fraud” (including serious money laundering): Investigation of Fraud (Jersey) Law 1991 (IOFL), Article 2 empowers the AG to require persons with relevant information to attend and answer questions and furnish information without immediate court intervention; subject to judicial review on reasonableness. (Paragraph 200) ### Protection of bona fide third parties - POCL and DTOL define the “amount that might be realized” and define valuation to account for creditors and bona fide third parties (POCL Article 2, DTOL Article 2). (Paragraph 201) - Bona fide third parties may make representations to the Bailiff to vary or discharge a saisie judiciare (POCL Article 16(7), DTOL Article 16(7)). (Paragraph 201) - TL Article 25(7) provides innocent third party protection in forfeiture orders by allowing interested third persons to be heard before the order is issued. (Paragraph 202) - Forfeiture under CIFJL and POC(CS)L can be challenged by third parties (CIFJL Article 2(5); POC(CS)L Article 11). General right exists to apply to the Royal Court at any time for judicial review of confiscation/forfeiture measures. (Paragraph 202) ### Power to void actions and contracts - Actions intended to willfully obstruct confiscation/forfeiture (aiding and abetting money laundering) are criminal offenses; such illegal contracts or agreements are not taken into account in confiscation/forfeiture decisions. (Paragraph 203) - Under common law, courts will void contracts contrary to public policy and contracts made for matters prohibited or unlawful by statute are void (Basden Hotels Ltd. v. Dormy Hotel Ltd 1968 JLR 91; Jameson (TW) Ltd. v. Cumming Butler 1981 J.J. 18). (Paragraph 204) ### Analysis — strengths and issues - The Jersey legal framework for seizure and confiscation related to proceeds of crime is generally solid and comprehensive; POCL and DTOL provide for a value-based confiscation regime capturing benefits from criminal conduct; TL focuses on deprivation of assets related to FT. (Paragraph 205) - Deficiencies needing review for compliance with international standards: (Paragraphs 206–208) - Deficiencies in the criminalization of ML and FT affect criminal conviction-based confiscation and forfeiture, limiting ability to confiscate proceeds or instrumentalities where offenses do not meet international standards. (Paragraph 207) - Equivalent value restraints under POCL and DTOL being available only when proceedings have been instituted or are about to be instituted can allow asset disposal by alerted subjects, adversely affecting effectiveness; ameliorated in some cases by JFCU disclosures to financial institutions leading to SARs and informal freezes. (Paragraph 208) ### Confiscation and freezing data (Drug offenses — DTOL) (Source: Viscount’s Department) - Year 2006 2007 2008 - Number of new saisies judiciares: 18 35 40 - Approximate value of assets restrained: £41,924 £64,497 £164,336 - Number of cases in which confiscations ordered: 20 40 34 - Total value of confiscation orders executed (amount recovered): £1,100,739 £676,658 £105,412 - Number of cases where assets remain under restraint at the end of the year: 13 7 11 - Approximate value of assets under restraint at end of the year: £2,979,072 £2,048,322 £2,490,305 (Paragraphs 209–210; table data) ### Confiscation and freezing data (Other Criminal Conduct — POCL) (Source: Viscount’s Department) - Year 2006 2007 2008 - Number of new saisies judiciares: 6 5 2 - Approximate value of assets restrained: £14,958,756 £49,487,879 £3,697,899 - Number of cases in which confiscations ordered: 1 3 0 - Total value of confiscation Orders executed (amount recovered): £12,193 £918,364 £0 - Number of cases where assets remain under restraint at the end of the year: 18 14 16 - Approximate value of assets under restraint at end of the year: £41,602,728 £88,154,634 £103,698,362 (Paragraphs 209–210; table data) ### Effectiveness observations - DTOL (2006–2008) saisies judiciares totaled 93 and confiscation orders totaled 94; increase in confiscation orders in 2007 with a decrease in 2008. (Paragraph 209) - POCL (2006–2008) saisies judiciares totaled 13 and confiscation orders totaled four; though fewer actions under POCL, the value of property restrained and confiscated under POCL is significantly higher. (Paragraph 209) - For the 16 POCL cases where assets remained under restraint at the end of 2008: seven involved charges of fraud or fraudulent conversion, four involved money laundering charges (two combined with fraud), and the remaining involved embezzlement, support of a criminal organization, illegal gambling and tax fraud, theft, corruption, copyright violations and Mafia association. (Paragraph 209) - At end-2008, six confiscation orders remained outstanding: one involved GBP1.2 million and the other five a total of approximately GBP57,000. (Paragraph 210) - Figures do not differentiate situations where a plea agreement provides for forfeiture of funds; authorities monitor amounts restrained which are ultimately returned when no confiscation occurs, the person is acquitted, or a plea agreement is reached. (Paragraph 210) ### Identified needs and recommended reforms - Issues for reinforcement to enhance effectiveness: (Paragraph 211) - Deficiencies in the scope of the ML and FT offenses undermine the criminal confiscation regime. - Restriction that equivalent value seizure is possible only after formal proceedings have been instituted or are about to be instituted. - Provision should be made under TL for restraint and confiscation of equivalent value. - Recommendations and comments: (Section 2.3.2) - Jersey’s laws should be amended to address deficiencies affecting the scope of the ML and FT offenses and thereby improve the criminal confiscation regime. - Consideration should be given to providing for restraint of property and/or its equivalent or corresponding value from the beginning of an investigation. - In matters under TL, there should be provision for the restraint and confiscation of property of corresponding value. - A more direct legal basis should be provided for the current ‘informal freezing’ or consent/nonconsent arrangement administered by the JFCU. (Paragraphs 211–214) ### Compliance rating (Recommendation 3) - R.3: LC - Factors underlying rating: (Paragraph 2.3.3 / page 53) - Deficiencies in ML and FT criminalization impact on the scope of criminal confiscation. - Failure to provide for corresponding value seizure before proceedings are about to commence has some potential to limit overall effectiveness. - No provisions to restrain, seize or confiscate property of corresponding value in the case of FT. _Extracted from the provided IMF content unit._ ### 220. The Al-Qa’ida and Taliban Order 2002, and Terrorism Order 2001 define quite specifically ### _cr09280 - 220. The Al-Qa’ida and Taliban Order 2002, and Terrorism Order 2001 define quite specifically ### Definitions and scope of freezing measures - The Al-Qa’ida and Taliban Order 2002, and Terrorism Order 2001 define the funds that are subject to freezing (See Article 2 each Order). - The Al-Qa’ida and Taliban Order 2002 does not contain a reference to assets that are “indirectly owned or controlled” by the designated persons. - The Al-Qa’ida and Taliban Order refers to “associated persons”. - The Terrorism Order refers to: - a person who commits, attempts to commit, participates in or facilitates the commission of terrorism, - a person owned or controlled directly by such a person, or - a person acting on behalf of, or at the direction of, such a person. - The TL defines property as “all property whether movable or immovable, vested or contingent and whether situated in Jersey.” No other definition of funds is contained in the TL. ### Communication to the financial sector and public dissemination (c. III.5) - The consolidated U.K. list (reflecting UN 1267 and EU 1373 lists) is updated automatically and disseminated by the Chief Minister’s Department via an automated email subscription system to subscribing financial institutions in Jersey. - A link to U.K. and U.S. sanction lists is published on the JFSC website; there is a link on the Chief Minister’s website. - Notices detailing revisions to the UN list published under UNSCR 1267 are published in the Jersey Evening Post to inform Jersey residents and relevant persons. - There is no mandated minimum time frame for financial institutions to compare their customer base against the U.K.’s consolidated list and U.S. list; some institutions have automated updates via head office. - Criminal liability: a financial institution commits a criminal offense where it makes funds available to any terrorist. ### Guidance to financial institutions and DNFBPs (c. III.6) - Guidance on obligations under freezing mechanisms is published on the Chief Minister’s Department website. - On a positive match, financial institutions must not make funds available and must immediately report the matter to the licensing authority (the Chief Minister’s Department). - The Chief Minister’s Department website contains detailed information on UN and EU sanctions measures and implementing legislation, and includes a link to the U.K.’s consolidated list. ### De-listing, unfreezing, and review procedures (c. III.7–III.10) - Jersey has not initiated listings under UNSCR 1373 and therefore does not currently have procedures in place to deal with a request for a de-listing. - Authorities’ powers to unfreeze: - Article 6(3) of the Terrorism Order and Article 8(3) of the Al-Qa’ida Order authorize the Chief Minister’s Department to revoke a freeze of assets covered by relevant notices. - Article 6A of the Terrorism Order allows a person whose funds are frozen to apply by representation to the Royal Court to have the freeze set aside; Article 8(7) of the Al-Qa’ida Order contains the same provision. - These Orders are publicly available on www.jerseylaw.je. - Access to frozen funds for humanitarian purposes and basic expenses: - Under the Al-Qa’ida and Taliban (United Nations Measures) (Channel Islands) Order 2002, Article 7: license or authorization can be granted by the Bailiff or Attorney General. - Under the Terrorism (United Nations Measures) (Channel Islands) Order 2001, Article 5: license or authorization can be granted by the Attorney General or the Chief Minister. - Access for basic expenses, fees, service charges: - Sometimes agreed between authorities and persons whose assets are under saisie judiciare. - Otherwise, a representation can be made to the Royal Court seeking an Order for access (example of an unsuccessful application: in re O’Brien [2003] JLR 1). - Jersey has prior experience releasing funds for humanitarian purposes and would follow a similar procedure. ### Freezing, seizing, confiscation and protection of third-party rights (c. III.11–III.12) - All penal conservatory and deprivation measures of seizure and confiscation or forfeiture that apply with respect to any criminal offense can be applied in respect of FT. - Protection mechanisms for bona fide third parties: - Licensing and authorization possibilities provided by relevant UN orders and TL Article 26(7) (affected third parties may make submissions to the court). - Paragraph 5 of Schedule 3 empowers the court to discharge restraint orders following third party submissions. - Third parties may request review of a freezing decision under Article 8(7) of the Al-Qa’ida Order and under Article 6(3) of the Terrorism Order (licensing authority may revoke notices at any time, triggered by affected third party representation). ### Enforcement, penalties and regulatory sanctions (c. III.13) - The UN Orders 2001 and 2002 provide for penalties that may run to seven years custody. - Failure to comply with a freezing order issued under the TL can result in penalties that may run to seven years custody. - Regulatory authorities such as the JFSC can apply sanctions up to revocation of a license. - Noncompliance that could be interpreted as supporting terrorism may lead to criminal prosecution for FT. ### Analysis and identified legal/formal gaps - Jersey’s implementation of UNSCRs 1267 and 1373 is closely linked to the U.K.’s implementation; Jersey automatically incorporates U.K. lists and has not been actively involved in U.K. designation/delisting decisions. - Jersey implements UNSCR 1267 as described and has the legal ability (via the Terrorism Order 2001) to designate persons and freeze assets in conformity with UNSCR 1373, though this has not been used in practice. - The TL provisions and specific UN Orders constitute the legal basis for Jersey’s asset-freezing regime. - Identified issues to address: - “No formal procedure is in place to receive and assess requests based on a foreign request, as required by UNSCR 1373;” - “In all cases, the definition of ‘funds’ subject to freezing does not expressly refer to assets ‘jointly’ or ‘indirectly’ owned or controlled by designated or listed persons.” ### Effectiveness and statistics - Authorities report little evidence suggesting terrorist property in Jersey. - Jersey has not frozen assets under UNSCRs 1267 and 1373 on its own initiative or at the request of another state, and has not received requests from other states to take action to freeze under the resolutions. - Effectiveness could not be fully evaluated due to lack of information on numbers of requests from other States and freezing actions. - JFCU terrorism-related SARs (Source: JFCU): - Year 2006 2007 2008 - Terrorism-related SARs 16 10 15 - The JFCU’s SAR figures, though modest, indicate some industry awareness and compliance. ### Recommendations and compliance rating (2.4.2 and SR.III) - Recommendations: - The authorities should put in place a formal procedure governing the receipt and assessment of requests based on a foreign request to designate/freeze in order to comply with obligations under UNSCR 1373. - The legal framework implementing the UN Resolutions should be amended to expressly extend the definition of ‘funds’ subject to freezing to cover assets ‘jointly’ or ‘indirectly’ owned or controlled by the relevant persons. - The authorities should develop procedures to assess the effectiveness of their program to implement the UNSCRs and keep statistics regarding implementation. - Compliance with Special Recommendation III: - SR.III rating: LC - Factors underlying rating: - Need for formal procedures to freeze terrorist funds or other assets of persons designated under UNSCR 1373. - Definition of “funds” subject to freezing does not cover assets ‘jointly’ or ‘indirectly’ owned or controlled by relevant persons. ### Financial Intelligence Unit (JFCU) functions and operations (R.26 summary) - Legal basis for SAR regime: Articles 32, 33, 34A, 34D of the POCL; Articles 37, 38, 40, 40A of the DTOL; Articles 20, 22, 23 of the TL (suspicions to be reported to a Police or Customs officer). In practice, reports are directed to the JFCU. - Regulated sector reporting: Article 21 of the MLO requires MLROs to report to designated Police or Customs officers using the disclosure form included as a Schedule to the MLO. - JFCU role and structure: - Acts as the FIU for Jersey; joint unit of Police and Customs officers, supported by civilian personnel; performs administrative, analytical, investigative functions. - Divided into three operational areas: Intelligence Wing, Operations Wing, Drugs Confiscation Wing. - Organizational resource highlights include several Detective Constables, Financial Analyst, Detective Sergeants, Admin Support Officers, and Customs & Immigration officers (detailed staffing chart in source). - SAR handling and consent process: - On receipt of a SAR (hard copy or facsimile), JFCU may consent or not to the financial activity in the SAR; consent decisions overseen by JFCU managers. - Consent may provide a defense under Articles 32 and 33 of the POCL (and equivalent DTOL and TL provisions); absence of consent inhibits the service provider from completing the transaction and can have similar effect to a freezing order. - Majority of JFCU responses are issued within 24 to 48 hours. - Consent initially not granted in about two percent of SARs; approximately half of those are subsequently granted in a short period of time. - The longest current nonconsent arrangement dates back to 2002 (protracted investigation and prosecutorial action). - Appeals and judicial review: - Two avenues: proceedings against the financial services provider for breach of contract/mandate; judicial review of administrative decision in the Royal Court. - In judicial review, the client would need to prove no reasonable Police officer could withhold consent; access to protected police information is generally unavailable to the client. - SAR processing systems and analysis: - SARs entered into the JFCU Intranet Financial Intelligence System (IFIS) implemented in 2004; SARs are risk rated. - Management adjudicates SARs to arrive at consent/non-consent, communicates decisions to MLROs, and allocates matters for further analysis. - Intelligence Wing performs analysis; SARs warranting further attention are forwarded to Operations Wing for investigation. - JFCU and Law Officers’ Department share responsibility for money laundering and terrorist financing investigations; Law Officers’ Department handles serious/complex fraud under IOFL. - Drugs Confiscation Wing handles DTOL investigations and acts as conduit with Customs. - Governance and resources: - Head of JFCU reports to Head of Crime Services; Chief Officer of Police retains operational and strategic control. - Both Police and JFCU represented on Jersey’s AML/CFT Strategy Group; strategic direction included in 2008 Policing Plan. - Financial Crime Investigation accounts for five percent of planned 2008 Police revenue expenditure. - Reporting guidance and forms: - JFSC Handbooks set requirements and guidance on reporting; JFCU has issued guidance on compiling SARs. - Article 21(2) of MLO requires use of the JFCU disclosure form (detailed, covering identification, supporting documents, reasons for suspicion). - JFCU and JFSC AML Unit provide formal and informal advice, seminars, training to regulated industry. - Reporting remains manual; an on-line system is currently being developed. *Source: _cr09280 - 220. The Al-Qa’ida and Taliban Order 2002, and Terrorism Order 2001 define quite specifically (excerpts provided).* ### 261. As the unit comprises Police and Customs officers, the JFCU has full and direct access to all ### _cr09280 - 261. As the unit comprises Police and Customs officers, the JFCU has full and direct access to all ### Access to law enforcement, financial and administrative data - The JFCU comprises Police and Customs officers and has full and direct access to all Police and Customs registers and can also access the main U.K. and Interpol law enforcement information databases. - Financial and public administrative information of a non-public nature is directly available to the JFCU but, if to be used in evidence, normally requires a production order issued by the Bailiff under: - Article 40 of the POCL, - Article 42 of the DTOL, or - Article 31 and paragraph 4 of Schedule 5 of the TL. - Collection of information held by financial institutions for intelligence purposes is possible on an informal basis. - Some administrative registers, such as housing and social security, are available on a limited basis through the Joint Intelligence Bureau in line with the Data Protection (Jersey) Law 2005. - The Data Protection Law (Jersey) 2005 regulates data processing; Article 29 contains special provisions where information is processed for the prevention and detection of crime and the apprehension of an offender. - Jersey is a member of the Egmont Group and Camden Asset Recovery Inter-Agency Network (‘CARIN”) and is one of nine countries on the CARIN steering group. - The FIU uses internet-based search engines and commercial databases such as World Check, “KYC360°”, and Credit Safe. ### Additional information from reporting parties (c. 26.4) - For a report under Articles 32 or 33 of the POCL, Articles 37 and 38 of the DTOL, or Article 22 of the TL, the JFCU will engage directly with reporting parties to obtain sufficient information to decide whether to grant “consent” for a transaction or activity. - Failure by the reporting party to provide additional information may result in delay or refusal to grant “consent”. - Under Article 21(3) of the MLO, a person who makes a report must provide the JFCU with additional information reasonably requested by a JFCU officer within a reasonable period. - For intelligence/analytical purposes, the Intelligence Wing may request further ‘reasonable’ information under Article 21(4) of the Money Laundering Order; such requests cannot be enforced and additional information outside such a request is supplied voluntarily and informally. ### Analysis, dissemination and operational procedures (c. 26.5–26.6) - All SARs are analyzed by the Intelligence Wing; analysis includes database checks, further enquiries, and comparison with ML and FT typologies. - Exchange of information with counterpart FIUs and conferring with the JFSC are important parts of analysis. - If suspicion is grounded, information is passed to the Operations or Drug Operation Wing for investigation as appropriate. - Dissemination of disclosed information is provided for by Articles 30 and 31 of the POCL, Articles 40C and 40D of the DTOL, and Articles 24B and 24C of the TL, domestically and externally. - The head of the JFCU reports to the Head of Crime Services of the Police. The JFCU is a separate unit within the Police with a degree of autonomy; Customs officers seconded to the JFCU continue partnership with their parent organization. - In serious or complex fraud, the AG may lead under the IOFL; JFCU officers assist Crown officers who lead the criminal investigation. - The JFCU has operational independence and autonomy subject to operational requirements and strategic objectives of both Police and Customs and subject to AG requirements when assisting serious/complex investigations under the IOFL. ### Protection of FIU information, policies and publication (c. 26.7–26.8) - JFCU office is within a restricted Police estate requiring electronic swipe card access; entry to JFCU requires specific card access beyond main building access. - All JFCU information is registered in the IFIS system on the Police secure server; access is limited to authorized personnel. Hard copy material is stored in secure, alarmed areas outside office hours. - Dissemination is governed by legislation (Articles 30/31 POCL; Articles 40C/40D DTOL; Articles 24B/24C TL; Data Protection Law) and internal JFCU policies and procedures. - Police officers in the unit are covered by Police Disciplinary Regulations; Customs officers are Civil Servants subject to Civil Service Disciplinary Procedures; both sign the Official Secrets (Jersey) Law 1952 and operate under the States’ code of conduct. - JFCU-specific information (SARs and foreign FIU information) is stored on IFIS; access restricted to JFCU staff, FIU analysts and supervisors; ‘interest markers’ shield direct access by other investigators. Any information release must be cleared by the Head of the JFCU. - The JFCU produces SAR statistics published by the Chief Officer of the Police as part of quarterly and annual reporting. - Periodic JFCU newsletters have been issued to all financial institutions and publicly available via the Police website. - Typologies are published jointly (JFCU, JFSC, Law Officers’ Department) in “Typologies from a Jersey Perspective” published in October 2008 and are disseminated through lectures, presentations and seminars. ### International engagement and resources (c. 26.9–30.1) - The FIU has been an active member of the Egmont Group since 1998 and contributes to Egmont Secretariat running costs; has access to the Egmont Secure Web and follows Egmont Principles for information exchange. - The JFCU is housed within the Police estate and uses the IFIS system on the Police intranet supported by the Police budget. The Chief Officer of Police may redeploy JFCU Police personnel to meet organizational requirements. - The current budget for the JFCU, including salaries and allowances, is projected to be five percent of the budget for the Police. It includes budgets for training and development, IT systems and equipment, travel and expense allowances. The Head of the Unit controls use of budgetary resources. The JFCU can make a business case for additional funds to senior Police management and confiscation funds under the POCL and DTOL. ### Integrity, vetting and training (c. 30.2–30.3) - All JFCU positions are filled by Police officers, civilian Police employees, or Customs officers. High standards of vetting for employees and immediate family members are undertaken before deployment. - Police officers are vetted upon entry and sign a declaration under the Official Secrets (Jersey) Law 1952. Customs officers undergo criminal records checks prior to appointment, swear an oath of office per Schedule 2 of the Customs & Excise (Jersey) Law 1999 (as amended), and are vetted to Security Clearance level. Security Clearance vetting is reviewed every ten years or when personal circumstances change. - The Police has stringent disciplinary policies, an internal Professional Standards Department, and procedures to investigate internal concerns or complaints. - JFCU recruits are primarily experienced investigators with criminal investigation training and an evidence-based application process. - All Police and Customs officers receive funding/support to undertake the International Compliance Association Diploma in Anti-Money Laundering. Other courses include U.K. National Fraud and Financial Investigation Courses, FT training from the U.K. National Terrorism Financial Investigation Unit, and local courses/seminars. ### SAR statistics (R.32 applicability) — key figures 2006–2008 (Source: JFCU) - Disclosure totals: - Total 2006: 1034 100.0% - Total 2007: 1517 100.0% - Total 2008: 1404 100.0% - By primary disclosure category (2006 / 2007 / 2008): - Drugs: 132 12.8% / 138 9.1% / 139 9.9% - Crime: 886 85.7% / 1369 90.2% / 1250 89.0% - Terrorism: 16 1.5% / 10 0.7% / 15 1.1% - By type of business (selected entries): - Accountant: 9 1% / 19 1% / 12 1% - Financial Advisor: 1 0% - Investment/Fund Manager: 36 3% / 47 3% / 34 2% - Lawyer: 12 1% / 14 1% / 37 3% - Life Assurance/Insurance Company: 7 1% / 7 0.5% / 5 1% - Banks: 697 67% / 980 65% / 849 60% - Funds: 30 3% / 49 3% / 73 5% - Trust Company: 216 21% / 362 24% / 328 23% - Other: 27 3% / 39 3% / 62 4% - Grounds for suspicion (selected entries, 2006 / 2007 / 2008): - Account Not In Keeping: 80 7.7% / 67 4.4% / 75 5.3% - Cash Inward: 80 7.7% / 118 7.8% / 98 7.0% - Cash Outward: 59 5.7% / 108 7.1% / 49 3.5% - Fraud / False Accounting: 38 3.7% / 26 1.7% / 53 3.8% - Media: 86 8.3% / 94 6.2% / 56 4.0% - Police Enquiry: 93 9.0% / 151 10.0% / 155 11.0% - Tax: 159 15.4% / 498 32.8% / 301 21.4% - Internet/Research: - 0.0% / - 0.0% / 78 5.6% - Unusual Forex: 0 0.0% / 4 0.2% / 10 0.8% - Repeat Disclosure: 47 4.5% / 34 2.2% / 17 1.2% - JFCU Work Items as at December 2008 (Source: JFCU): - Active Work Items by wing: Intelligence Wing 360 / Operations Wing 141 / Drugs Confiscation Wing 55 — Total 556 - Completed, Awaiting Management Review and Sign Off: 801 / 11 / 90 — Total 902 - Total: 1,161 / 152 / 145 — Total 1,458 ### Effectiveness findings and operational observations - Reporting levels by the financial sector ranged from 1,034 disclosures in 2006 to 1,404 in 2008; disclosure numbers are roughly similar to other equivalent local jurisdictions. - Insufficient statistics prevent precise analysis of the number of SARs resulting in investigations by the Operations Wing, Drugs Confiscation Wing, or the AG Law Officers’ Department. Active cases indicate the Intelligence Wing is effectively filtering and identifying cases warranting investigation. - The number of SARs resulting in an investigation, with eighty active cases, appears to represent an effective, if under-resourced, JFCU target development capability. - The Drugs Confiscation Wing has seventy four active cases with a staff of four; measured by concrete prosecution results, effectiveness is an issue. - The majority of SARs relate to foreign predicate activity with proceeds coming to Jersey; the JFCU/FIU is dependent on assistance from foreign counterparts, which is not always forthcoming or informative. - The JFCU implemented a new statistical collection process that commenced on January 1, 2009. - Statistics indicate that 98 percent of SARs were responded to within 48 hours. - Industry comments include requests for greater feedback on submitted SARs; this feedback issue is linked to JFCU resource levels. - Delays sometimes occur when the JFCU depends on external sources (foreign counterparts), affecting informal freezing/consent processes tied to JFCU prior consent to release funds subject to an SAR. - The prerequisite for improved effectiveness is adequate FIU staffing given the number of active SARs and those awaiting management sign off. - Overall assessment: the JFCU is adequately performing its role as a key player in the AML/CFT system, has developed trust and openness with the financial sector, and maintains a clear separation between intelligence and investigative handling of reports. *Source: _cr09280 - extracted chapter/section content.* ### 303. By contrast, the high number of active investigations, and ultimately the low numbers of ### _cr09280 - 303. By contrast, the high number of active investigations, and ultimately the low numbers of ### Intelligence Wing effectiveness and issues - The high number of active investigations, and ultimately the low numbers of prosecution, raises the issue of effectiveness. - The JFCU makes relevant information readily available to foreign counterparts, which is a positive factor, but this does not sufficiently address the low level of results from the domestic system. - The challenge for improving effectiveness is for the authorities as a whole and not just for the JFCU. - The JFCU should examine possible new ways to enhance its performance in terms of cases for investigation and asset recovery. ### Recommendations specific to the JFCU Intelligence Wing (2.5.2) - The Intelligence Wing of the JFCU should be adequately staffed to perform its functions effectively. - The JFCU should issue periodic reports including statistics, typologies and trends and information on its activities. - The JFCU should maintain comprehensive statistics on the work of the Intelligence Wing on matters relevant to the effectiveness and efficiency of systems for combating ML and FT. ### Compliance summary for Recommendation 26 (2.5.3) - Rating: R.26 LC - Summary factor: Resource constraints impacted on the effectiveness of the Intelligence Wing of the JFCU. ### Legal framework for investigation, prosecution, seizure and confiscation (2.6.1) - Legal instruments providing the framework: - POCL (non-drug crimes related ML) - DTOL (drug related ML) - TL (FT and related ML) - POC(CS)L provides for the seizure and civil forfeiture of cash where it is suspected to be ‘tainted’. - Police Force (Jersey) Law 1974 and the PPCEL cover Police investigative powers and conservatory measures. - IOFL provides investigative powers to the AG where there is a suspected offense involving serious or complex fraud. - Prosecution: primarily by the AG and his staff of prosecutors (four at present with scope to hire additional resources). Summary proceedings may be handled by a prosecutor or a Centenier; higher courts are handled by Law Officers’ Department prosecutors, which always handle ML and FT matters. - The Law Officers’ Department has three additional lawyers hired for the purpose of investigating and prosecuting AML matters. - The AG intervenes and conducts IOFL investigations, contracting external legal experts such as prosecutors and forensic accountants when needed. - The AG issues warrants for special projects including tapping communications under the Regulation of Investigatory Powers (Jersey) Law 2005. ### Designation of authorities, powers and investigative arrangements (c. 27.1–27.6) - Primary investigative responsibilities: - The Police is primarily responsible for investigation of all offenses; specialized units deal with specific criminality areas. - All ML and FT cases are allocated to the Operations Wing of the JFCU; Drug Investigations Wing investigates drug trafficking-related ML. - Police powers: stop and search, entry, search and seizure, arrest, detention (Police Force (Jersey) Law 1974 and PPCEL); specific powers under POCL, DTOL, TL, POC(CS)L or court order. - Customs officers: empowered by the Customs and Excise (Jersey) Law 1999 to administer, investigate and enforce assigned matters, including TL, POC(CS)L, and MLO. - JFCU: established comprising officers of Police and Customs; officers who are Police have constable powers; officers who are Customs have Police powers under POCL and DOTL and Customs powers for assigned matters. - Ability to postpone/waive arrest or seizure: - Police Force Jersey Law 1974 provides power to arrest, which can be deferred, postponed, or waived for evidence gathering and identifying persons. - Deferring arrest is common practice (not exceptional in drug trafficking cases) and is subject to accountability via the ‘Major Crime Policy File’ system and major incident duplicate entry book, reviewed by Police management. - Special investigative techniques: - Legal basis exists for a wide range of special investigative techniques (Regulation of Investigatory Powers (Jersey) Law 2005, Article 10 for interception with AG-signed warrant, authorization for directed and intrusive surveillance and covert human intelligence sources). - Controlled delivery of proceeds of crime or funds intended for use in terrorism is permitted; deferment of arrest is permitted if decisions are reasonable. - No legislative protection from civil action for financial institution employees who cooperate, but operational practice requires deposited money from abroad in controlled operations to belong to the overseas investigative authority with funds quarantined offshore; this provides practical protection. - AG has issued guidelines for covert or undercover investigations by overseas and domestic authorities; all such actions require the AG’s approval. - Use of temporary specialized investigative groups: provided for under IOFL and practiced regularly by the AG who hires investigators, prosecutors, and forensic accountants. - Review of ML/FT techniques, trends and methods: occurs in Police annual and strategic reporting, at periodic meetings between head of JFCU and the AG, at AML/CFT Strategy Group meetings, and via continuous exchange with the JFSC. ### Powers to compel production, searches and witness statements (c. 28.1–28.2) - Powers to compel production and searches: - Articles 40 and 41 of POCL 1999; PPCEL 2003 Article 10 on searches and seizure; Article 41A POCL for financial information and account monitoring orders. - Articles 42 and 43 of DTOL for drug-related ML; Article 44A DTOL for financial information and account monitoring orders. - Article 31 of the TL for FT investigations; PPCEL Article 3(2)(b) may also be used for terrorist offenses. - Article 2 of IOFL gives the AG special powers to obtain evidence without a court order for serious or complex fraud; refusal to comply is an offense; the AG may apply to the Bailiff for a search warrant executed by Police. - POCL and DTOL powers available to Customs Officers included within the definition of Police officers. - Witness statements: Police officers can take witness statements in respect of investigations and prosecutions (Police Force (Jersey) Law 1974, Article 2 duty). ### Resources, integrity, training, and adequacy (c. 30.1–30.4) - Operational independence: JFCU is operationally independent; no instances of undue political influence or interference on record. - Staffing levels: - Police: 245 full time equivalent officers, of which 13 work in the JFCU, together with three Customs officers and three civilians. - Law Officers’ Department: four prosecutors dealing with serious crime and three other staff engaged in IOFL investigations and prosecutions. - Case loads and resource adequacy: - Operations Wing: 141 active cases. - Drugs Confiscation Wing: 55 active cases. - The number and complexity of active cases raises issues of adequacy of resources; existing resources are insufficient to properly and thoroughly investigate the active cases in a timely manner. - Resources issue is linked to effectiveness concerns. - Integrity: Officers within the Law Officers’ Department are subject to States’ policies (States Human Resources Policy Manual) and statutory requirements, including declaration pursuant to the Official Secrets (Jersey) Law 1952. - Training: - JFCU staff have received adequate training as financial investigators; analysis provided under Recommendation 26. - Law Officers’ Department frequently retains English counsel for serious and complex fraud cases; permanent staff receive external training at conferences including IFEX International Fraud and Financial Crime Conference; Cross Border Crime Conference; Chatham House Anti-Corruption Conference; Evidence and Intelligence Conference; Cambridge International Symposium on Economic Crime; and the annual Securities and Exchange Commission conference. - Special training for judges: Judges receive no specific training on ML or FT. ### Statistics, operational data and indicators (applying R.32) - Statistical collection: - Ad hoc statistics were kept at the JFCU for number of investigations, prosecutions, convictions, and value of confiscated property. - No TL investigations were reported to the assessors. - Statistical data provided was sourced through manual reconstruction. - The JFCU implemented a statistical collection system with effect from January 2009. - JFCU Work Items (Source: JFCU): - Active Work Items: - Intelligence Wing 360 - Operations Wing 141 - Drugs Confiscation Wing 55 - Total 556 - Completed, Awaiting Management Review and Sign Off: - Intelligence Wing 801 - Operations Wing 11 - Drugs Confiscation Wing 90 - Total 902 - Total: - Intelligence Wing 1,161 - Operations Wing 152 - Drugs Confiscation Wing 145 - Total 1,458 - Number and type of convictions (Source: JFCU): - Offense Convictions 2006 2007 2008 Total - Proceeds of Crime (Jersey) Law 1999. - 3 - 3 - Transferring the proceeds of criminal conduct–DTOL 2 1 1- 3 - Assisting another to retain the benefits of drug trafficking - DTOL 3 2 1 6 - False Accounting, Common Law - 2 - 2 - Total 5 8 1 14 - Estimated (Maximum) Value of Seized Drugs, Number and Value of DTOL Confiscation Orders and Cash Seizures (Source: JFCU): - Estimated Value of Drugs Seized: - 2006 £3,300,000 - 2007 £1,620,000 - 2008 £1,300,000 - Total £6,220,000 - Number of Drug Trafficking Confiscations: - 2006 21 - 2007 40 - 2008 34 - Total 95 - Value of Drug Trafficking Confiscations: - 2006 £1,100,738 - 2007 £676,658 - 2008 £105,411 - Total £1,882,807 - Number of Cash Seizures: - 2006 1 - 2007 - - 2008 4 - Total 5 - Value of Cash Seizures: - 2006 £99,611 - 2007 - - 2008 £122,252 - Total £221,863 - Total Value of Seizures: - 2006 £1,200,349 - 2007 £676,658 - 2008 £227,663 - Total £2,104,670 - Observations: - The Police are unable to estimate what percentage of drugs being trafficked in Jersey they are intercepting; the statistics raise a possible issue of effectiveness for proceeds of crime investigations related to drug trafficking. - The number of active cases in the Operations and Drugs Confiscation Wings is high compared to staffing levels. - Effectiveness issues identified in the JFCU Intelligence Wing are also relevant to law enforcement aspects overall. - Law enforcement authorities have a sufficient investigative legal arsenal. ### Recommendations and compliance regarding law enforcement and prosecution (2.6.2–2.6.3) - Recommendations: - The authorities should implement steps to improve effectiveness by seeking to increase investigative resources. - Competent authorities should maintain comprehensive statistics on matters relevant to the effectiveness and efficiency of systems for combating ML and FT. - Compliance summary for Recommendations 27 & 28: - R.27 LC - The JFCU should be adequately staffed to perform its investigative function effectively. - R.28 C *Source: _cr09280 - 303. By contrast, the high number of active investigations, and ultimately the low numbers of (IMF PDF).* ### 341. Customs is a dual-role agency with officers performing a dual customs and immigration ### _cr09280 - 341. Customs is a dual-role agency with officers performing a dual customs and immigration ### Customs role and disclosure requirements - Customs is a dual-role agency with officers performing a dual customs and immigration function. (¶341) - The Customs and Excise (Amendment No.6) (Jersey) Law 2008 was passed by the States in July 2008 and came in to force on January 9, 2009. (¶342) - Articles 37B and 37C provide that an officer may require a person entering or leaving Jersey, or exporting or importing goods to disclose cash or bearer negotiable instruments in excess of the prescribed amount, currently set at EUR10,000 or the equivalent in any other currency. (¶342) ### Request for information on origin and use of currency; offenses - Article 36G of the Customs and Excise (Amendment No.6) (Jersey) Law 2008: - empowers an officer to ask questions with respect of cash and its intended use, - requires evidence to be produced to support information provided, - requires recording of the questions and responses. (¶343) - Article 37D of the Customs and Excise (Amendment No.6) (Jersey) Law 2008: - provides criminal offense provisions for persons refusing to declare when required to do so, or making a false declaration. (¶344) ### Restraint, seizure, and forfeiture of cash - Customs and Police officers are empowered under the POC(CS)L throughout Jersey and may seize any cash based on grounds for suspecting that it is tainted. Cash is defined to include bearer negotiable instruments. (¶345) - Definition of tainted cash: cash that is used in, or intended to be used in, unlawful conduct; or obtained in the course of, from the proceeds of, or in connection with, unlawful conduct. (¶345) - Cash seized may be subject to the civil forfeiture provisions contained within the legislation. (¶346) - Where tainted cash is seized under Article 4(1) of the POC(CS)L: - the officer takes custody of the cash and is required to provide a receipt to the person in whose possession or on whose premises the cash was found, specifying the amount, denominations and currency of the cash. (¶347) - the officer is required as a matter of procedure to provide the JFCU, whose staff includes Customs officers, a full report of the cash seizure. (¶348) ### Domestic and international cooperation - Domestic cooperation: - Customs coordinates its activities with the Police Special Branch and the JFCU; this coordination is enhanced by the placement of Customs officers within the JFCU. (¶349) - International cooperation and intelligence sharing: - Customs officers within the JFCU operate within guidelines issued by the AG in respect of the sharing of intelligence collected through SARs with overseas law enforcement and regulatory bodies. (¶350) - Jersey will provide evidential assistance to foreign jurisdictions in response to formal letters of request made to the AG. Officers will also cooperate with foreign law enforcement agencies by virtue of the Criminal Justice (International Co-operation) (Jersey) Law 2001. (¶351) - Customs will freely exchange intelligence with U.K. agencies, in particular, U.K. Serious Organised Crime Agency (SOCA), HM Revenue Customs, and the U.K. Border Agency, in compliance with the Data Protection (Jersey) Law 2005. (¶352) - Article 6(2)(a) of the Customs and Excise (Jersey) Law 1999 allows the Agent of the Impôts to cooperate with other Customs services on matters of mutual concern. (¶353) - Article 6(2)(c) of the Customs and Excise (Jersey) Law 1999 allows for arrangements with EU member states for the exchange of information to prevent/detect fraud/duty evasion against their Customs laws. (¶354) ### Notification and safeguards - Notification of precious metals and stones: - Customs as a matter of practice will consider notifying the relevant authority upon the discovery of gold, precious metals or stones, and has actively exchanged this information in the past. (¶355) - Safeguards for proper use of information: - Any exchange of intelligence will be in compliance with the Data Protection (Jersey) Law, 2005. (¶356) ### Recommendations and compliance (Special Recommendation IX) - Recommendation: - Jersey should proceed to implement the newly-established disclosure system to detect the physical cross-border transportation of currency and bearer negotiable instruments that are related to money laundering and terrorist financing. (Section 2.7.2) - Compliance note: - Not yet possible to demonstrate effectiveness of newly-established system to detect the physical cross-border transportation of currency and bearer negotiable instruments that are related to money laundering or terrorist financing. (SR.IX LC — Rating Summary) (section 2.7.3) ### Preventive measures — financial institutions: risk environment - Material vulnerabilities and characteristics (¶357–358): - A substantial proportion—believed to be around 90 percent in some sectors—of customer relationships and of financial service business conducted are on a non face-to-face basis for nonresidents of Jersey. (¶357) - In many cases the business relationship is established through intermediaries or introducers (Jersey or foreign) that are subject to varying levels of regulation; subject to certain controls, Jersey financial institutions are permitted to rely on intermediaries or introducers to conduct CDD on their behalf, though CDD evidence is generally independently checked and CDD tests sometimes conducted again by the Jersey financial institution, employing a risk-based approach. (¶357) - Financial services provided include private banking facilities for nonresidents. (¶357) - The use of legal persons and arrangements such as trusts is prevalent, both as asset-holding vehicles and as part of more complex structures that can create difficulties in accurately identifying the customer and the ultimate beneficial owner or controller. (¶357) - This environment brings a material risk of financial crime, typically emanating from other jurisdictions and seeking to avail of the financial services available in Jersey. (¶358) - Supervisory response: - Authorities have adopted a comprehensive risk-based approach to implementation and supervision of AML/CFT preventive measures. The JFSC requires each financial institution to develop its own risk-based policies and procedures and considers these during onsite examinations. Indications regarding the depth and quality of work by financial institutions were mixed; the JFSC has required further analysis and deeper understanding of risks for some institutions. (¶359) ### Legal framework for CDD and record-keeping - Primary instruments (¶360–364): - The primary legislative foundation for CDD and other AML/CFT preventive measures is the POCL, which defines money laundering and tipping-off offenses and the offense of not reporting suspicious transactions, deals with confidentiality and provides exceptions, and sets forth (as a Schedule) the list of business activities subject to the preventive measures. (¶362) - The POCL in Article 37(1) authorizes the Minister for Treasury and Resources to issue Orders prescribing measures to be taken by persons who carry on financial services business for preventing and detecting money laundering; pursuant to this the Minister issued the MLO. The MLO is secondary legislation and is accepted as “law and regulation” for the assessment. (¶363) - The MLO generally applies to “relevant persons,” defined in Article 1(1) as persons carrying on a “financial services business” in or from within Jersey, or a Jersey legal entity carrying on such a business anywhere in the world. “Financial services business” is defined in Article 36 of the POCL as a business described in Schedule 2 to the POCL. (¶364) - Scope and Schedule 2 (¶364–366): - Schedule 2 is composed of two parts: - Part A: financial services businesses prudentially supervised by the JFSC under regulatory laws (e.g., banking under the Banking Business (Jersey) Law 1991 (BBJL); insurance under the Insurance Business (Jersey) Law 1996 (IBJL); collective investment funds and functionaries under the Collective Investment Funds (Jersey) Law 1988 (CIFL); investment business, trust company business, money service business, and fund services business under the FSJL). These are referred to as "regulated businesses" and their persons as “regulated persons.” (¶364) - Part B: businesses that fall within the FATF definition of DNFBPs and businesses that provide “other services” — a “catch-all” comprising financial activities contained in the FATF Glossary where not otherwise included in Schedule 2. (¶364) - The assessors concluded that the scope of coverage (including exemptions) is in all material respects consistent with the FATF definitions of “financial institution” and “DNFBP,” and are satisfied regarding the adequacy of the process and risk analysis used by Jersey authorities for determining exemptions. (¶366) - Examples of exemptions from Schedule 2 (¶366): - Exemptions include, for example: - Persons outside Jersey and subject to obligations in another jurisdiction equivalent to Jersey’s (e.g., National Savings Bank of the U.K.; Lloyd’s of London). (¶366) - Activities determined to present lower ML risk (e.g., the States and central banks of the EU; trade unions; recruitment agents). (¶366) - Activities not offered to the public (e.g., investment advice between directors). (¶366) - Activities administered by a prudentially supervised person subject to AML/CFT obligations itself (e.g., private trust company business). (¶366) *Source: _cr09280 - 341. Customs is a dual-role agency with officers performing a dual customs and immigration* ### 367. To supplement the POCL and the MLO, the JFSC has issued the Handbook for Regulated ### _cr09280 - 367. To supplement the POCL and the MLO, the JFSC has issued the Handbook for Regulated Businesses ### Handbook for Regulated Businesses: status and enforceability - Stated objectives include outlining requirements of the POCL, the MLO, and other primary and secondary legislation imposing anti-money laundering and counter terrorism financing obligations in Jersey, and "to set out the Commission’s requirements--to be followed by all relevant persons that are regulated by the Commission" pursuant to its regulatory laws. - Handbook structure: Statutory Requirements, Regulatory Requirements, and Guidance Notes. - Assessors' conclusion: the Regulatory Requirements in the Handbook for Regulated Businesses should be accepted as "other enforceable means" (OEM) on the following basis: - Handbook statements: Paragraph 10 of Section 1 — Regulatory Requirements set forth how a "person must meet the Statutory Requirements" and that "failure to follow" these requirements "may attract regulatory sanction." Paragraph 12 of Section 1 — Regulatory Requirements "are described using the term must, indicating that these requirements are mandatory." - Legal basis: originally issued under Article 8 of the Financial Services Commission (Jersey) Law 1998 ("JFSC Law"); authority expanded by the SBL enacted in 2008. - SBL provisions cited: - Article 22: authorizes a "supervisory body" to prepare and issue "Codes of Practice for establishing sound principles for compliance with this Law and anti-money laundering and counter-terrorism legislation..." - Article 8 of the SBL: gives the supervisor broad powers to examine supervised persons and require information and answers. - Article 26: authorizes a supervisor to issue a public statement concerning a person that appears to have committed a contravention of any Code of Practice. - Article 23: allows a supervisor that a supervised person has failed to comply with any Order or any Code of Practice to "give ... such directions as it may consider appropriate,..." including imposing a prohibition, restriction or limitation, requiring removal of a person, and requiring ceasing of operations and winding up of a business. - Article 18: authorizes a supervisor to revoke the registration of a person that is regulated under the SBL for noncompliance with any Code of Practice. - Assessors' view: this range of possible sanctions is largely effective, proportionate, and dissuasive. - Practical observations: - Handbook issued in February 2008 and revised in October 2008. - SBL in effect since September 2008. - At the time of the on-site visit, no sanction for noncompliance had been applied. - Management letters following on-site examinations referenced "requirements" in the Handbook, and financial institutions view the Regulatory Requirements as enforceable obligations. - Note: Guidance Notes in the Handbook are not considered OEM for purposes of this assessment. ### Customer due diligence (CDD): legal framework and core obligations (R.5–8) - Legal triggers for CDD (Article 13 of the MLO): - Establishing a business relationship; - Carrying out a one-off transaction (defined as a transaction over EUR15,000 — except for bureaux de change and money transmission activities where the threshold is EUR1,000); - Where there is suspicion of ML or FT; - Where there are doubts about the veracity or adequacy of previously obtained identification data. - Conditional verification after business relationship establishment: - Verification may be completed after establishment provided that: - (a) it is completed as soon as reasonably practicable thereafter; - (b) it is necessary not to interrupt the normal conduct of business; - (c) there is little risk of ML occurring. - Article 14: if measures cannot be completed, then no relationship may be formed or one-off transaction conducted, or an existing relationship shall be terminated. - Article 3 and Article 13 requirements for relevant persons: - Identify and verify the customer. - Determine whether customer acts for a third party; if so, identify that third party. - Where the third party is not an individual, understand ownership and control and identify (and take reasonable measures to verify) each individual who is that third party’s beneficial owner or controller. - Identify and verify any person purporting to act on behalf of the customer and verify authority. - Understand the ownership and control structure of customers that are not individuals and the provisions under which customers can enter into legal arrangements. - Obtain information on the purpose and intended nature of the business relationship or one-off transaction. - Scrutinize transactions and keep documents, data or information up to date. - Risk-based approach (Article 11): policies must have regard for degree of ML risk and provide for identification and scrutiny of: - Complex or unusually large transactions and unusual patterns of transactions with no apparent economic or visible lawful purpose; - Business relationships and transactions connected with countries and territories which do not, or insufficiently, apply the FATF Recommendations. - Enhanced measures (Article 15) required in higher risk circumstances, including where: - A customer has not been physically present for identification purposes; - Correspondent banking relationships; - PEPs. - Reduced/simplified measures (Articles 16–18) may be applied in prescribed low-risk cases, except where there is suspicion of ML or FT. - Definition note: "money laundering" in the POCL includes both money laundering and terrorism financing (i.e., ML and FT). ### Prohibition of anonymous accounts and numbered accounts - Article 23B of the MLO (effective November 7, 2008) explicitly prohibits a relevant person from establishing an anonymous account or an account in a name it knows or suspects to be fictitious. - Prior to explicit prohibition, anonymous accounts would have been contrary to Article 13 requirements. - JFSC observations: - Trust and company service providers may have permitted anonymous or fictitious name accounts prior to their regulation in 2000, but JFSC believes such practices have ceased and that there are no such accounts at this time. - Assessors found no indication that such accounts exist. - Numbered accounts: - Use of numbered accounts is not prohibited. - JFSC identified a small number of banks utilizing numbered accounts and some offering hold mail services. - Under the FATF Methodology, when numbered accounts exist, institutions should be required to maintain them so full compliance can be achieved with the Recommendations. - Assessors determined that although there are no MLO-specific requirements for numbered accounts, the CDD provisions appear adequate to achieve full compliance with the Recommendations for such accounts. ### When CDD is required: specific cases and thresholds - Establishment of business relationships (Article 13(1)(a) of the MLO): identification measures required before establishment, with concession for subsequent completion as noted above. - Occasional/one-off transactions (Article 13(1)(a) and Article 4 of the MLO): - One-off transaction thresholds: - EUR15,000 (general, other than money service business or casino); - EUR1,000 for a money service business (including bureau de change and money transmission activities); - EUR3,000 for a casino. - Definition includes two or more linked transactions where the aggregate meets the threshold. - Article 13(5): if a transaction is later found to be linked to an earlier transaction, the relevant person must apply identification measures as soon as reasonably practicable. - Wire transfers regulation: - Jersey implemented legislation based on European Regulation 1781/2006 on Wire Transfers: the Community Provisions (Wire Transfers) (Jersey) Regulations 2007, as amended (the WTR). - Payment service providers must, before transferring funds other than from an account, verify complete payer information where the amount exceeds EUR1,000 (or linked operations exceed EUR1,000). Exemption threshold does not apply where there is suspicion of money laundering. (WTR Regulation 6(4)) - Measures applicable to wire transfers are analyzed further in the assessment of SR.VII. - Suspicion-based CDD (Article 13(1)(c)(i)): - Relevant persons required to apply identification measures when they suspect money laundering (including terrorism financing), regardless of thresholds. - Exemptions in Articles 16, 17, and 18 are not applicable if there is a suspicion of ML or FT (MLO Articles 16(8), 17(3), and 18(9)). - Article 14(6) carve-out: identification procedures need not be applied where a relevant person has made a report to the JFCU and received consent from an officer of the JFCU not to do so; assessors understand this procedure is rarely used. - Financial institutions reported strong awareness of suspicious transaction reporting obligations and general satisfaction with system operation. ### Identification measures and verification sources (Article 3 and Handbook guidance) - Article 13(1) of the MLO: identification measures required before establishment of business relationship or before carrying out a one-off transaction. - Article 3(4) of the MLO (amendment effective November 7, 2008): - Identification means finding out the identity, including name and legal status, and obtaining evidence, on the basis of documents, data, or information from a reliable and independent source, that: - (a) is reasonably capable of verifying that the person to be identified is who the person is said to be; and - (b) satisfies the person responsible for identification that the evidence does establish that fact. - Article 3(5): identification measures must include assessment of the risk that any business relationship or one-off transaction will involve money laundering, including obtaining appropriate information for assessing that risk. - Handbook for Regulated Businesses regulatory requirements: - Relevant person must collect relevant identification information on an individual (Section 4.3.1). - Must verify the identity of the individual and take reasonable measures to re-verify following change of identity (Section 4.3.2). - Handbook Guidance Notes on demonstrable identification information: - For all customers: obtain name, residential address, and date of birth. - For standard and higher risk customers: also obtain place of birth, nationality, sex and government-issued identification number. - Handbook Guidance Notes on verification methods: - For lower risk: compliance may be demonstrated by verifying name and either residential address or date of birth, using at least one verification method. - For standard risk: verify address and date of birth, place of birth, nationality, and sex, using at least two verification methods. - Verification methods listed include: - Jersey driving license (lower risk example); - Birth certificate in conjunction with a bank statement, utility bill, or other listed evidence (lower risk example); - Current passport (commonly used); - National identity card; - Independent data sources. *Source: Selected paragraphs 367–389 of the IMF assessment document in content unit _cr09280.* ### 390. The financial institutions interviewed during the assessment did not identify any particular ### _cr09280 - 390. The financial institutions interviewed during the assessment did not identify any particular ### Identification of non-individual customers (Legal Persons or Other Arrangements) (c. 5.4) - Articles 13 and 3(2)(c)(i) of the MLO require a relevant person to identify and verify the identity of any person purporting to act on behalf of a customer, and (by amendment to the MLO effective November 7, 2008) to verify the authority of any person purporting to so act. - Articles 13 and 3(4) of the MLO require a relevant person to establish and verify the identity of a customer, including that person’s name and legal status. - Sections 4.4 and 4.5 of the Handbook for Regulated Businesses specify information to be collected: - Trustee of a trust: name of the trust; name and address of the trustee; verify name and date of establishment of an express trust; identities of trustees; take reasonable measures to verify identity of settlors, protectors, and beneficiaries; all key documents used to verify identity must be in a language understood by employees. - Legal body/company: name of the company; registered office address; names of directors; verification to include at minimum name, official identification number, and date and country of incorporation. - Permissible company verification methods include certificate of incorporation, memorandum and articles of association, company registry search (including confirmation company is not in process of being dissolved, wound up, or terminated), latest audited financial statement, independent data sources, and a personal visit. - Article 3(2)(c)(ii) of the MLO (amendment effective November 7, 2008) requires the relevant person to understand the provisions under which a customer that is not an individual can enter into legal arrangements. - Assessors note: - Recent additions to the MLO (authority verification and understanding legal arrangements) are not yet covered by guidance in the Handbook. - MLO does not use FATF term “legal arrangement”; Handbook refers to “legal bodies” and “trusts” only. Any other “legal arrangement” would be covered by the MLO but may lack specific Handbook guidance. - Amendment to Article 3(c)(ii) effective November 7, 2008 uses “legal arrangement” in a different context from the standards, which could cause confusion. - Financial institutions’ practices: - No practical problems identified linked to the definitional issues. - Practice is to identify and verify, as far as feasible, all relevant parties to a trust arrangement. - Some complex trust arrangements acknowledged as carrying significant risk of abuse. ### Identification of beneficial owners and controllers (c. 5.5; 5.5.1 & 5.5.2) - Articles 13 and 3(2)(c)(iii) require identification of individuals who are the customer’s beneficial owners or controllers and taking reasonable measures to verify identity using evidence from reliable and independent sources. - Article 2(1) defines beneficial owner or controller of a non-individual as: - an individual who is an ultimate beneficial owner of that person (whether or not the only ultimate beneficial owner), and - an individual who ultimately controls, or exercises control over the management of, the person (whether alone or with another person or persons). - Definition is similar to FATF Glossary but omits clause “the person on whose behalf a transaction is being conducted” (covered by Article 3(2)(b)). - Financial institutions’ practices: - Longstanding practice to identify the ultimate beneficial owner in all cases; institutions display confidence in accuracy. - Some difficulties arise with customers from certain jurisdictions in obtaining confirmations; alternative verification means developed. - Non face-to-face nature of much nonresident business increases risk that identity of ultimate beneficial owner might remain concealed. - Article 13 and 3(2)(b) require determination whether a customer is acting for a third party and, if so: - identify that third party and take reasonable measures to verify identity; and - where the third party is not an individual, understand ownership and control and identify each individual who is that third party’s beneficial owner or controller and take reasonable measures to verify identity. - Assessors’ view on Article 17 concession: - Article 17 allows, in certain circumstances, a relevant person not to identify (nor verify) an underlying customer or its beneficial owners/controllers. - Assessors conclude Article 17 concession is not compliant with Recommendation 5, given obligation under Recommendation 5 to determine whether customer acts on behalf of another and to obtain sufficient identification data, though concessions may be acceptable for commingled accounts where identification of all third parties is not feasible. - Requirements for understanding ownership/control and identifying ultimate beneficial owners: - Article 13, Articles 3(2)(c)(ii) and (iii), and Article 2 require understanding ownership/control and identifying individuals who are ultimate beneficial owners or controllers, and obtaining evidence reasonably capable of verification. - Section 4.4 (trusts) and Section 4.5 (legal entities) of the Handbook require collection of identification information on trustees, express trusts, settlors, beneficiaries, legal entities, beneficial owners and controllers (and subsequent changes). - Handbook guidance includes identification of those holding 25 percent or more interest in capital in lower risk situations and directors; in standard or higher risk, obtain identification of individuals with ultimate effective control (the mind and management). - By Article 2, a person holding a stock or share in a body corporate the securities of which are listed on a regulated market is not considered a beneficial owner. - Financial institutions report: - Well-developed procedures for determining beneficial owners and trust parties. - Many client relationships are introduced by other financial businesses or professional advisors, facilitating understanding control structures. - Some institutions do not accept complex structures; others accept subject to higher degree of due diligence. ### Information on purpose and intended nature of business relationship (c. 5.6) - Articles 13 and 3(2)(d) of the MLO require obtaining information on the purpose and intended nature of a business relationship or one-off transaction, including where concessions under Articles 16 and 17 are used (concessions do not extend to Articles 13 and 3(2)(d)). - Assessors consider that limited information available to relevant persons, particularly where Article 17 concession is claimed, can make it difficult in some cases to meaningfully obtain information on the purpose and nature of the underlying business relationship or one-off transaction. ### Ongoing due diligence and monitoring (c. 5.7; 5.7.1 & 5.7.2) - Article 13(1)(b) of the MLO requires a relevant person to conduct ongoing monitoring during a business relationship. - Articles 13 and 3(3)(a) require scrutiny of transactions to ensure consistency with knowledge of the customer, including customer’s business and risk profile; scrutiny to include, where necessary, source of funds. - Articles 13 and 3(3)(b) require keeping identification-obtained documents, data, and information up to date by reviewing existing records. - Article 15 requires application of enhanced CDD measures in any situation which, by its nature, can present a higher risk of ML. - Financial institutions’ practices: - Operate risk-based systems to identify transactions that materially depart from client profile expectations. - Assessors note limited information availability where Article 17 concession is claimed can impede meaningful ongoing due diligence. ### Enhanced due diligence for higher-risk customers (c. 5.8) - Article 15 requires application of enhanced CDD measures in specifically enumerated situations and any situation which can present a higher risk of ML. Specifically enumerated situations include: - (a) customers that have not been physically present for identification purposes; - (b) where a bank in Jersey establishes a banking relationship with a bank outside Jersey; and - (c) where the relevant person proposes a business relationship or one-off transaction (i) with a person connected with a country or territory that does not apply, or insufficiently applies, the FATF Recommendations, or (ii) with a politically exposed person. - Section 3.3.4 of the Handbook lists factors to consider in risk assessment, including value of assets handled, type and complexity of relationship; examples of higher risk: unexplained use of corporate structures and express trusts, use of nominee and bearer shares. - Article 15(2) defines “enhanced customer due diligence measures” as measures that involve specific and adequate measures to compensate for the higher risk of money laundering; specific measures are included in Sections 3.4.1 and 3.4.2 of the Handbook. - Gaps relative to FATF Recommendations: - Jersey law does not require enhanced due diligence for all FATF higher-risk examples. In particular, MLO does not require enhanced CDD for all accounts for non-residents, only for customers not present for account opening; enhanced CDD is not specified for private banking customers. - Assessors question whether this approach is fully consistent with Recommendation 5, though Jersey has identified other risk factors that may trigger enhanced measures. - Financial institutions’ approaches vary: - Many treat non face-to-face nonresident business as normal and do not always treat as higher risk; a minority adapt procedures recognizing higher risk. - Overall, institutions show strong awareness of ML and FT risks. ### Application of simplified/reduced CDD measures and reliance on intermediaries/introducers (c. 5.9) - Articles 16, 17, and 18 of the MLO provide for exemptions from CDD requirements or for reduced/simplified measures in certain situations: - Articles 16 and 17 permit reliance on intermediaries and introducers to obtain and retain CDD information on underlying customers or introduced customers under certain circumstances. - Article 18 provides exceptions from standard CDD measures for the relevant person's direct customer in certain situations. - Article 16 permits reliance on identification measures performed by an intermediary or introducer, subject to specified conditions. - Jersey authorities position: concession under Article 16 with respect to intermediaries should be addressed under Recommendation 5 rather than Recommendation 9, because Interpretive Note to Recommendation 9 states it “does not apply to relationships, accounts or transactions between financial institutions for their clients” and such relationships are to be addressed by Recommendations 5 and 7. - Assessors disagree: Recommendation 9 ("Intermediaries/Introduced business") is intended to set conditions under which countries permit financial institutions “to rely on intermediaries or other persons to perform...CDD or to introduce business, provided the criteria...are met.” Assessors see no reason introducers should be evaluated under Recommendation 9 while intermediaries are assessed against different criteria; therefore conditions under MLO Article 16 are considered in relation to Recommendation 9. - Article 17 concession (limited compared with Article 16) permits a relevant person to establish an account in the name of an intermediary but not to identify (or verify identity of) the underlying customer or any beneficial owners/controllers where conditions are met. - One explicit condition in Article 17(1): the relevant person must know or have reasonable grounds to believe that the intermediary is a bank, collective investment fund functionary, investment business, fund service business, or insurance business that is registered (or licensed) in Jersey, or carries on an equivalent business. *Source: _cr09280 - selected pages of the MLO assessment chapter.* ### 2. Under 17(2), the relevant person is required to assess the risk of operating an intermediary ### 2. Under 17(2), the relevant person is required to assess the risk of operating an intermediary account on a non-disclosed basis (i.e., without identifying the underlying client) as set out in Section 4.10.1 of the Handbook for Regulated Businesses (Regulatory Requirements) ### Intermediary-concession design and assessors' conclusions - The concession under Article 17 of the MLO provides a complete exemption from identification and verification requirements in relation to the underlying customer(s) of the intermediary and beneficial owner(s), based on the contractual relationship being between the relevant person and the intermediary (para. 418). - Assessors concluded that Article 17 conflicts with FATF Recommendation 5 because Recommendation 5 requires determining whether the customer (the intermediary) is acting on behalf of another person and taking reasonable steps to obtain sufficient identification data to verify that other person; no such requirement applies in Jersey where the Article 17 exemption is used (para. 418). - The assessors found that Article 17 might be pragmatically acceptable for commingled (pooled) accounts where it is impracticable to identify/verify each individual beneficial owner, referencing the Basle CDD paper as support for accepting simplified measures in such cases (para. 419). - For designated accounts or business capable of disaggregation by underlying customer, the assessors conclude that the full obligations of Recommendation 5 must be applied to identification and verification of underlying customers and beneficial owners; Article 17 therefore conflicts with Recommendation 5 for those cases (para. 420). - The assessors noted limited use of the concession by institutions, which "to some extent mitigates its potential for risk" (para. 417). ### Specific risks identified with intermediary arrangements - Significant reputational reliance is placed on the quality of AML/CFT processes of the foreign intermediary bank; Jersey banks may not be in a position to obtain beneficial owner information for funds held on behalf of customers of their foreign intermediary customers (para. 417). - Bank secrecy laws in some jurisdictions (example given: Swiss banks) further prevent the Jersey bank from obtaining beneficial owner information, increasing risk (para. 417). - No apparent requirement under Article 17 for the Jersey bank to: - identify the underlying customer (beneficial owner), - spot-check the intermediary’s CDD measures, or - be in a position to obtain copies of the CDD documentation if duly required (para. 417). ### Conditions, limits, and acceptability criteria - If authorities amend provisions to require identification/verification but permit reliance on the intermediary to conduct these tasks, that approach would be acceptable only if fully compliant with the requirements and criteria of Recommendation 9 (para. 420). - Article 5(d) of the MLO requires that an overseas person relied upon must be subject to requirements to forestall and prevent ML that are consistent with the FATF Recommendations; Section 1.7.3 of the Handbook and Appendix B set out the approach and listed jurisdictions assessed as equivalent (paras. 431). - A relevant person may assess whether an overseas jurisdiction not listed by the JFSC is “equivalent” but must follow Section 1.7 of the Handbook and be able to demonstrate the process and basis for its conclusion (para. 431). ### Article 18 exceptions and related concessions - Article 18(2)–(6A) except from Article 13 customer identification measures the following low-risk customers/products (para. 421): - 1. Customers that are public authorities (defined as a person holding a public office in Jersey). Handbook Section 4.9.3 requires obtaining and retaining documentation establishing entitlement to this concession. - 2. Pension, superannuation, or similar schemes where contributions are employer/deduction-based and interests may not be assigned. - 3. Insurance policies connected to employment with no surrender value and not usable as collateral. - 4. Insurance policies having a single premium of GBP1,750 or less, or an annual premium of GBP750 or less. - 5. Customers whose securities are listed on a regulated market. Handbook Section 4.9.2 requires documentation that the customer is admitted to trading on a regulated market and, where a subsidiary is not wholly owned, identification/verification of beneficial owners and controllers not connected with the traded parent. - Article 18(7) exempts applicants that are a “regulated person” under the MLO or carry on an equivalent business from certain identification/verification measures; this does not cover third parties for whom the applicant acts (para. 423). Handbook Section 4.9.1 requires retaining documentation establishing entitlement to this exemption. - Article 18(8) exempts from identification/verification persons authorized to act on behalf of a customer who is not a relevant person and who act in the course of employment with a regulated financial services business; as amended, it would also exempt the relevant person from verifying the authority to so act—the JFSC confirmed the exemption should be narrowed so the relevant person still verifies authority (para. 424). - Article 18(8A) exempts attorneys and real estate agents from verifying identity when entering into a relationship to enable a customer to purchase or sell real estate in Jersey, on the basis of other stringent government requirements (para. 425). - Article 18(9) provides that Article 18 concessions may not be used where the relevant person has knowledge or suspicion of ML/TF or in situations presenting higher ML/TF risk; assessors observed that comparable Handbook concessions are not explicitly subject to both conditions (para. 428). ### Other Handbook concessions and recommendations on tightening conditions - Section 3.5 of the Handbook allows reliance on CDD of a seller when acquiring a business or block of customers where the seller is a regulated person or carries on equivalent business, provided the buyer assesses the seller's CDD procedures as satisfactory; the assessment must involve either sample testing or assessment of all relevant CDD (para. 426). - Section 4.11 permits, for very low risk products/services, acceptance of funds received from a bank account in the sole or joint name of the applicant (where that bank is a regulated person or carries on "equivalent business") as satisfactory verification of identity, subject to conditions mandating direct payments from/to the other bank and in-person withdrawals requiring identity evidence. Assessors questioned compatibility with Recommendation 5 and recommended tightening conditions to require that funds received may be withdrawn only by being returned to their original source in the form and manner originally received to "exclude entirely the risk of abuse for money laundering" (para. 427). ### Implementation, supervision, and system-wide observations - Concessions under Articles 16, 17, and 18 and related Handbook provisions are of significant importance to many Jersey financial institutions with a key objective of minimizing duplication of CDD and reducing transmitted documentation (para. 430). - Assessors were not able to quantify the degree of reliance institutions place on third parties versus conducting their own CDD; they observed considerable variation across institutions, raising questions about effectiveness of implementation (para. 430). - The JFSC identified a range of deficiencies through onsite inspections and required remedial action; an active remediation program of CDD files was under way in a number of institutions at the time of the on-site visit, with a significant improvement in overall compliance noted from early 2008 onwards (para. 430). ### Compliance with FATF Recommendations and risk-based approach guidance - Article 17 exemption is not aligned with Recommendation 5’s requirement to identify persons on whose behalf an intermediary acts and to obtain sufficient identification data (paras. 418–420). - Article 18 exceptions are generally consistent with examples in the FATF Recommendations and Methodology, but the broad wording could be read to grant complete exceptions rather than reduced measures; Jersey authorities maintain that ongoing monitoring is still required for customers subject to these concessions (paras. 422, 429). - Articles 16(8), 17(3), and 18(9) each provide that simplified measures cannot be applied where there is suspicion of ML/TF; however, Articles 16 and 17 do not include an explicit provision excluding application in “any situation which by its nature can present a higher risk of money laundering or terrorist financing,” and therefore are not fully compliant with the Interpretive Note to Recommendation 5 (para. 432). - Sections 3 and 4 of the Handbook set out guidance on applying a risk-based approach to CDD: Section 3 covers the process for a risk-based approach; Section 4 covers application to individuals, trustees of express trusts, and legal bodies. Section 1.2 of the Handbook explains the status of guidance, including that guidance indicates ways to satisfy statutory/regulatory requirements while allowing alternative means and that relevant persons should adopt an appropriate and intelligent risk-based approach and consider additional measures where necessary (para. 433). *Source: _cr09280 - 2. Under 17(2), the relevant person is required to assess the risk of operating an intermediary account on a non-disclosed basis (excerpt).* ### 434. Article 13(1) of the MLO provides that a relevant person must apply identification procedures ### _cr09280 - 434. Article 13(1) of the MLO provides that a relevant person must apply identification procedures ### Timing of Verification of Identity—Treatment of Exceptional Circumstances (c.5.14 & 5.14.1) - Article 13(1) requires a relevant person to apply identification procedures before the establishment of a business relationship or before carrying out a one-off transaction, subject to Article 13(4) and (5). - Article 13(4) permits verification of identity to be completed as soon as reasonably practicable after establishment of a business relationship if: - (a) it is necessary not to interrupt the normal conduct of business; and - (b) there is little risk of ML as a result of completing verification after establishment of the relationship. - Section 4.12.1 of the Handbook for Regulated Businesses (Regulatory Requirements) allows verification after initial establishment if, in addition to the two requirements above: - all other necessary CDD information (including information on identity) has been obtained; - verification is carried out as soon as reasonably practicable; - the relevant person “highlights” to the customer its obligation to terminate the relationship at any time on the basis of non-completion of verification measures; and - the money laundering risk is effectively managed. - The Handbook further provides that a relevant person must not pay funds away to a third party, other than to invest or deposit funds on behalf of a customer, until identity has been verified. - Guidance Notes (Section 4.12.1) indicate ML risks can be effectively managed where: - (i) policies and procedures establish timeframes for completion of verification procedures; - (ii) establishment of any relationship where identity has still to be verified has received appropriate authorization and is appropriately monitored so verification is carried out as soon as reasonably practicable; and - (iii) appropriate limits or prohibitions are placed on the number, type and amount of transactions over an account. - Article 13(5) states that where two or more one-off transactions are linked and later discovered to be linked and exceed the applicable threshold, verification must be completed as soon as reasonably practicable. ### Observed Practices and Risks (c.5.14 continuing) - Some financial institutions reportedly made routine use of the scope to commence business relations prior to finalizing identification measures, citing it was “necessary not to interrupt the normal course of business”, with a liberal interpretation of “necessary”. - Given significant non face-to-face business for nonresidents, a liberal approach to timing of CDD completion may introduce additional risk. - Financial institutions generally described commencing relationships only after identification work was substantially complete, with minor points outstanding; some would accept funds but block further transactions until identification measures were complete. - Assessors perceived that some institutions were unduly relaxed regarding the allowable length of time before completing all identification measures. ### Failure to Complete CDD before commencing the Business Relationship (c. 5.15) - Article 14(1) of the MLO: if unable to apply identification procedures before establishment of a business relationship or before a one-off transaction, the relevant person must not establish the business relationship or carry out that one-off transaction. - Article 14(4): where two or more one-off transactions are linked and total EUR15,000 (or lower threshold, where applicable) or more, a relevant person must not carry out any further linked transactions if unable to apply identification measures as soon as reasonably practicable. - Article 14(5): where a relevant person suspects ML or FT and is unable to apply identification measures, the relevant person shall not establish the business relationship, or shall not carry out that transaction, as the cases require. - The Article 14 requirement not to establish a relationship or carry out a one-off transaction does not apply where a relevant person has consent from an officer of the JFCU; the JFCU may provide such consent if it is concerned a customer may be alerted or its work assisted by allowing the relationship or transaction to proceed. - Article 14(8): where a relevant person does not establish a relationship or does not carry out a one-off transaction as a result of Article 14, it must consider whether to make a report in line with Part 5 of the MLO. - Financial institutions generally confirmed compliance, though assessors noted undue tolerance of delay in completing identification measures in some cases; a number of institutions reported filing SARs where they had difficulty obtaining necessary information. ### Failure to Complete CDD after commencing the Business Relationship (c. 5.16) - Article 14(2): where permitted to verify identity after establishment, if a relevant person is unable to verify identity it must terminate that relationship. - Article 14(3): if a relevant person is unable to apply ongoing monitoring during a business relationship, it must terminate that relationship. - Article 14(4) (post-establishment thresholds to prevent completion of linked one-off transactions if identification cannot be applied as soon as reasonably practicable): - EUR15,000 or more (general, other than MSB or casino), - EUR1,000 (in the case of an MSB), - EUR3,000 (in the case of a casino). - Article 14(5): where a relevant person suspects ML or FT, or has doubts about veracity or adequacy of documents/data/information previously obtained under CDD and is unable to apply identification measures, the relevant person shall terminate the business relationship or shall not complete that transaction. - Article 14(7): if unable to apply identification measures in respect of an existing business relationship, it must terminate that relationship. - Article 14(8): if a relevant person terminates a relationship, or does not complete a one-off transaction as a result of Article 14, it must consider whether to make a report in line with Part 5 of the MLO. - The requirement to terminate or not complete does not apply where consent is obtained from an officer of the JFCU; JFCU may consider consent where customer alerting or investigative assistance is a concern. ### Existing Customers—CDD Requirements (c. 5.17) - Article 13(2): where a business relationship started before the MLO came into force in February 2008 (an existing customer), a relevant person must apply identification measures to that relationship at appropriate times after April 1, 2008. - Article 13(3)(a): “appropriate times” means “times that are appropriate having regard to the degree of risk of ML taking into account the type of customer, business relationship, product or transaction concerned;” and any time when ML is suspected. - Article 13(2B) applies the requirement for ongoing monitoring to all existing customers, including: - scrutiny of transactions as required under Article 3(3)(a) for all customers, and - ensuring documents, data, and information held on existing customers collected under the MLO or Money Laundering (Jersey) Order 1999 (in force between July 1, 1999 and February 4, 2008) and held prior to the MLO coming into force is kept up to date and relevant by undertaking reviews of existing records, including when inconsistencies arise from applying required scrutiny. - Section 9 of the Handbook for Regulated Businesses (Regulatory Requirements) requires: - risk assessing each existing customer; - applying identification measures to higher risk customers as soon as practicable. - For other customers, appropriate times to apply identification measures include: - where a transaction of significance takes place; - when a relevant person’s customer documentation standards change substantially. - For existing customers assessed as lower or standard risk, Section 9 anticipates it may not be necessary to verify identity until the relationship is assessed as presenting a higher risk. - Assessors question whether Article 13(2)’s “appropriate times” is consistent with Recommendation 5, which requires application of CDD to existing customers “on the basis of materiality and risk and to conduct due diligence on such existing relationships at appropriate times.” They note it may be more appropriate to establish specific periods for updating customer identification, graduated on a risk basis. - Jersey financial institutions have been engaged in remediation exercises mandated by the JFSC to bring CDD records up to the MLO standard, employing a risk-based approach focusing first on high-risk customers. Some institutions reported the remediation was largely complete at the time of the on-site visit; others were still in progress. ### Existing Anonymous-account Customers – CDD Requirements (c. 5.18) - JFSC informed assessors it was not aware of anonymous accounts; anonymous accounts have been explicitly prohibited by Article 23B of the MLO, effective November 7, 2008 (and were contrary to prior requirements). ### Summary – R.5 - Against Jersey’s inherently medium/high-risk financial-sector business, the JFSC has prioritized implementation of effective AML/CFT measures, reflected in high awareness across financial institutions. - Financial institutions were closely involved in developing the latest requirements, which largely reflect the FATF Recommendations but allow a range of concessions, some difficult to reconcile with the international standard. ### Foreign PEPs—Requirement to Identify (c. 6.1) - Article 11 requires relevant persons to maintain policies and procedures for CDD that have regard to the degree of risk of ML or FT and, under Article 11(3)(c), include procedures for determining whether a customer, beneficial owner or controller, a third party for whom a customer is acting (or any beneficial owner or controller of that third party), or person acting or purporting to act on behalf of a customer is a politically exposed person (PEP). - Article 15(6) contains a detailed PEP definition covering all aspects of the FATF Glossary, including individuals entrusted with public functions (with many examples), categories of family members, and categories of close associates. - Section 3.4.1 of the Handbook for Regulated Businesses (Regulatory Requirements) requires risk-based systems and controls to determine whether a customer (or potential customer), owner or controller, or third party on whose behalf a customer acts is a PEP. - Sections 3.3.1 through 3.3.5 set out CDD to be applied to any customer, including requesting and considering information and use of external data sources. - Guidance Notes (Section 3.4.1) describe demonstrating appropriate systems and controls for determining PEP status, including assessing jurisdictions posing highest corruption risk and establishing current or former holders of prominent public functions in those countries. ### Foreign PEPs—Risk Management (c. 6.2; 6.2.1) - Article 15(5A) (effective November 7, 2008) requires relevant persons to apply enhanced CDD measures that include specific and adequate measures where a business relationship or one-off transaction involves a customer who is, is beneficially owned by, or is acting on behalf of, a PEP. Such measures must include senior management approval of the business relationship. - Section 3.4.1 (Regulatory Requirements) requires clear policies and procedures for dealing with PEPs, including board or appropriate senior management approval to establish and to continue a relationship if a PEP connection is identified. ### Foreign PEPs—Requirement to Determine Source of Wealth and Funds (c. 6.3) - Article 15(5A) requires, when dealing with a PEP-related business relationship or one-off transaction, that specific and adequate measures include establishing the source of wealth of the PEP and source of funds involved in the relationship or transaction. - Articles 13 and 3 require assessment of the risk that any business relationship or one-off transaction will involve ML or FT, which includes obtaining appropriate information for assessing that risk. - Section 3.3 (Regulatory Requirements) requires collection of relevant CDD information; for higher risk customers, reasonable measures to establish source of funds for a relationship or one-off transaction and source of wealth more generally may demonstrate compliance. ### Foreign PEPs—Ongoing Monitoring (c. 6.4) - Article 15(1)(a) requires financial institutions to apply, on a risk-sensitive basis, enhanced CDD measures to PEP relationships, which includes enhanced ongoing monitoring. - Section 3.4.1 (Regulatory Requirements) requires clear policies and procedures for dealing with PEPs, including enhanced scrutiny and regular oversight at board or appropriate senior management level. - Section 5.2 (Regulatory Requirements) requires monitoring procedures to mandate more intensive scrutiny of PEPs. ### Domestic PEPs—Requirements (Additional Element c. 6.5) - Individuals holding prominent public functions domestically are not included in the PEP definition; normal CDD measures apply. Where risk for a particular customer is assessed as higher, enhanced CDD measures must be applied under Article 15(1)(b). ### Domestic PEPs—Ratification of the Merida Convention (Additional Element c. 6.6) - Following enactment of the Corruption (Jersey) Law 2006, Jersey requested the U.K. authorities to extend ratification of the UN Convention against Corruption to include Jersey. Jersey authorities indicated no date can be estimated as it is outside their control. ### Effectiveness of implementation – R.6 - In discussions, PEPs were among the top high-risk client categories identified by financial institutions. - Assessors were informed of a large number of PEP-related accounts in Jersey, though many relate to relatively low-level officials; in several cases financial institutions apply PEP requirements to all domestic Jersey politicians and senior officials even though not required. - Among customers classified as PEPs, assessors understood there are significant foreign PEPs with substantial funds in or managed from Jersey. - Financial institutions interviewed appeared well aware of PEP-related risks and familiar with CDD requirements. - JFSC inspection work identified that some banks have procedural weaknesses in this area and need rectification, as implementation standards are not as effective as necessary. *Source: _cr09280 - 434. Article 13(1) of the MLO provides that a relevant person must apply identification procedures* ### 460. Article 15(4B) of the MLO (effective November 7, 2008) requires a relevant person to apply ### _cr09280 - 460. Article 15(4B) of the MLO (effective November 7, 2008) requires a relevant person to apply ### Correspondent banking: specific and adequate measures (Article 15(4B)) - Article 15(4B) of the MLO (effective November 7, 2008) requires a relevant person to apply specific and adequate measures where a relevant person that is a bank has or proposes to have a banking or similar relationship with an institution (a “respondent”) whose address for that purpose is outside Jersey. - These measures include Paragraph 4 of the correspondent banking section of the Handbook for Regulated Businesses (in Regulatory Requirements), which sets out what these enhanced measures must be. ### Requirement to obtain information on respondent institution (c. 7.1) - Article 15(4B) requires gathering specific information about the institution to: - understand fully the nature of its business; - determine the reputation of the institution and the quality of supervision, including whether it has been subject to money laundering investigation or regulatory action. - Paragraph 4 of the correspondent banking section of the Handbook for Regulated Businesses sets forth generally the same requirements. - The Guidance states that the reputation of an institution may be determined by assessing the correspondent’s stature and regulatory track record. ### Assessment of AML/CFT controls in respondent institution (c. 7.2) - Article 15(4B) requires assessing the institution’s systems and controls to combat money laundering to determine: - whether they are consistent with the requirements of the FATF recommendations; - their effectiveness. - Paragraph 4 of the correspondent banking section of the Handbook for Regulated Businesses sets forth the same requirement. ### Approval of establishing correspondent relationships (c. 7.3) - Article 15(4B) requires that new correspondent relationships be approved by the senior management of the relevant person that is a bank. - Paragraph 4 of the correspondent banking section of the Handbook for Regulated Businesses requires the board of a relevant person that is a bank to approve new correspondent relationships. ### Documentation of AML/CFT responsibilities for each institution (c. 7.4) - Article 15(4B) requires recording the respective responsibilities of the relevant person and the institution to prevent and detect money laundering so both parties clearly understand those responsibilities. - Paragraph 4 of the correspondent banking section of the Handbook for Regulated Businesses contains the same requirement. - Assessors did not identify any material instance in which a bank in Jersey was providing correspondent banking services to banks abroad. ### Payable-through accounts (c. 7.5) - Article 15(4B) requires being satisfied that, in respect of customers of the institution who have services provided directly by the relevant person, the institution has applied CDD measures at least equivalent to those set out in the MLO and is able to provide a copy, at the request of the relevant person, of the evidence, documents, data, and information obtained when applying such measures. - Paragraph 4 of the correspondent banking section of the Handbook for Regulated Businesses contains the same requirement. - Assessors did not identify any case where a Jersey bank had provided payable-through facilities. ### Misuse of new technology for ML/FT (c. 8.1) - Article 11(3)(b) of the MLO requires a relevant person to maintain appropriate policies and procedures which specify the taking of additional measures, where appropriate, to prevent the use for ML or FT of products and transactions which are susceptible to anonymity. - Section 2.4 of the Handbook for Regulated Businesses (in Regulatory Requirements) requires that a relevant person "have systems and controls in place, or take appropriate measures, to guard against the use of technological developments in money laundering or financing terrorism schemes.” - Neither the MLO nor the Handbook refer specifically to technological risks such as: - internet banking (establishing new account relationships by internet or providing services on a non face-to-face basis electronically to existing customers); - the use of credit/debit cards as part of account relationships, particularly to nonresidents on a non face-to-face basis; - security of computer systems, particularly if customer-accessible, to address the risk of fraud, phishing, or other improper access to customer information. - Recommendation: develop more detailed guidance for the Handbook for Regulated Businesses, perhaps in conjunction with financial institutions, to improve effectiveness of current basic requirements. ### Risk of non face-to-face business relationships (c. 8.2 & 8.2.1) - Article 15(3) of the MLO requires a relevant person to apply on a risk sensitive basis enhanced CDD measures where a customer has not been physically present for identification purposes. - Article 11(1) requires a relevant person to maintain appropriate policies and procedures for applying such measures, including both customer identification and ongoing monitoring. - Article 11(3)(b) requires taking additional measures when appropriate to prevent use for money laundering of products and transactions susceptible to anonymity. - Under Section 4.8 of the Handbook for Regulated Businesses (in Regulatory Requirements), additional checks include: - verification of identity using a further identification method listed in Section 4.3.2 of the Handbook; - obtaining copies of identification documents certified by a suitable certifier; - requiring the first payment for the product or service to be drawn on an account in the name of the customer at a bank that is subject to similar CDD standards; - telephone contact with the applicant. - Observations: - Many financial-service relationships in Jersey are conducted on a non face-to-face basis and are typically not regarded as inherently high risk by the majority of institutions. - A minority of institutions said they were applying additional CDD measures. - Assessors formed the view that nonresident non face-to-face business warranted a higher risk classification than appeared to be receiving. ### Recommendations and comments (R.5, R.6, R.8) - R.5: - The authorities should conduct a risk-based review of the current scope of the concessions allowing reliance on third parties to conduct CDD and limit their availability to be strictly consistent with the FATF Recommendations. - If the authorities continue allowing source of funds to be used as a principal basis for verification of identity in certain low-risk circumstances, the requirements should be tightened further to eliminate any remaining risk of abuse for ML or FT purposes. - The authorities should review the permitted exemptions from CDD measures in Article 18 of the MLO to ensure financial institutions must determine that the customer's country of residence is in compliance with and has effectively implemented the FATF standards. - The authorities should amend requirements to ensure all concessions from full identification measures are conditioned on the absence of specific higher risk scenarios. - The authorities should expand the current list of categories of higher-risk customers in the MLO to which enhanced CDD must be applied and consider including private banking and nonresident customers. - The JFSC should conduct a risk-based review of use by relevant persons of the scope to defer completion of full identification requirements under Article 13(4) of the MLO and issue further guidance as needed. - The authorities should amend CDD requirements and guidance as necessary to ensure that, in addition to trusts, all other forms of legal arrangement are addressed adequately and consistently. - The authorities should amend requirements to clarify that, when utilizing the concession permitting an employee of a relevant person to act on behalf of its customer, the relevant person must verify the employee's authority to so act. - R.6: - The JFSC should, including through its on-site examination program, continue to seek effective implementation by financial institutions of the latest CDD requirements for PEPs. - R.8: - The authorities should issue more detailed guidance on the specific ML and FT risks of new and developing technologies, including for example in relation to e-money and e-commerce. ### Compliance summaries for Recommendations 5 to 8 - R.5: PC - Available concessions from conducting full CDD represent an overly-generous implementation of the FATF’s facility to apply reduced or simplified measures for certain low-risk scenarios. - Some concessions are available where the financial institution is not required to determine that the customer resides in a country that is in compliance with and has effectively implemented the FATF standards. - Some exceptions from conducting full CDD are not conditioned on the absence of specific higher risk scenarios. - Current list of high-risk customers in the MLO omits some significant high-risk business categories of relevance in Jersey. - Tighter implementation needed regarding timing of completion of CDD measures for existing customers. - R.6: LC - Implementation of latest requirements for PEPs not yet fully effective in some financial institutions. - R.7: C - R.8: LC - Limited guidance on specific ML and FT risks of new technologies, including in relation to e-money and e-commerce. ### Third parties and introduced business (R.9) — introduction and legal framework - Article 16 of the MLO permits financial institutions and other relevant persons to: - establish a business relationship or carry out a one-off transaction with an intermediary on behalf of a third party; or - establish a business relationship with a customer introduced by an “introducer,” and rely on identification measures performed by the intermediary or introducer, subject to specified conditions. - Article 17 provides a concession, under more limited conditions, for relationships with intermediaries on behalf of undisclosed third parties. - Definitions: - MLO Article 16(6)(a) defines an intermediary as a person who establishes a business relationship or carries out a one-off transaction with a relevant person on behalf of that person’s customer so that the intermediary becomes the relevant person’s customer. - MLO Article 16(6)(b) defines an introducer as a person who has a business relationship with a customer and who introduces that customer to a relevant person with the intention that the introducer’s customer also becomes a customer of the relevant person. - To place reliance under Article 16(1), a relevant person must determine it is appropriate to do so; Section 4.10.1 of the Handbook for Regulated Businesses sets out factors for the risk assessment. - An introducer must consent to being relied on and must confirm that the introduced customer is an established customer. ### Requirement to immediately obtain certain CDD elements from third parties (c. 9.1) - To place reliance under Article 16(4)(d) or (c)(ii), a relevant person must obtain in writing “sufficient information” about: - the third party for whom the intermediary is acting and any beneficial owner or controller of such third party; or - an introduced customer and any beneficial owner or controller, any third party for whom the introduced customer is acting, any beneficial owner or controller of such third party, and any person purporting to act on behalf of an introduced customer. - Section 4.10.3 of the Handbook (Regulatory Requirements) requires a "customer information profile–in line with the guidance for individuals, trustees and legal bodies set out in Sections 4.3 to 4.5." - Assessors note there is no explicit requirement in Article 16 that the relevant person must obtain the identification information about the underlying or introduced customer immediately from the intermediary or introducer, as required for full compliance with Recommendation 9 criteria. - Authorities point out the effect of Articles 13 and 3 is that this information must be obtained before the establishment of a business relationship. - If reliance is placed on an intermediary/introducer for subsequent changes, Section 4.10.3 requires being satisfied the intermediary/introducer will notify the relevant person of any material changes to the customer information. ### Availability of identification data from third parties (c. 9.2) - Under Article 16(4)(b) a relevant person must obtain "adequate assurance" in writing that the intermediary/introducer: - has completed identification measures on the customer; - holds the evidence of identification and the records of such evidence; - will provide access to the evidence to the relevant person without delay upon request; - (for an introducer) the introduced customer is an established customer of the introducer. - Article 16(7) states assurance is adequate if (a) it is reasonably capable of being regarded as reliable, and (b) the person relying on it is satisfied that it is reliable. - Section 4.10.3 (Guidance Notes) states a relevant person may demonstrate access by requiring the intermediary/introducer to provide evidence within five working days of a request, and by periodically requesting such evidence where intermediaries are in jurisdictions known for strict secrecy provisions. - Assessors find guidance is not adequate to address risks where intermediaries/introducers are located in jurisdictions with strict secrecy provisions. - Utilization of the concession should be conditioned on an agreement by the introducer to immediately transfer the CDD evidence to the relevant person upon cessation of business. *Source: _cr09280 - 460. Article 15(4B) of the MLO (effective November 7, 2008) requires a relevant person to apply (IMF assessment text).* ### 477. The assessors note that there is no requirement that a relevant person perform spot testing by ### 477. The assessors note that there is no requirement that a relevant person perform spot testing by ### Regulation and Supervision of Third Party (applying R. 23, 24 & 29, c. 9.3) - Under Article 16(4)(a) of the MLO, to place reliance on an intermediary or introducer a relevant person must know or have reasonable grounds for believing that the intermediary or introducer is: - a person in respect of whom the JFSC discharges functions under the SBL; or - a person that carries on equivalent business. - The JFSC has only recently extended AML/CFT regulation to certain DNFBPs, including lawyers and accountants; these groups may technically fall within the concession but should not be used as intermediaries/introducers until their AML/CFT requirements have been demonstrated to be fully implemented. - Relevant persons must perform a risk assessment on the intermediary/introducer considering factors including: - stature and regulatory track record of the intermediary/introducer; - adequacy of the AML/CFT framework and supervisory regime in its jurisdiction and period of time it has been in place; - adequacy of its AML/CFT measures; and - previous experience and nature of business conducted with the intermediary/introducer. (Handbook for Regulated Businesses, Section 4 Paragraphs 153, 154.) - Article 5 of the MLO requires an “equivalent business” to be subject to requirements to prevent money laundering consistent with the FATF Recommendations and supervised for compliance by an overseas regulatory authority discharging a function the same or similar to a function of the JFSC in respect of preventing and detecting ML. - Handbook concessions within the general concession permitting reliance on an intermediary or introducer: - Section 4.10.4 permits reliance on a group branch/subsidiary registered in another country that is not directly subject to FATF-consistent requirements, if subject to supervision for compliance with group requirements and the group's parent meets "equivalent business" conditions. - Assessors find that a branch/subsidiary not directly subject to FATF-consistent requirements is not effectively "regulated and supervised" within the meaning of Recommendation 9; therefore the Section 4.10.4 interpretation is not fully consistent with Recommendation 9. - Section 4.10.5 permits reliance in certain “low-risk product” situations where the relevant person need not obtain identity information regarding each underlying customer, including: - (i) investment products controlled/administered by the intermediary that are closed-ended and where proceeds are received from and returned to the investor (and not third parties); - (ii) employee benefit schemes administered by the intermediary, funded by the sponsor or by payroll deductions for employees of the sponsor; - (iii) pooling of funds by the intermediary for specified purposes, including facilitation of immovable Jersey property transactions, and certain situations where funds are held temporarily on an undisclosed basis pending transfer; - aggregated deposit acceptance from a bank account in the name of a Jersey regulated person or a financial services business regulated by the Guernsey Financial Services Commission or the Isle of Man Financial Supervision Commission, where funds (and any income) may only be returned to the originating bank account; - where the customer is a Jersey law firm and the relevant person confirms funds relate to immovable Jersey property transactions (this provision became redundant when lawyers in Jersey became subject to the SBL in September 2008). - Assessors agree these particular products appear low risk and that the Handbook is interpreting “sufficient information about the customers” in these circumstances (Article 16(4)(d) of the MLO). ### Adequacy of Application of FATF Recommendations (c. 9.4) - An equivalent business must be subject to AML requirements consistent with the FATF Recommendations. - Handbook Section 1.7.2 (“equivalent jurisdictions”) references Appendix B (nonexclusive list of countries considered equivalent) and Section 1.7.3 lists factors for determining equivalence, including: - whether requirements are established by law, regulation, or other enforceable means; - whether the jurisdiction is a member of the FATF, a Member State of the EU, a member of the European Economic Area, or another Crown Dependency; - the legislation and other requirements in place; - recent independent assessments by FATF, the World Bank and the IMF; and - other publicly available information concerning effectiveness. ### Ultimate Responsibility for CDD (c. 9.5) - Article 16(1)(b) of the MLO provides that, despite reliance on an intermediary/introducer, the relevant person remains liable for any failure to apply identification measures. ### Effectiveness of implementation - Intermediated and introduced business is an important source of new and continuing business for Jersey; the concession to place reliance on intermediaries/introducers is significant for efficiency. - Use of the concession varies across institutions: some replicate full CDD measures in client acceptance; others place maximum reliance on intermediaries/introducers. - Factors affecting effectiveness of implementation include: - inclusion of certain Jersey-regulated DNFBPs within the concession while their AML/CFT measures (particularly lawyers and accountants) had only recently been introduced and effectiveness had not been tested in practice. - difficulty in practice determining whether a foreign introducer is regulated and supervised specifically for AML/CFT (as opposed to prudential or market practice purposes). - Overall conclusion: pragmatic and broadly in line with Recommendation 9, but the concession for introduced business has potential to increase reputational risk for Jersey and its financial institutions and warrants close monitoring. ### Recommendations and Comments (3.3.2) - Authorities should explicitly require that a relevant person must obtain all necessary CDD information from the intermediary or introducer immediately and should consider requiring relevant persons to perform spot-testing of an intermediary or introducer’s performance of CDD obligations. - Authorities should limit the concession allowing financial institutions to rely on intermediary or introducers to conduct CDD in the following cases: - intermediaries or introducers outside Jersey that could be legally restricted in providing CDD evidence to Jersey institutions, and - certain domestic DNFBPs until newly-introduced AML/CFT requirements have been fully implemented. - Authorities should eliminate the concession in the Handbook for Regulated Businesses permitting reliance on an intermediary or introducer that is a group member not itself subject to, nor supervised for compliance with, CDD requirements compliant with Recommendation 5. ### Compliance with Recommendation 9 (3.3.3) - Rating: R.9 PC - Summary of factors underlying rating: - No explicit requirement that relevant persons obtain immediately certain CDD elements from intermediaries and introducers. - No provisions adequately addressing risk that intermediaries and introducers in secrecy jurisdictions may have barriers to providing CDD evidence. - Concession permitting reliance on certain categories of DNFBPs as intermediaries or introducers not appropriate until their AML/CFT requirements are fully implemented. - Concession permitting reliance, as intermediary or introducer, on branch or subsidiary group member not regulated and supervised in accordance with FATF recommendations is not consistent with Recommendation 9. --- ### Financial Institution Secrecy or Confidentiality (R.4) - No statutory financial institution secrecy provisions under Jersey law that would inhibit implementation of the FATF Recommendations; however, strict application of the common law duty of confidentiality applies, subject to the Tournier principles (statutory disclosure, public duty, institution’s interest, or customer consent). - Provisions relevant to AML/CFT: - Articles 34D of the POCL, 40A of the DTOL, and 23 of the TL make it an offense not to report knowledge or suspicion of laundering the proceeds of criminal conduct; primary provisions under which financial institutions report suspicions to the JFCU. - A court order (“production order”) or warrant is required for law enforcement access to confidential client information (Article 41A of the POCL, Article 42 of the DTOL, and Article 31 of the TL). - JFCU access and monitoring powers: Article 41A of the POCL, Article 44A of the DTOL, and Articles 32 and 33 of the TL. - Article 21(4) of the MLO provides for additional information to be provided to the JFCU where a SAR fails to include sufficient information. - No explicit provision generally permitting financial institutions to provide information to each other for AML/CFT purposes; Article 22A of the MLO permits disclosure to another part of the same group/network where appropriate for preventing and detecting money laundering. - In practice, financial institutions did not report confidentiality-related difficulties in exchanging information between themselves for AML/CFT purposes when conducted in accordance with industry practices or meeting CDD requirements pursuant to Recommendations 7 or 9 or SR VII. - Supervisory access to confidential information: - SBL (effective September 2008), regulatory laws, and JFSC law provide powers for the JFSC. - Article 8 of the SBL gives JFSC or authorized agents broad entry, examination, and information requisition powers. - Article 39 of the SBL authorizes the JFSC to enter into mutual assistance arrangements and to conduct investigations on behalf of another regulatory authority. ### Recommendations and Comments (3.4.2) - Provide explicitly that financial institutions do not breach their confidentiality duty in exchanging customer information between themselves for AML/CFT purposes. ### Compliance with Recommendation 4 (3.4.3) - Rating: R.4 LC - Summary of factors underlying rating: - No comprehensive exclusion from common law duty of client confidentiality to permit financial institutions to exchange information for purposes of R.7 and R.9 (other than with relevant persons or within a group). ### Record keeping and wire transfer rules (R.10 & SR.VII) - Record-Keeping & Reconstruction of Transaction Records (c. 10.1 & 10.1.1): - Under Article 19(2)(b) and Article 20(3) of the MLO, a relevant person must keep a record containing details relating to each transaction carried out in the course of any business relationship or one-off transaction for a period of five years commencing with the date on which the transaction is completed. - Under Article 20(5), the JFSC may notify the relevant person of a record retention period longer than five years, and such longer period shall apply instead of five years. - Article 19(3) of the MLO requires records to be sufficient to enable the reconstruction of individual transactions. - Section 8.3 of the Handbook for Regulated Businesses (Regulatory Requirements) requires records to contain: - The name and address of the customer; - If a monetary transaction, the kind of currency and the amount; - If the transaction involves a customer’s account, the number, name or other identifier for the account; - The date of the transaction; - Details of the counterparty, including account details; and - The nature of the transaction. - Record-Keeping for Identification Data, Files and Correspondence (c. 10.2): - Under Article 19(2)(a) and Article 20(1) of the MLO, a relevant person must keep a record comprising: - a copy of the evidence of identity obtained pursuant to the application of CDD measures or information that enables a copy of such evidence to be obtained; and - all the supporting documents, data or information that have been obtained in respect of a business relationship, for a period of at least five years commencing with the date on which the business relationship ends. *Source: _cr09280 - 477. The assessors note that there is no requirement that a relevant person perform spot testing by* ### 496. Under Article 19(2)(a) and Article 20(2) of the MLO, a relevant person must keep a record ### _cr09280 - 496. Under Article 19(2)(a) and Article 20(2) of the MLO, a relevant person must keep a record ### Record retention (Articles 19 and 20) - A relevant person must keep a record comprising: - a copy of the evidence of identity obtained pursuant to the application of CDD measures or information that enables a copy of such evidence to be obtained; and - all the supporting documents, data or information that have been obtained in respect of a one-off transaction which is the subject of CDD measures, for a period of at least five years commencing with the date on which the one-off transaction is completed. - Under Article 20(5), the JFSC may notify to the relevant person a record retention period longer than five years, and such longer period shall apply instead of five years. - Where a relevant person is an introducer or intermediary and has given assurance to another relevant person that it will retain the evidence as required and make it available without delay, it is required to do so under Article 19(5) of the MLO (added as of November 7, 2008). - Article 19(4) requires records to be kept in such a manner that they can be made available on a timely basis to the JFSC, Police officer or Customs officer for the purposes of complying with a requirement under any enactment. ### Effectiveness of implementation — R.10 (records) - Financial institutions confirmed retention of records of account opening, customer correspondence and transactions for a minimum of the five period required and, for some institutions, considerably longer. - No barrier identified to access by the JFSC or law enforcement when exercising powers under proper procedure. - Residual risk: records maintained outside Jersey due to concessions regarding intermediaries or introducers may be legally restricted or delayed in meeting obligations to provide records to Jersey. ### Wire transfers — context and derogation (SR.VII introduction) - Because Jersey is in monetary union with the U.K. and its service providers make full use of U.K. domestic payment systems, in accordance with Article 18 of EU Regulation 1781/2006, the U.K. Treasury applied to the EU for, and was granted on December 8, 2008, a derogation to be applied to EU Regulation 1781/2006. - The derogation allows EU member states to establish agreements with territories outside the EU with whom they share a monetary union and payment and clearing systems, so that the reduced information requirement for intra-EU transfer can apply between the Member State and its associated territory. - The derogation would not apply between that territory and any other EU Member State. - The Jersey authorities are close to concluding the necessary agreement with the U.K. to formalize transitional provisions that have applied since 2007 and which have allowed payments to be treated as domestic with reduced information. - Transfers within the U.K. Payment Area (the U.K., Jersey, Guernsey, and Isle of Man) are treated as domestic transfers under SR VII, but transfers between Jersey and other EU Members continue to be treated as cross-border transfers. ### Implementation of Wire Transfer Regulations (WTR) - Jersey enacted secondary legislation based on EU Regulation 1781/2006—WTR—which came into force in July 2007 and was updated in December 2007. - The Handbook for Regulated Businesses contains a separate section with detailed guidance on the WTR. - Coverage includes international payment transfers made via SWIFT, EUR payment systems, and transfers within the U.K. Payment Area via CHAPS and BACS. - Consistent with the EU Regulation, the WTR does not apply to payments between financial institutions as principal or to credit/debit card transactions (Regulation 5). ### Obtain originator information for wire transfers (Regulation 6 and related) - Except for transfers within the U.K. Payment Area, Regulation 6(1) requires the PSP of the payer to ensure transfers are accompanied by complete information on the payer. - Regulation 6(5) requires the PSP of the payer to keep for five years a record of complete information on the payer that accompanies a transfer of funds. - For the purpose of the WTR, "complete information on the payer" means the payer’s name, address and account number, except that: - the payer’s address may be substituted with the payer’s date and place of birth, customer identification number or national identity number; and - if the account number of the payer does not exist, the payer’s PSP shall substitute it with a unique identifier, which allows the transaction to be traced back to the payer. - Regulation 6(2) requires the PSP of the payer to verify, before transferring the funds, the complete information on the payer on the basis of documents, data or information obtained from a reliable and independent source. - Regulation 6(3): complete information on a payer shall be deemed to have been verified if the PSP of the payer is a relevant person that has complied with the CDD requirements of the MLO. - Regulation 6(4): in the case of a one-off transaction, complete information shall be deemed verified if the transfer consists of a transaction of an amount of EUR1,000 or less, the transfer is not a transaction that is carried out in several operations that appear to be linked that together comprise an amount of more than EUR1,000, and the PSP does not suspect that the payer is engaged in ML or FT. - For payments within the U.K. Payment Area, Regulation 7(1) provides that the transfer of funds need only be accompanied by the payer’s account number or a unique identifier allowing the transaction to be traced back to the payer. ### Inclusion and maintenance of originator information (batch, domestic, intermediary obligations) - Batch transfers: obligation to include complete information on the payer in each transfer does not apply if the batch file contains the complete information on the payer and individual transfers carry the account number or unique identifier. - Regulation 7(2): if the PSP of the payee requests, the PSP of the payer shall, within three working days after the day on which the provider receives the request, make the complete information on the payer available to the PSP of the payee. - Regulation 15 of the WTR, with Articles 42 and 44A DTOL, Articles 40 and 41A POCL, and Articles 31 to 33 of the TL, provides for an order by the Bailiff that a PSP shall make complete information on the payer available within such period as the order may specify and provide records in relation to the payer. - Regulation 13 requires an intermediary PSP to ensure all received information on the payer that accompanies a transfer is sent with the transfer. - Regulation 9(1) requires the PSP of the payee to determine whether fields within messaging or payment and settlement systems that include information on the payer have been completed in accordance with the conventions of that system. - Regulation 9(2) requires the PSP of the payee to have effective procedures to detect cases where complete information on the payer is missing. - Regulation 14(6) provides that an intermediary PSP which used a system with technical limitations preventing information from accompanying the transfer shall keep for five years records of all information on the payer that it has received. ### Risk-based procedures and handling missing originator information - Regulation 9(1) and 9(2) require PSPs of payees to detect and have procedures for missing/incomplete payer information. - Paragraph 38 of the wire transfers section of the Handbook requires a PSP to subject incoming payment traffic to an appropriate level of post-event risk-based sampling to detect non-compliant payments. - Regulation 10(1) provides that if the PSP of the payee becomes aware that information on the payer is missing or incomplete, the PSP shall: reject the transfer; ask for the complete information on the payer; or take another action specified by an Order of the Minister for Treasury & Resources. - Under Regulation 10(3), if the PSP of the payer regularly fails to supply required information, the PSP of the payee must report that fact to the JFCU and the JFSC. - Regulation 10(4): the PSP of the payee must take steps to ensure the PSP of the payer complies, which may include issuing warnings and setting deadlines. - Regulation 10(5): if non-compliance persists, the PSP of the payee must either reject future transfers from that PSP or decide whether to restrict or terminate its business relationship with the provider. - Regulation 11: where missing/incomplete information and the PSP knows or suspects ML, it must report that knowledge or suspicion to the JFCU. ### Monitoring, sanctions and supervisory powers - Regulation 14A charges the JFSC with effectively monitoring PSPs and taking necessary measures to secure compliance with the WTR. - Regulation 14B powers include requiring information/documents, appointing an inspector, and entering and searching premises with a Police officer; it also provides a gateway to pass information to other supervisors. - In 2008, 16 risk-themed examinations of banks were conducted covering corporate governance, CDD requirements, monitoring, reporting and compliance with the WTR. - Regulation 14C sets out offenses for failure to follow WTR requirements. - Regulation 14D sets out penalties, typically imprisonment for two years and an unlimited fine. - The JFSC may apply SBL powers for failure to comply with Regulatory Requirements in the Handbook, including imposing license conditions (Article 17(3) SBL), issuing directions (Article 23 SBL), and issuing public statements (Article 26 SBL). - JFSC may revoke a PSP’s license under the BBJL or FSJL where failure to follow Codes of Practice provides grounds for revocation. - For PSPs not required to register under the BBJL or FSJL, the JFSC may direct that PSP to cease activities. ### Additional elements and thresholds - There is no requirement to require all incoming or outgoing cross-border transfers under EUR/USD1,000 to contain full and accurate originator information (other than where transactions appear linked to comprise more than EUR1,000 or the PSP suspects money laundering). ### Effectiveness of implementation — SR.VII - At the time of the on-site visit, Jersey banks were operating on the basis of the (then-pending) EU derogation. - Banks reported policy to provide full originator information with all outgoing wire transfers, but transfers to the U.K., Isle of Man, and Guernsey were treated as domestic and put through the U.K. clearing system without full originator information (though either a name or unique identifier was provided). - Recipient banks have secondary responsibilities on receipt of wire transfers omitting full originator information; several banks indicated procedures limited to spot checking incoming transfers for originator information. - Unclear how many such transfers were followed up or held pending provision of originator details; some banks monitor patterns of missing details and follow up with habitual offenders. - Assessors concluded this approach falls short of the “effective risk-based procedures for identifying and handling” such transfers, as called for by SR.VII. ### Recommendations - R.10: - [none] - SR.VII: - The authorities should take steps to ensure a stricter approach by Jersey financial institutions when dealing with incoming wire transfers that lack originator information. ### Compliance ratings and underlying factor - R.10: C - SR.VII: LC - Liberal interpretation by financial institutions of the risk-based approach in dealing with incoming wire transfers that lack full originator information. ### Monitoring of transactions and relationships (intro to R.11 & R.21) - Article 15(1)(b) of the MLO requires a relevant person to apply on a risk-sensitive basis enhanced CDD measures in any situation which by its nature can present a higher risk of ML. - Article 11(1) of the MLO requires a relevant person to maintain appropriate policies for the application of CDD measures, which must have regard to the risk of ML and FT. - Section 5 of the Handbook for Regulated Businesses addresses monitoring of activity and transactions. - Article 11(3) requires policies and procedures to provide for the identification and scrutiny of complex or unusually large transactions, and unusual patterns of transactions which have no apparent economic or visible lawful purpose. - Section 5.2 (Regulatory Requirements) states that monitoring procedures must devote more intensive scrutiny to higher-risk customers and activity, including complex transactions, unusual large transactions, and unusual patterns of transactions that have no apparent visible lawful purpose. *Source: _cr09280 - 496. Under Article 19(2)(a) and Article 20(2) of the MLO, a relevant person must keep a record* ### 516. Section 5.2 of the Handbook for Regulated Businesses provides (in Regulatory ### _cr09280 - 516. Section 5.2 of the Handbook for Regulated Businesses provides (in Regulatory ### Monitoring procedures and record-keeping (complex, unusual, and no-apparent-purpose transactions) - Section 5.2 of the Handbook for Regulated Businesses (Regulatory Requirements) requires monitoring procedures to examine: - complex transactions, - unusual large transactions, and - unusual patterns of transactions which have no apparent economic or visible lawful purpose, - to determine their background and purpose, to establish whether there is a rational explanation, and to document these findings in writing. (paragraphs 516, 523) - Record-keeping obligations under the MLO: - Article 19(2)(a) and Article 20(1): keep all supporting documents, data or information obtained in respect of a business relationship for a period of at least five years commencing with the date on which the business relationship ends. (paragraph 517) - Article 19(2)(a) and Article 20(2): keep all supporting documents, data or information obtained in respect of a one-off transaction subject to CDD procedures for a period of at least five years commencing with the date on which the one-off transaction is completed. (paragraph 517) - Article 19(2)(b) and Article 20(3): keep details relating to each transaction carried out in the course of a business relationship or one-off transaction for a period of five years commencing with the date on which all activities taking place within the course of the transaction were completed. (paragraph 517) - Section 8.4.3 of the Handbook requires maintaining adequate and orderly records containing the findings of reviews of the transactions described above for the respective periods referenced. (paragraph 517, repeated in 523) ### Effectiveness of implementation (monitoring & risk-based policies) - Assessors’ findings: - Financial institutions had developed or were developing risk-based policies with special attention to unusual transactions and patterns. Material transactions inconsistent with customer profiles were identified, considered, and queried where warranted. (paragraph 518) - Country risk was a main factor identified by financial institutions; potential customers and transactions from jurisdictions with weak AML/CFT controls attracted particular scrutiny. (paragraph 526) - Authorities did not identify any instance where they applied or sought to apply countermeasures against another jurisdiction. (paragraph 527) ### Enhanced CDD and treatment of jurisdictions not sufficiently applying FATF Recommendations - Legal and Handbook provisions: - Article 15(1)(b) of the MLO (effective November 7, 2008): relevant persons must apply on a risk-sensitive basis enhanced CDD measures in any situation which by its nature can present a higher risk of ML. (paragraph 519) - Article 11(1) of the MLO: relevant persons must maintain appropriate policies for application of CDD measures with regard to the risk of ML and FT. (paragraph 519) - Article 15(1)(a) and Article 15(3A) (effective November 7, 2008): enhanced CDD required where the business relationship or one-off transaction is with a person connected with a country or territory that does not apply, or insufficiently applies, the FATF recommendations. (paragraph 520) - Article 11(3)(d) (effective November 7, 2008): relevant persons must have policies and procedures to determine whether a business relationship or transaction is with a person connected with a country or territory that does not apply, or insufficiently applies, the FATF recommendations. (paragraph 520) - Section 3 and Section 5 of the Handbook address factors to consider when establishing business relationships and monitoring transactions, respectively, and identify jurisdictions with organized crime, links to terrorist activities, vulnerability to corruption, EU or UN sanctions, and FATF non- or insufficient-applying jurisdictions as higher risk. (paragraphs 521, 522) - Section 5.2.1 allows relevant persons to consider findings of reports by the FATF, FATF-style regional bodies, OGBS, the IMF, and the World Bank when determining which jurisdictions do not, or insufficiently, apply the FATF Recommendations; Appendix D lists jurisdictions covered by relevant FATF statements and is updated as necessary. (paragraph 522) ### Examination and documentation of transactions connected to high-risk jurisdictions - Section 5.2 requires monitoring procedures to establish whether there is a rational explanation (an apparent economic or visible lawful purpose) for activity and transactions connected with jurisdictions which do not, or insufficiently, apply the FATF Recommendations, and to document these findings in writing. (paragraph 523) - Article 19(2)(a) and Article 20(1)/(2) specify five-year retention periods for records of business relationships and one-off transactions subject to CDD measures; Section 8.4.3 reinforces the need to keep adequate and orderly records of findings. (paragraph 523) ### Ability to apply countermeasures (scope and limitations) - Article 23C of the MLO (effective November 7, 2008) authorizes the Minister to direct relevant persons to: - not enter into a business transaction or carry out a one-off transaction; - not proceed any further with a business relationship or one-off transaction; - impose any prohibition, restriction or limitation on, or apply enhanced CDD to, a business relationship or one-off transaction, - in each case with any person situated or incorporated in a country or territory to which the FATF has applied countermeasures. (paragraph 524) - Assessors’ observation: - The list of possible countermeasures appears adequate, but the Minister’s authority is limited to countries or territories to which “the FATF has applied countermeasures,” which appears narrower than authority to apply measures to countries that continue not to apply or insufficiently apply the FATF Recommendations. (paragraph 525) ### Recommendations, ratings, and identified shortcomings - Recommendation R.21: - Authorities should amend the power to apply countermeasures to remove the limitation tying it to the actions of the FATF. (paragraph 3.6.2 Recommendations and Comments) - Compliance ratings summary: - R.11 — C - R.21 — LC - Underlying factor cited: Power to use countermeasures restricted by its dependence on FATF actions. (paragraph 3.6.3) ### Suspicious Transaction Reports (STRs) and reporting framework (R.13-14, 19, 25 & SR.IV) - Legal framework and reporting obligations: - Reporting of suspicions of ML and terrorist offenses provided in Articles 40 and 40A of the DTOL, Articles 34A and 34D of the POCL, and Articles 20 and 23 of the TL. Reporting must be made to a Police or Customs officer or to a MLRO or other designated officer in a relevant person, consistent with internal procedures established by an employer and Article 21 of the MLO. Section 6 of the Handbook addresses reporting. (paragraph 528) - For financial institutions, Articles 34D of the POCL, 40A of the DTOL, and 23 of the TL create an offense for an employee who knows or suspects, or has reasonable grounds for knowing or suspecting, that another person is engaged in ML or drug money laundering or has committed specified TL offenses and does not report that information to a Police or Customs officer or to a MLRO or other designated officer consistent with employer procedures; the employer (relevant person) also commits an offense if a report is not made. (paragraph 529) - Article 21(1)(c) of the MLO requires relevant persons to maintain reporting procedures; Article 21(1)(h) allows disclosure to a “designated Police officer or designated customs officer” when appropriate; Article 6 of the MLO designates the JFCU as the appropriate recipient of such reports. Amendments to POCL, DTOL, and TL to reflect reports to a “designated” Police or Customs officer were pending Privy Council approval at the time of the assessment. Assessors consider MLO provisions adequate to designate the JFCU as the reporting office. (paragraph 530) - The POCL failure-to-report offense covers proceeds of any offense in Jersey for which conviction could bring imprisonment of one or more years; the DTOL failure-to-report offense covers drug money laundering. Together they cover offenses in the designated categories under FATF Recommendation 1. (paragraph 531) - Nature of the reporting requirement: - The statutory provisions create an offense for failing to report rather than an explicit direct reporting duty; assessors judged the inverted formulation to be, on balance, equivalent in law to a direct reporting requirement and not to negatively affect reporting decisions. (paragraph 532) - Assessors noted potential delay or deterrence risks because internal reporting must be to the MLRO (or deputy MLRO) rather than directly to the JFCU; this could slow down reporting or deter reports in some cases. (paragraph 533) - Article 34D(6) of the POCL provides that an employee does not commit an offense for failure to disclose information that comes to their attention in the course of employment if the financial services business failed to provide required training and the training would have been material; the institution could be subject to sanction for failing to report and for failing to train its employees adequately. (paragraph 534) ### STR scope: terrorism, attempted transactions, tax-related suspicions - STRs related to terrorism: - Reporting provision applies where a relevant person knows or suspects, or has reasonable grounds for knowing or suspecting, that another person has committed an offense under any of Articles 15 to 18 of the TL. Articles 15–17 criminalize: (a) fund-raise for terrorism, (b) use and possess property used or may be used for terrorism, and (c) enter into arrangements making property available knowing it will or may be used for terrorism; Article 18 criminalizes handling proceeds of a terrorist offense. The failure-to-report offense under the TL applies where the person has reasonable grounds to suspect, or knows or suspects, such terrorist financing offenses. (paragraphs 535–537) - No reporting threshold and attempted transactions: - All suspicious transactions, including attempted transactions, must be reported under Articles 34D of the POCL, 40A of the DTOL, and 23 of the TL. The reporting threshold is knowing or suspecting, or having reasonable grounds for knowing or suspecting, that another person is engaged in ML or has committed an offense under Articles 15 to 18 of the TL; there is no need for a transaction to have occurred and there is no monetary threshold. Section 2.4 of the Handbook requires systems and controls to enable reporting to the JFCU when a person knows, suspects or has reasonable grounds to know or suspect involvement in ML or FT, including attempted transactions. Financial institutions confirmed they consider themselves obliged to report suspicious attempted transactions. (paragraph 538) - Reporting regardless of tax matters: - The failure-to-report offenses apply to suspicious transactions that involve tax. Article 34D of the POCL concerns reporting knowledge or suspicion of money laundering, defined via Articles 32 and 33 as assisting another to retain benefits of, or acquire/possess/use, proceeds of “criminal conduct,” where criminal conduct is any offense punishable by imprisonment for one or more years. While Jersey has no separate statutory offense of tax evasion per se, failure to submit a tax return is an offense and such conduct could be prosecuted as “serious fraud” and constitute a predicate offense for money laundering. Section 2.7.5 of Part 2 of the Handbook explains that fraud-related offenses, including fiscal offenses (such as tax evasion) and exchange control violations, can predicate ML in Jersey. (paragraph 539) *Source: Extract from the assessed chapter and sections of the Handbook for Regulated Businesses and related legislative provisions as presented in the provided content unit.* ### 540. As described in section 2 of this report, Jersey does not require dual criminality; all predicate ### _cr09280 - 540. As described in section 2 of this report, Jersey does not require dual criminality; all predicate ### Effectiveness of implementation - Jersey does not require dual criminality; all predicate offenses for money laundering extend to any conduct committed abroad, regardless of whether or not the conduct constitutes an offense in the country where it was committed. - Financial institutions interviewed were very familiar with responsibilities regarding reporting of suspicions of ML or FT to the JFCU. - Financial institutions accounted for more than 60 percent of the SARs received by the JFSC in the period 2005-08. - Reported SARs by type of business (using classifications employed by the JFCU): - Banks: 697 67% (2006); 980 65% (2007); 849 61% (2008) - Trust Companies: 216 20% (2006); 362 24% (2007); 328 23% (2008) - Investment/Fund Manager: 36 3% (2006); 47 3% (2007); 34 2% (2008) - Funds: 30 3% (2006); 49 3% (2007); 73 5% (2008) - Other: 55 5% (2006); 79 5% (2007); 120 9% (2008) - Total: 1,034 (2006); 1,517 (2007); 1,404 (2008) - The JFCU indicated general satisfaction with the quantities and quality of reports and with follow-up cooperation of financial institutions. - Internal review processes (Article 21 of the MLO) may delay SAR submission to the JFCU; some institutions indicated a typical decision process of about a week unless urgent. - Assessors view that system processes in each financial institution determine the length of time for SAR submission and the degree of discretion allowed to staff; they recommend reviewing the system to improve overall efficiency and effectiveness. ### Protection for Making STRs (c. 14.1) - Relevant statutory protections: - Articles 32(3)(a), 33(5)(a), 34A(3), and 34D(9) of the POCL - Articles 37(3)(a), 38(5)(a), 40(4), and 40A(9) of the DTOL - Articles 21(3) and 24 of the TL (where a report is made under the TL) - Article 21(2) or (4) of the MLO and Article 37(3) of the POCL (where information is provided to the JFCU in accordance with internal reporting procedures) - Protections specify that disclosures made shall not be treated as a breach of any restriction imposed by statute, contract or otherwise, and may "not involve the person making it in any liability of any kind." - Protection is available even if a person does not know precisely what the underlying criminal activity is, and regardless of whether illegal activity has actually occurred. - Shortcoming: provisions do not limit protection to reports made in good faith; assessors note non-compliance with FATF Recommendations for this reason. ### Prohibition Against Tipping-Off (c. 14.2) - Statutory tipping-off provisions: - Article 35 of the POCL and Article 41 of the DTOL: guilty of tipping-off if a person knows or suspects that a report has been made to a Police or Customs officer (or to a MLRO or other designated officer) and discloses information likely to prejudice any investigation; amendments include disclosure of a report that will be made to prevent pre-report tipping-off (amendments approved by the States and awaiting Privy Council approval at time of assessment). - Article 35 of the TL: guilty of tipping-off if a person knows or has reasonable cause to suspect that a disclosure has been or will be made and discloses anything likely to prejudice any investigation. - Assessors' conclusion: Jersey prohibition is not sufficiently broad compared with Recommendation 14 because it is based on whether disclosure is "likely to prejudice an investigation" rather than prohibiting disclosure of the fact that an SAR has been filed; this may permit cases where an individual (possibly in good faith) concludes disclosure would not be likely to prejudice an investigation, complicating prosecution. ### Confidentiality of reporting staff (c. 14.3) - Articles 40B of the DTOL, 29 of the POCL, and 24A of the TL provide that information disclosed in a SAR shall not be disclosed other than as specifically permitted by those laws. - JFCU practice: personal details of staff of reporting institutions are not disclosed to overseas FIUs; SAR content is sanitized to protect the source. - Exception: SARs shared with the JFSC are shared in their entirety to assist the JFSC with its statutory functions. ### Consideration of reporting currency transactions above a threshold (c. 19.1–19.3) - Jersey’s AML/CFT Strategy Group last considered feasibility of a currency-reporting system in September 2007 and decided against introduction on these grounds: - The JFCU already receives a significant number of SARs and a threshold-based system might adversely impact operational effectiveness by diluting focus to amount-based reports. - Use of automated pattern recognition software might undermine the Island’s AML/CFT ethos emphasizing a relevant person knowing its customer well. - Few European jurisdictions have such systems; effectiveness in Jersey would likely be reduced if surrounding jurisdictions did not have similar systems. - Relevant persons (mostly subsidiaries or branches of European companies) may resist incurring costs and devoting resources to develop systems where they could not rely on group expertise. - Transaction size is only one element of risk; setting a financial threshold is arbitrary and would ignore other significant risks. - Additional elements (19.2 and 19.3): Not applicable. ### Feedback to financial institutions (c. 25.2) - Financial institutions expressed broad satisfaction with feedback received following SAR submission to the JFCU. - All SARs are acknowledged; significant level of direct follow-up by JFCU on individual reports. - Institutions understand JFCU cannot always keep them informed of investigative progress, especially when matters are passed to other jurisdictions, but appreciated occasions when outcomes were communicated. - Industry-level typologies feedback: joint JFCU, JFSC, and Law Officers’ Department publication "Typologies from a Jersey Perspective" issued in October 2008 (includes information on typologies and trends internationally and locally). ### Recommendations and Compliance Ratings (3.7.2 and 3.7.3) - Recommendations (3.7.2): - R.13: The JFCU and JFSC should consider steps to enhance the timeliness of reporting of suspicious transactions to the JFCU. - R.14: - The law should be amended to limit protection for those reporting suspicious transactions to those acting in good faith. - The tipping-off offense should be broadened by removing the limitation referring to situations that might prejudice an investigation. - SR.IV: The JFCU and JFSC should consider steps to enhance the timeliness of reporting of suspicious transactions to the JFCU. - Compliance ratings and factors (3.7.3): - R.13: LC - To enhance effectiveness, there appears to be scope to improve the timeliness of SAR reporting. - R.14: PC - The protection for SAR reporting is not limited to good faith reporting. - Tipping-off provision not fully consistent with international standard in being limited to situations that might prejudice an investigation. - R.19: C - R.25: C - SR.IV: LC - To enhance effectiveness, there appears to be scope to improve the timeliness of SAR reporting. ### Internal controls, compliance, audit and related measures (R.15 & R.22) - Legal and regulatory framework: - Article 11(1) MLO requires financial institutions and relevant persons to maintain appropriate policies and procedures covering: customer due diligence measures; reporting; record-keeping; screening of employees; internal control; risk assessment and management; monitoring and management of compliance; and internal communication of such policies and procedures. - Article 11(2) defines "appropriate" policies and procedures as those developed having regard to the risk of money laundering and taking into account the financial institution’s type of customer, business relationships, products, or transactions. - Parts 3, 4, and 5 of the MLO set requirements for customer due diligence, record-keeping, and reporting of suspicious activities. - Article 11(9) MLO requires financial institutions to communicate AML/CFT requirements to staff whose duties relate to provision of financial services. - Monitoring, testing, and MLCO: - Article 11(11) MLO requires financial institutions to maintain adequate procedures for monitoring and testing the effectiveness of implementation of policies, procedures, and training. - Article 7 MLO requires appointment of a Money Laundering Compliance Officer (MLCO); Article 7(2A) requires MLCO to be of appropriate seniority and have timely access to records. - MLCO monitors compliance with enactments relating to ML or FT. - Handbook for Regulated Businesses Section 2.3 places onus on the board to assess effectiveness and compliance and to act on deficiencies; Section 2.4.2 provides guidance on demonstrating assessment of compliance via periodic MLCO compliance reports. - Section 2.5 requires MLCO to have appropriate independence, seniority, and authority; JFSC may object to appointment if not "fit and proper." - Although Article 7 MLO does not specify MLCO must be at management level, essential elements appear captured. - Audit function and training: - No legal/regulatory requirement to maintain an adequately resourced and independent audit function as per international standard; MLCO may cover some functions but not equivalent independence. - In practice, most financial institutions are subject to internal audits covering AML/CFT; subsidiaries typically receive periodic group internal audit visits; external auditors include CDD and AML/CFT matters to some degree in annual audits. - Article 11(9) and Article 11(10) MLO require measures and training for employees; Section 7.5 of the Handbook requires training to be adequate and tailored, covering key AML/CFT legislative requirements and provided to Board, MLCO, MLRO, and deputy MLROs. - All financial institutions interviewed confirmed provision of AML/CFT training, maintain records of training for employees, and make those records available for audit or JFSC inspection. - Employee screening: - Article 11(1)(d) MLO requires relevant persons to maintain appropriate (risk-based) employee screening policies and procedures. - JFSC considers employee screening as part of on-site supervision; mandatory Codes of Practice require prudentially supervised relevant persons to vet and monitor employee probity (specific paragraph references provided in Codes of Practice). - Financial institutions confirmed prospective employees are routinely vetted. - Independence of compliance officer (additional element—c. 15.5): - Handbook Section 2.5 specifies MLCO must have appropriate independence, seniority and authority to ensure the Board acts on recommendations and reports directly to the Board. - Section 6 requires MLRO to have appropriate independence and ability to raise issues directly with the Board. - Summary observation: - No statutory requirement for an independent audit function; MLCO role may cover some audit functions but not necessarily with required independence. *Italic: Source: _cr09280 - 540. As described in section 2 of this report, Jersey does not require dual criminality; all predicate (excerpt).* ### 560. With the exception of an explicit requirement for an independent audit function, the legal ### _cr09280 - 560. With the exception of an explicit requirement for an independent audit function, the legal ### Implementation of AML/CFT policies and inspections - The legal framework broadly complies with Recommendation 15 except for an explicit requirement for an independent audit function; it is set out in secondary legislation, supplemented by other enforceable means, and supported by relevant guidance notes. - Financial institutions interviewed confirmed they had AML/CFT policies and procedures, in varying levels of detail and complexity, and provided and kept records of regular staff training in AML/CFT. - In a number of cases procedures draw heavily on the experience of the (U.K. or other home jurisdiction) parents of the financial institutions. - The JFSC is conducting an ongoing series of AML/CFT themed inspections that check existence and quality of internal control policies and procedures and practical implementation of resultant controls. - Deficiencies and weaknesses have been identified by the JFSC in certain institutions and remedial action has been required. ### Application of AML/CFT Measures to Foreign Branches & Subsidiaries (c. 22.1, 22.1.1 & 22.1.2) - Article 10A MLO requires that any branch or subsidiary of a relevant person carrying on financial services business outside Jersey applies measures at least equivalent to the requirements of the MLO, except where local law prohibits such compliance; Article 10A(7) requires the financial institution to inform the JFSC if such legal barriers apply. - No explicit legal/regulatory requirement to pay particular attention to applying Jersey-equivalent AML/CFT measures for branches/subsidiaries in countries that do not or insufficiently apply the FATF Recommendations. - Article 11(1) MLO requires relevant persons to maintain appropriate policies for application of CDD measures with regard to the risk of ML and FT. - Article 11(3) MLO requires policies to provide for identification and scrutiny of: - Business relationships and transactions connected with countries or territories which do not or insufficiently apply the FATF Recommendations; and - Business relationships and transactions with persons or countries or territories that are subject to measures imposed by one or more countries for insufficient or nonexistent application of the FATF Recommendations or otherwise sanctioned by the EU or UN for purposes connected with the prevention of ML and FT. - Article 10A(10) requires compliance with more stringent local requirements where applicable. ### Requirement to inform home supervisor if foreign branches/subsidiaries cannot implement measures (c. 22.2) - Article 10A(7) requires that if local legal barriers prevent application of Jersey’s AML/CFT requirements in a foreign branch or subsidiary, the financial institution must inform the JFSC. ### Consistency of CDD measures at group level (c. 22.3) - No requirement in law, regulation, or other enforceable means to apply consistent CDD measures at group level for activities of a customer with different parts of a Jersey financial services group. ### Recommendations and Comments R.15 - The authorities should introduce a requirement in law, regulation, or other enforceable means that, having regard to the size and nature of the business, financial institutions maintain an adequately resourced and independent audit function to test compliance with AML/CFT procedures. - The authorities should clarify that the current provisions for timely information access for compliance officers must include customer identification data and other CDD information, transaction records, and other relevant information, including where that documentation or information is held by third parties, in or outside Jersey. R.22 - The authorities should introduce a requirement in law, regulation, or other enforceable means for financial institutions to pay particular attention to the requirement to apply AML/CFT measures at least equivalent to those in Jersey in the cases of branches or subsidiaries in countries that do not or insufficiently apply the FATF Recommendations. - The authorities should introduce a requirement that financial institutions must apply consistent AML/CFT requirements at group level to customers doing business with different parts of the group. ### Compliance with Recommendations 15 & 22 — Ratings and factors - R.15: LC - There is no requirement in law, regulation, or other enforceable means expressly covering AML/CFT to maintain an adequately resourced and independent audit function (having regard to the size and nature of the business). - The current requirement for timely information access for compliance officers, though drafted in broad terms, is not sufficiently detailed. - R.22: LC - No explicit requirement in law, regulation, or other enforceable means for particular attention to the need to apply AML/CFT measures at least equivalent to those in Jersey in the cases of branches or subsidiaries in countries that do not or insufficiently apply the FATF Recommendations. ### Shell Banks (R.18) — Description, analysis, and compliance - Prohibition of establishment of shell banks (c. 18.1): - Article 10(1) BBJL precludes JFSC from considering registration if the applicant: - is to have no physical presence in Jersey involving meaningful decision-making or management; and - is not subject to supervision by an overseas regulator by reason of the applicant’s connection with any other institution or person. - Article 10(1) also requires the JFSC to revoke a permit where the above conditions apply. - The JFSC confirmed no shell banks are established in Jersey. - Managed banks remain authorized in Jersey and are subject to AML/CFT and prudential requirements. - Prohibition of correspondent banking with shell banks (c. 18.2): - Article 23A MLO: a Jersey bank must not enter into or continue a banking relationship with a shell bank. - Requirement to ensure respondent financial institutions prohibit use of accounts by shell banks (c. 18.3): - Article 23A MLO requires banks to take appropriate measures to ensure they do not enter into, or continue, a banking relationship with a bank known to permit its accounts to be used by a shell bank. - R.18: C ### The Supervisory and Oversight System—Competent Authorities and SROs (R.23, 29, 17 & 25) Regulation and supervision of financial institutions (c. 23.1) - All financial institutions in Jersey are subject to AML/CFT regulation and supervision under the POCL, DTOL, TL, and MLO. - Article 5 SBL appointed the JFSC as supervisory body for all regulated persons and empowered it to issue mandatory Codes of Practice and to supervise compliance with the SBL, the MLO, and Codes of Practice. - The JFSC updated the Handbook for Regulated Businesses in October 2008, with further revisions in December 2008. - The JFSC has been conducting ongoing thematic AML/CFT on-site inspections linked to the introduction of the risk-based approach and implementation of AML/CFT procedures. JFSC thematic findings (summarized) - Banks have largely introduced ML/FT risk management approaches classifying customers, products, transactions and jurisdictions into higher, standard and lower risk; being part of large international groups aids adherence to local laws and regulatory requirements. - Collection of identification evidence is generally well-handled; appropriate requirements in place for source of funds and source of wealth, though actual performance is variable within and between banks. - Banking sector largely operates in accordance with regulatory obligations under Laws, Orders, and Codes of Practice, but significant work remains to achieve consistent compliance. - Areas requiring improvement include: - Conducting and maintaining a business risk assessment for AML/CFT to the detailed standards required by the JFSC. - Managing intermediary and introducer-sourced business, particularly historical business, with wide divergence in due diligence applied to intermediaries. - Ensuring consistent and stringent application of board/management-determined policies and procedures. - Potentially large numbers of existing customers requiring remediation in respect of risk assessment and CDD. - Weaknesses identified in application of AML/CFT requirements for PEPs; the category is defined widely in practice by banks and includes many domestic and foreign officials and elected persons who might not be PEPs in other jurisdictions. - The assessors were impressed by the scope and depth of JFSC AML/CFT onsite work in 2008 and previous years and commended the JFSC for placing findings in the public domain. Engagement with banking sector - Meetings with a wide cross-section of banks indicated bankers are well-informed and strongly committed to compliance. - Remediation of CDD records was ongoing and being prioritized based on internal risk analysis; many banks indicated remediation work was well advanced and often involved contacting customers for additional information on source of wealth. - Assessors conclude there is evidence of substantial ongoing improvement in effectiveness of implementation by Jersey financial institutions and that the JFSC is setting a high bar for further improvement. Designation of competent authority (c. 23.2) - JFSC appointed by Article 5(1) SBL as supervisory body for all regulated persons for AML/CFT purposes; all FATF-defined categories of financial institution business are covered. Fit and proper criteria and prevention of criminals controlling institutions (c. 23.3 & 23.3.1) - Authorization by JFSC registration is required to commence business under the SBL; conducting scheduled activities without registration is an offense. - Fit and proper tests applied under Articles 13 and 14 SBL to applicants; principal persons include directors and any person holding more than a 10 percent shareholding; key persons include compliance officers, MLCOs, and MLROs. - Article 14(4) SBL disqualifies a person as fit and proper if convicted of an ML or FT offense, an offense involving fraud or other dishonesty, or for other reasons related to the risk of ML or FT. - Where a relevant person is prudentially supervised, Article 13 FSJL allows JFSC to object to appointment or continued appointment of principal or key persons on fit and proper grounds; similar provisions in Article 12A CIFJL, Article 24 BBJL, and Article 23 IBJL. - JFSC demonstrated effective use of powers to vet applicants and to declare persons unfit to own or control financial institutions, used in practice especially in relation to trust businesses. Application of prudential regulations to AML/CFT (c. 23.4) - An IMF FSAP Update Assessment updated the 2002/3 FSAP assessment of the Basel Core Principles and IAIS Principles; findings are broadly positive with no significant deficiencies identified. Licensing or registration of value transfer/exchange services (c. 23.5) - Under Schedule 2 POCL and Article 2 FSJL, money service business (MSB) subject to POCL and MLO includes: - a bureau de change; - providing check cashing services; - transmitting or receiving funds by wire or other electronic means; or - engaging in money transmission services. - Unless exempted, MSBs must seek registration with the JFSC. - Exemptions for bureaux de change are based primarily on turnover in the previous 12-month period; the turnover threshold for exemption is set at under GBP300,000. Persons claiming the exemption must notify the JFSC. Monitoring and supervision of value transfer/exchange services (c. 23.6) - Regulatory framework for MSBs came into effect in July 2007 with the Financial Services (Amendment of Law) (Jersey) Regulations 2007, the Financial Services (Money Service Business) (Registration) (Jersey) Order 2007 and simultaneous issuance of Codes of Practice by the JFSC. - Under the SBL 2008, the JFSC is the AML/CFT supervisor of the money service businesses sector and AML/CFT compliance is the primary focus of JFSC supervision. - Names and addresses of registered money service businesses are posted on the JFSC website. *Source: _cr09280 - 560. PDF chapter/section content.* ### 587. The JFSC has developed internal procedures to supervise money service businesses and, ### _cr09280 - 587. The JFSC has developed internal procedures to supervise money service businesses and, ### Supervision of Money Service Businesses (MSBs) - Since July 2007, the JFSC has conducted supervisory visits to all registered independent money service businesses. - The JFSC has conducted outreach programs to confirm that all parties requiring registration are aware of the requirement or the need to notify an exemption. - Findings from outreach and supervision: - Identified an incomplete understanding of AML/CFT risks among operating staff. - Routine problems in adapting to new systems, policies, procedures, and controls. - No serious compliance issues have arisen. - MSB contacts were generally familiar with ML and FT vulnerabilities and demonstrated awareness of their AML/CFT obligations. - Administrative arrangements were in place; contacts confirmed recent JFSC supervision visits which included reviews of policies and procedures, examination of systems, and review of transactions logs. - Section 3.4.1.3 of the Codes of Practice requires that MSBs maintain a list of agents (names and addresses) and promptly notify the JFSC in writing of any changes. ### Licensing, Guidance, and Engagement with Financial Institutions - All financial institutions within the FATF definition operating in Jersey are subject to JFSC regulation and supervision and to the full range of AML/CFT requirements. - Under Article 8 of the JFSC Law, the JFSC can issue guidance to entities subject to its supervision. - The JFSC’s Handbook for Regulated Businesses includes guidance notes on CDD and other relevant topics, and information resources for ML and FT awareness raising and training. - Financial institutions reported active engagement in consultation on the Handbook and have, to a large extent, operationalized its provisions during the consultation period. - Financial institutions expressed satisfaction with JFSC guidance, access for clarifications, and quality of feedback. - The JFSC publishes detailed aggregate findings of themed on-site inspections (including 2008 AML/CFT issues) to provide feedback and guide remediation. ### Powers and Types of AML/CFT Supervision (Articles & Route Planners) - The SBL and regulatory laws provide the JFSC with tools and powers to monitor compliance with AML/CFT requirements by all persons covered by the SBL. - Article 8(2) of the SBL grants the JFSC the power to conduct reasonable routine on-site examinations, including requiring a financial institution to: - supply information in a format and at times specified by the JFSC; - provide answers to questions; and - permit access by JFSC officers or agents to its premises. - The JFSC conducts three types of supervision examination: - Discovery visits: wide-ranging, cover approach to business and governance; may occur shortly after registration or management change. - Risk-themed examinations: concentrate on a specific area across an industry segment; tend to be preceded by a self-assessment questionnaire. - Focused examinations: arise from specific events or problems identified. - Historically, on-site inspections used comprehensive work programs ("route planners") including ML and FT considerations. - Going forward, the JFSC (including its AML Unit) will focus on corporate governance applied to counter ML and FT using a comprehensive corporate governance route planner. - Inspections include review of policies and procedures and testing of implementation, including sample testing of books, records, and customer files. - JFSC conducted AML/CFT themed inspections of banks in 2008; aggregate key findings were summarized and published and inspections were comprehensive with strong emphasis on recommendations and formal follow-up of recommendations as part of off-site supervision. ### Power to Compel Production of Records and Sanctioning Tools - Under Article 30 of the SBL, a designated supervisory body may by notice in writing require a relevant person (or a “principal” or “key” person thereof) to: - provide, at such time and place as may be specified, information and documents of a specified description; and - attend at such place and time as may be specified and answer questions which the supervisory body requires the person to answer. - Such information, documents or questions may relate to financial services business, compliance with the SBL or any Codes of Practice, conditions of registration, or directions given under the SBL, including documents related to accounts, business relationships, transactions, and any analysis made to detect unusual or suspicious transactions. - Penalties for non-compliance with Article 30: - Any person who without reasonable excuse fails to comply shall be guilty of an offense and liable to imprisonment for a term of six months and an unlimited fine. - The JFSC does not need a court order to compel production of information or documentation or to gain access to premises. - Statutory powers and sanctions available to the JFSC (regulatory laws and the SBL) include: - Article 18 of the SBL: power to revoke a registered person’s license. - Articles 14 or 15: power to refuse to grant a license. - Article 17: power to place conditions on a license. - Article 23: power to issue directions (instruct or restrain actions). - Article 26: power to issue public statements to warn the public and/or censure a relevant person. - Article 24: power to apply to the Royal Court for an injunction restraining contraventions or to remedy contraventions; or to seek orders making the relevant person subject to supervision, restraint, or conditions. - Sanction scope includes directors, owners/controllers, managers, and other officers. Articles 42(1) and 42(2) of the SBL extend liability to principal persons and officers where offenses are committed with their consent, connivance, or neglect. Aids, abetters, counselors, or procurers are also liable. ### Availability and Types of Sanctions (Criminal, Civil, Administrative) - Criminal sanctions: - Article 40A of the DTOL, Article 34D of the POCL, and Article 23 of the TL: failure by an employee of a financial institution or other relevant person to make a report where he has knowledge, suspicion, or reasonable grounds is an offense and may be punished by up to five years imprisonment or an unlimited fine or both. - Article 41 of the DTOL, Article 35 of the POCL, and Article 35 of the TL: the offense of “tipping-off” may be punished by up to five years imprisonment or a fine or both. - Article 37(7) of the POCL: failure by a relevant person to comply with an obligation set out in the MLO may, for a body corporate, be punished by a fine, and for an individual, by up to two years imprisonment, a fine or both. - Civil sanctions: - Article 24(1) of the SBL: Royal Court may issue an injunction restraining a relevant person from contraventions of Article 10 (unauthorized business), any condition on registration, any direction given, or the MLO. - Article 24(2) of the SBL: Court may order steps to remedy a contravention. - Article 25 of the SBL: Court may make a relevant person subject to supervision, restraint or conditions if not fit and proper or likely to commit a contravention. - Administrative sanctions (as outlined in analysis of Recommendation 29): - refuse to issue or to revoke a license; - apply conditions to a license; - issue directions; or - make public statements. - Observations and recommendation by assessors: - The range of sanctions appears largely effective, proportionate, and dissuasive, but the JFSC does not have the power to apply monetary fines. - Assessors recommend authorities give serious consideration to introducing a system enabling the JFSC to apply monetary fines to further enhance effectiveness and provide a full range of sanctioning powers. ### Enforcement Activity Statistics (JFSC) - The JFSC provided statistics (including financial and nonfinancial licensed entities and trust and company service providers) indicating enforcement activity. Cases with AML/CFT issues (TOTAL NO. OF CASES WORKED ON DURING YEAR; Enforcement cases with AML issues; Enforcement cases with CFT issues; Enforcement cases with Money Laundering Order issues/breaches; Supervision cases with AML issues): - 2006: 140; 42; 2; 4; 52 - 2007: 201; 42; 1; 2; 72 - 2008: 136; 46; (blank for CFT and MLO columns); 2; 26 - Totals: 477; 130; 3; 8; 150 - Enforcement actions taken by the JFSC where AML/CFT issues were involved (Words of advice; Notice(s); Direction(s); Public Statement (majority relate to unauthorized business with ML issues); Referral to the JFCU / Attorney General; Regulatory action (includes heightened supervision and remedial action plans)): - 2006: 5; 27; 7; 13; 8; 62 - 2007: 2; 23; 5; 12; 3; 76 - 2008: 1; 16; 2; 8; 8; 29 - TOTAL: 8; 66; 14; 33; 19; 167 ### Designation & Liability - Criminal sanctions: action may be taken by the Royal Court at the instigation of the Attorney General. - Civil/administrative sanctions or breaches of regulatory laws: action may be taken by the JFSC. - Liability of directors and senior management: - Offenses by bodies corporate committed with consent, connivance, or attributable to neglect of directors, managers, secretaries, or similar officers result in those persons being guilty and liable to be proceeded against and punished accordingly. - Article 42(1) and Article 42(2) of the SBL, and similar provisions in the regulatory laws (e.g., Article 41(3), (4), and (6) of the FSJL), extend liability to principal persons and officers, including persons holding 10 percent or more of share capital. ### Range and Proportionality of Sanctions - Available sanctions include: - Written warnings (general power); - Directions to comply and to bar individuals from employment (Article 23 of the SBL); - Requesting regular reports on remedial measures; - Fines for noncompliance (though only as criminal sanctions); - Restricting powers of managers, directors, or controlling owners (Article 17(3) of the SBL, Article 23, or Royal Court intervention under Articles 24 and 25); - Objecting to continued appointment of principal and key persons (financial institutions under regulatory laws); - Appointment of a manager (financial institutions under regulatory laws); - Revocation of registration (Article 18 of the SBL and equivalent provisions). - The JFSC cannot apply administrative monetary fines; fines are available only through criminal sanction applied by the Royal Court. Assessors recommend consideration of introducing a JFSC-administered monetary fine system. *Source: _cr09280 - 587. The JFSC has developed internal procedures to supervise money service businesses and,* ### 617. The JFSC is a statutory body corporate set up under the JFSC Law, under which it is ### _cr09280 - 617. The JFSC is a statutory body corporate set up under the JFSC Law, under which it is ### Mandate and Purpose - The JFSC is a statutory body corporate set up under the JFSC Law and is accountable for its overall performance to the States through the Minister for Economic Development. - Key purposes: - reducing risk to the public of financial loss due to dishonesty, incompetence, malpractice or the financial unsoundness of financial service providers; - protecting and enhancing the Island’s reputation and integrity in commercial and financial matters; - safeguarding the Island’s best economic interests; - countering financial crime both in Jersey and elsewhere. - The JFSC has an explicit statutory role in relation to countering financial crime, not confined to crime committed in Jersey. ### Structure, Independence, and Governance - Governing body: - Board of Commissioners provided for by the JFSC Law. - Current Board comprises ten Commissioners (including a Chairman) drawn from Jersey, the U.K., and the Netherlands. - Executive: - Director General, Deputy Director General, ten directors, and JFSC Secretary constitute the executive board responsible for day-to-day operations. - Independence: - Article 2(4) of the JFSC Law provides that the JFSC shall be independent of the Minister for Economic Development and of the States, except in certain specific circumstances set out in the law. ### Funding and Financial Position - Funding sources and legal basis: - Funded through fees and charges levied on the financial sector in line with Article 21 of the SBL and Articles 14 and 15 of the JFSC Law (in respect of functions under the regulatory laws). - Under regulatory laws, each sector has its own fee structure; charging methodologies are published on the JFSC’s website. - Fee-setting requires consultation with, and agreement of, industry. - Article 21(2) of the SBL and Article 15(2) of the JFSC Law: fees set to raise sufficient income to allow the JFSC to carry out its functions and provide a reserve of such amount as is considered necessary. - Recent financial performance: - For the past three years the JFSC has recorded a surplus of income over expenditure. - Assessors were satisfied that the JFSC has access to sufficient resources to carry out its AML/CFT functions. ### Human Resources and AML Unit - Headcount and staffing (exact figures): - Permitted headcount of 118. - As at end December 2008, the JFSC employed 95 full time staff and 11 part time staff. - AML Unit—formed in 2007—consists of four staff and is headed by a deputy director. - Assessors’ observations: - Assessors impressed with level and quality of staff resources in the specialist policy area, in the AML Unit, and across supervisory divisions. - Industry respects professionalism and technical knowledge of JFSC management and staff. ### International Engagement and Expertise - Memberships and contributions: - Member of the OGBS since 1980; played a leading role in OGBS anti-money laundering program. - Participation and collaboration with the FATF and the Basel Committee through OGBS. - Participation in development of OGBS statement of best practice for trust and company service providers. - Attends and contributes to the work of the Wolfsberg Group. - An officer sits on the board of the European Business Register (access to data of 20 million companies in Registries of 19 European jurisdictions, including Jersey). - International capacity building: - JFSC staff asked to participate in numerous international assessment exercises and to provide training to foreign regulators and other bodies. ### Integrity, Recruitment, and Training - Integrity of competent authorities (c. 30.2): - Recruitment policy published on Intranet and in staff handbook; intended to limit recruitment to individuals of high integrity with appropriate skills. - Pre-employment checks include Police checks, references, and health screening. - Managers and above are requested to hold or be working towards a professional qualification; copies of original certificates requested on joining. - All staff required to sign declaration concerning confidentiality and conflicts of interest on commencement; declaration reviewed annually as part of performance review. - Training for competent authorities (c. 30.3): - JFSC has provided AML/CFT training and plans to develop the program more formally. - Training provided: - September 2007: internal training on introduction of the Handbook for Regulated Businesses. - May 2008: internal training on assessing compliance with corporate governance section of the Handbook for Regulated Businesses. - Additional internal training on relevance of FT for Jersey, identification of suspicious transactions and filing of SARs, and measures to counter ML. - Assessors encourage the JFSC to expedite plans for updated AML/CFT training given recent changes in Jersey’s preventive measures. ### Statistics, Coordination, and Supervision Activity - Policy coordination: - Chief Minister’s Department responsible for ongoing formulation of AML/CFT strategy and development/operation of AML/CFT framework. - Support/co-ordination provided by an Anti-Money Laundering / Terrorist Financing Strategy Group (AML/CFT Strategy Group). - JFSC statistics and interaction with JFCU: - Maintains statistics covering interaction with the JFCU, relevant on-site examinations, and cooperation with supervisory authorities abroad. - Provided statistics for numbers of SARs referred by the JFCU to the JFSC and SARs filed by the JFSC with the JFCU. - Supervision visits that considered ML (whole or in part) — exact annual figures: - 2004: 55 - 2005: 126 - 2006: 113 - 2007: 155 - 2008: 197 - Quality of inspection work: - Assessors reviewed on-site work and found inspection work conducted professionally, outstanding issues pursued, and records well maintained. ### Recommendations and Compliance (selected) - R.17: - Recommendation: The authorities should consider expanding the range of sanctioning powers available to the JFSC to include monetary fines. - R.30: - Recommendation: None for supervisors. - Compliance ratings and factors: - R.17 — LC - The supervisory authority does not have the power to apply monetary fines among the range of available sanctions. - R.23 — C - R.25 — C - R.29 — C ### Money or Value Transfer Services (SR.VI) — Summary and Analysis - Legal framework and definitions: - Based on Schedule 2 of the POCL and Article 2 of the FSJL, money service business activities subject to the POCL and the MLO include: - a bureau de change; - providing check cashing services; - transmitting or receiving funds by wire or other electronic means; or - engaging in money transmission services. - Registration and exemptions: - Unless exempted, persons carrying on MSBs must seek registration with the JFSC. - Exemptions for bureaux de change based primarily on turnover in the previous 12-month period. - Turnover threshold for exemption is set at under GBP300,000. - Persons claiming exemption must notify the JFSC. - Regulatory framework developments: - New regulatory framework for MSBs effective July 2007 via Financial Services (Amendment of Law) (Jersey) Regulations 2007, Financial Services (Money Service Business (Registration)) (Jersey) Order 2007 and Financial Services (Money Service Business (Exemptions)) (Jersey) Order 2007, plus Codes of Practice for Money Service Business by the JFSC. - JFSC is the supervisor of the money service businesses sector under SBL 2008; AML/CFT compliance is the primary focus. - Names and addresses of registered MSBs posted on the JFSC website. - Application of preventive measures: - MSBs subject to full scope of preventive measures in the POCL and MLO. - Codes of Practice requires MSBs to have adequate risk management systems addressing: - corporate governance; - internal control systems (to include 10 year record retention); - Compliance Officer (in addition to Money Laundering Reporting Officer required under the MLO); - complaints procedures; - integrity and competence. - Codes of Practice refer MSBs to the relevant Handbook for Regulated Businesses for detailed rules and guidance on CDD and SAR reporting. - JFSC conducted outreach and training seminars following introduction of Codes of Practice. - Monitoring and supervision: - Since July 2007, JFSC conducted supervisory visits to all registered independent MSBs and outreach to ensure awareness of registration/exemption requirements. - Findings: incomplete understanding of AML/CFT risks among operating staff and routine problems adapting to new systems, but no serious compliance issues. - MSB contacts generally familiar with ML and FT vulnerabilities and aware of AML/CFT obligations; administrative arrangements in place; recent JFSC supervision visits confirmed. - Agents: - Section 3.4.1.3 of the Codes of Practice requires MSBs to maintain a list of any agents appointed and addresses of premises, and to notify the JFSC promptly in writing of any changes. - Sanctions: - See Sections 3 above for analysis of Jersey’s sanctions regime for enforcing AML/CFT preventive measures, including for DNFBPs. - Alternative remittance systems: - It is not believed that any alternative remittance systems currently operate within the jurisdiction. - Intelligence indicates migrant workers in Jersey (the vast majority of which are EU nationals) remit funds home through mainstream banking system or through registered and supervised MSBs regulated for compliance with SR VII. - Summary finding for SR.VI: - Jersey has adopted a comprehensive AML/CFT regime for the MSB sector addressing most criteria of SR.VI. - Issues primarily relate to incomplete implementation of a new regime; AML/CFT regulatory requirements for MSBs had been in place about 18 months as of the assessment. - MSB staff not yet fully familiar with AML/CFT vulnerabilities or responsibilities, indicating need for further experience and training. - Recommendation: - The JFSC should sustain its training and onsite supervision to improve compliance for MSBs. - Compliance with SR.VI: - SR.VI — LC - Additional training and experience needed for full effective implementation. ### Preventive Measures — DNFBPs (R.12) — Summary - Legal framework: - CDD obligations for DNFBPs laid out in the POCL and the MLO; substantially the same as for financial institutions and subject to same strengths and weaknesses identified in sections 3.1 and 3.3. - Trust company businesses supervised by JFSC since 2001. - Arrangements for JFSC supervision of lawyers, accountants, estate agents and high value dealers came into force in September 2008. - Handbooks issued: - Handbook for the Legal Sector (Handbook for Lawyers); - Handbook for the Accountancy Sector (Handbook for Accountants); - Handbook for Estate Agents and Dealers in High-Value Goods. - Handbook for Regulated Businesses applies to TCB sector and MSBs. - Handbooks include mandatory regulatory requirements and guidance. - Implementation challenges: - Much DNFBP business (lawyers, accountants, TCBs) characterized by cross-border and non face-to-face relationships. - Managing risks from such relationships—identification of ultimate beneficiaries and controllers—is critical to CDD implementation for DNFBPs. - Trust and Company Service Providers (TCBs): - Under FSJL, trust company business defined as a “financial service business” and regulated. - Article 2(3) and Article 2(4) of FSJL: TCB activities track the activities listed in Recommendation 12. - Financial Services (Trust Company Business (Exemptions)) (Jersey) Order 2000 exempts some persons; exemptions narrow and specific. - Pursuant to Schedule 2 of the POCL, persons carrying on trust company business also subject to POCL, DTOL, TL and the MLO. - SBL (Article 5) specifies JFSC as AML/CFT supervisory body for all business prudentially supervised by JFSC, including TCBs. - Article 23 of SBL gives JFSC power to issue relevant Codes of Practice; TCBs subject to Handbook for Regulated Businesses. - CDD regime: - CDD regime in POCL, MLO, and Handbook for Regulated Businesses identical for all regulated financial services businesses subject to SBL. - Observations on strengths and weaknesses of CDD regime in section 3 apply equally to TCBs and DNFBPs. *Source: IMF assessment content unit _cr09280 - 617.* ### 642. Pursuant to Schedule 2, lawyers are subject to the requirements of the MLO through the ### _cr09280 - 642. Pursuant to Schedule 2, lawyers are subject to the requirements of the MLO through the ### Lawyers: scope, supervision, and Handbook - Schedule 2 applies to all members of the “independent legal profession,” including “those who by way of business provide legal or notarial service to third parties when participating in financial, or immovable property, transactions” relating to: - (1) the buying and selling of immovable property or business entities; - (2) the buying and selling of shares the ownership of which entitles the owner to occupy immovable property; - (3) the managing of client money, securities or other assets; - (4) the opening or management of bank, savings or securities accounts; - (5) the organization of contributions necessary for the creation, operation or management of companies; or - (6) the creation, operation or management of trusts and companies or similar structures. - Under the SBL (and SBO), which came into force in September 2008, the JFSC is the designated authority for supervising and enforcing lawyers’ AML/CFT obligations. - In October 2008 the JFSC issued the Handbook for Lawyers, which: - Introduces regulatory requirements detailing policies, procedures and systems the legal sector must follow to meet the statutory requirements of the POCL and MLO. - Follows the content and structure of the Handbook for Regulated Businesses, with more attention to legal sector circumstances. ### Lawyers: exemptions, concessions, and limits on reduced/simplified CDD - Article 6 of the Money Laundering (Amendment) (Jersey) Order 2008 provides an exemption allowing independent legal professionals to enter into a business relationship or carry out a one-off transaction without verifying identity of the customer and beneficial owners/controllers where the relationship/transaction relates to a registered contract within the meaning of the Housing (Jersey) Law 1949. - Rationale: residential real estate transactions require housing consent, are recorded and registered by the Royal Court, and completion requires scrutiny of identity, employment and residency. - The exemption applies only to the verification requirement, not to the identification procedure. - Handbook for Lawyers concessions for reduced or simplified CDD (narrowly specified and tied to standard or lower risk): - Reliance on vendor CDD when acquiring another business or block of clients, provided: - The vendor is a financial services business that is a regulated person or carries on an equivalent business to any category of regulated business as defined by Article 5 of the MLO; and - The firm has assessed that the vendor’s CDD measures are satisfactory. - Specific authorized reduced/simplified CDD cases: - Cases where funds may only be received from and paid to an account in the customer’s name (i.e., product or service where funds may not be paid in by, or paid out to, third parties). - Cases where an instruction is to perform a single task within a limited timeframe (such as drafting a single deed of appointment) that does not have “an element of duration,” although it would constitute a transaction. - Article 4 of the MLO: where legal fees known at the outset are less than EUR15,000, identification is not required. - Article 13 and 24A of the MLO (existing relationships established before February 19, 2008): - CDD measures must be applied at appropriate times on or after May 1, 2008. - For higher risk customers, identification measures are to be applied as soon as practicable after the risk is assessed as higher. - For standard and lower risk clients, the Handbook for Lawyers defines appropriate times to apply identification measures as: - When a transaction of significance takes place; - Where there has been a gap in retainers of three years or more; - When the firm’s client documentation standards change substantially. - Article 16 of the MLO: where an intermediary/introducer is subject to the MLO or in an equivalent jurisdiction and supervised, a firm may rely upon a third party to carry out elements of identification measures required under Article 13 and 3. - Handbook safeguards: - Concessions must be documented. - Concessions may not be used if there is a suspicion of money laundering. - Observations on practical applicability and concerns: - Many lawyer relationships are with non face-to-face clients (including offshore), where a presumption of higher risk may be appropriate, reducing the pool of clients eligible for standard or lower risk concessions. - The text permitting no third-party payments was indicated by the authorities to have been included in error in the Handbook for Lawyers. - The provision for lawyers to self-certify existing clients is not consistent with re-identification standards expected for financial institutions in the Handbook for Regulated Businesses. - MLO requirement: all members of the legal profession must comply with AML/CFT CDD requirements in all circumstances set out by FATF Recommendation 12. ### Accountants: scope and supervision - Accountants are subject to the POCL as provided in Schedule 2. - Accountants covered by Schedule 2 include those providing: - (a) external accountancy services; - (b) advice about the tax affairs of another person; - (c) audit services; or - (d) insolvency services. - There are no accounting standard setters organized in Jersey; most accountants are affiliated with chartering organizations in the U.K., Ireland, Canada, or various other countries. - Until very recently the provision of accountancy services was not otherwise regulated in Jersey. - Under the SBL, which came into force in September 2008, accountants are subject to regulation by the JFSC for AML/CFT compliance. - The JFSC issued a Handbook for Accountants introducing regulatory requirements detailing policies, procedures and systems to meet POCL and MLO statutory requirements; it follows the structure of other Handbooks for Regulated Businesses with sector-specific attention. ### Real Estate Agents: scope and supervision - Estate agency services are subject to the POCL, under the “Other Businesses” part of Schedule 2. - Real estate business is defined as “the business of providing estate agency services for or on behalf of third parties concerning the buying and selling of freehold (including flying freehold) or leasehold property (including commercial and agricultural property) whether the property is situated in Jersey or overseas.” - Until recently estate agency services were not regulated for AML/CFT or other public interest purposes. - With effect from February 2008 the financial sector requirements for measures to prevent ML and FT were extended to real estate agents. - Under the SBL (came into force in September 2008) the JFSC is the AML/CFT supervisor for estate agents; estate agents are required to be registered by the JFSC. - In August 2008 the JFSC issued the Handbook for Estate Agents and Dealers in High-Value Goods, introducing regulatory requirements in a more streamlined style than the Handbook for Regulated Businesses. ### Dealers in Precious Metals and Precious Stones / High Value Dealers - For high value transactions the Jersey AML/CFT regime includes all high value dealers, not limited to dealers in precious metals and precious stones; Schedule 2 of POCL brings high value dealers within scope. - With the coming into effect of the SBL (and SBO), the JFSC is the designated supervisor for high value dealers’ compliance with POCL and MLO. - JFSC issued the Handbook for Estate Agents and Dealers in High-Value Goods, introducing Codes of Practice and guidance for high value dealers. - Registration requirement and cash threshold: - A party wishing to be a “high value dealer” and accept cash payments of EUR15,000 or more must apply for registration with the JFSC. - Dealers accepting high value payments who do not wish to register are expected to adopt written internal policies stating they will not accept cash for transactions in amounts of EUR15,000 or more; these policies should be publicized to staff and available for inspection by the JFSC. - Once registered, high value dealers must apply the full customer due diligence regime akin to that required of the accounting sector. ### Trust and Company Service Providers (TCBs): supervisory history, compliance findings, and implementation - Under FATF definitions TCBs are DNFBPs (not financial institutions). The MLO and Handbooks differentiate handling of simplified/reduced CDD measures accordingly. - Article 17 of the MLO limits the concession of not identifying underlying customers of intermediaries to banks, collective investment funds, investment businesses, fund services businesses, and insurance businesses (financial institutions), excluding persons carrying on money service business; TCBs and other DNFBPs do not benefit from Article 17’s concession, though Article 16 may be relevant. - Regulatory history and transition: - All trust service businesses were required to register with JFSC by February 2001. - Transitional arrangements were in place to allow adaptation to new requirements. - On June 20, 2008 the JFSC issued a letter to CEOs of TCBs advising that the transitional phase had ended. - During the transition period, “24 of the original trust company business applicants who had applied by February 2, 2001, have either merged with another company, ceased trust company business or withdrawn their applications, prior to a determination of that application. A further four firms have had their applications formally refused. Additionally, during this transitional period, six firms who had been granted registration were unable to maintain the required regulatory standards and, through working closely with the JFSC, voluntarily sought to wind down their affairs by a sale of the underlying customer base or affiliation.” - JFSC-identified regulatory shortfalls during transition included: - Weakness of corporate governance and inadequate internal controls. - CDD shortfalls: failure to identify PEPs, inadequate due diligence and inappropriate risk ratings for clients operating from high-risk jurisdictions, insufficient due diligence on underlying attorneys and their activities, and inadequate documentation to demonstrate a full understanding of underlying company activities (including a case involving a trading company receiving commission on arms sales). - 2007 themed visits to 16 trust companies: - Customer take-up procedures at 12 of 16 companies did not indicate significant due diligence deficiencies. - For the remaining 4 trust companies significant due diligence deficiencies were found related to timing of customer payments versus completion of due diligence, or failure of due diligence measures to detect alleged tax evasion. - In general, due diligence material was well documented. - Monitoring of prospective transactions was generally difficult, in part due to absence of industry software. - Retrospective due diligence for pre-1999 customers had been largely completed, though in some cases where no transactions had occurred, due diligence was not completed or partially complete. - Inconsistent due diligence records present a risk for trust firms acquiring other trust firms or undergoing restructuring. - Industry practices and risk sensitivity: - Practitioners are highly alert to AML/CFT obligations and have grown increasingly comfortable managing compliance responsibilities. - Firms noted the Handbook for Regulated Businesses (issued in February 2008) was a considerable advance, introducing greater clarity on treatment of risk. - Introducers and intermediaries are an important channel for business development; firms generally stated they would carry out their own due diligence and not rely on due diligence of offshore intermediaries/introducers. - Similar circumstances were frequently given different risk ratings by different TCBs. ### Implementation by Lawyers: awareness and supervisory activity - Practitioners appeared well informed about CDD and record keeping obligations under the MLO. - The final Handbook for Lawyers was published in late October 2008 during the assessment visit; lawyers were generally familiar with expected scope and content due to extensive prior consultation. - The JFSC has developed and begun to implement supervisory practices for overseeing AML/CFT compliance by lawyers. - All legal professionals the assessors met with stated: - The beneficial owner would be identified in all cases. - A client file would be opened and no transaction on behalf of the client would be carried out in the absence of complete customer due diligence information. *Source: _cr09280 - 642. Pursuant to Schedule 2, lawyers are subject to the requirements of the MLO through the (IMF assessment text).* ### 666. In cases where business is introduced by third parties, which is the vast majority, all of the ### _cr09280 - 666. ### Customer Due Diligence (CDD) for DNFBPs: lawyers, accountants, estate agents, high-value dealers - Lawyers: - In cases where business is introduced by third parties, which is the vast majority, all of the lawyers the assessors met with stated that they would conduct their own CDD. They would not rely on customer information provided by a foreign counterpart. - The regulatory framework for lawyers has just recently come into force and compliance reviews by the JFSC had just commenced; assessors were not in a position to evaluate fully the effectiveness of implementation by lawyers of their CDD arrangements. - The concession which allows lawyers to apply reduced or simplified CDD measures in cases where funds may only be received and paid to an account in a customer’s name is identified for removal (see recommendations). - The concession allowing lawyers to self-certify the identity of existing clients is inconsistent with the standards set out in the Handbook for Regulated Businesses and is recommended for repeal. - Accountants: - The CDD regime for accountants as set out in the MLO, and the Handbook for Accountants is the same as for other relevant persons; strengths and weaknesses analyzed in section 3 apply equally to accountants. - Article 17 of the MLO provides, under certain circumstances, for reduced or simplified identification measures for certain customers that are intermediaries. - Guidance in Section 4 of the Handbook for Accountants permits reduced or simplified CDD measures for lower or standard risk existing clients, including reliance on existing file information, publicly available information, or a certificate from a long‑known fee earner or partner. - The concession allowing accountants to self-certify the identity of existing clients is inconsistent with the Handbook for Regulated Businesses and is recommended for repeal. - Accountants have been subject to the MLO since February 2008; a regulatory framework for CDD compliance was only introduced very recently (September 2008). JFSC had begun supervisory procedures and official visits; assessors were not in a position to fully evaluate implementation. - Accountancy sector representatives were familiar with POCL, MLO and the Handbook for Accountants; many had prior experience implementing international CDD standards. - Real Estate Agents: - Estate agents may apply the concession in Article 17 of the MLO for reduced or simplified identification measures for intermediaries. Article 18 allows some exceptions in very specific circumstances. - The Handbook for Estate Agents and Dealers in High-Value Goods gives less latitude for exceptions than the Handbook for Regulated Businesses; exemptions in practice are relevant where the applicant is: (a) another financial services business supervised by the JFSC; (b) a financial services business from an equivalent jurisdiction; or (c) a Jersey public authority. - It is unclear whether estate agents are required to identify both buyers and sellers; information was contradictory. The JFSC stated identification of both buyers and sellers is required and has explained this in outreach; guidance in Section 1.4.1 of the Handbook states: “Whilst estate agents are required only to undertake CDD on sellers when acting as their agents, best practice would be to at least identify the purchaser, in addition to the seller, once an offer has been accepted.” - FATF Risk-Based Approach Guidance (footnote 4) states: “In transactions where either the vendor or purchaser is not a client/customer of a real estate agent, the agent acting in the transaction should apply reasonable risk-based CDD measures to the party that is not their client.” - CDD requirements for estate agents and high value dealers are the same as those for financial institutions; strengths and weaknesses in section 3 apply equally. - JFSC engaged in extensive outreach; identified need to assist those with little prior experience, especially in risk assessments and establishing formal systems, procedures and controls. - Dealers in Precious Metals and Precious Stones (high-value dealers): - Jersey adopted a broader definition of high-value dealers, including dealers in precious metals and precious stones. - JFSC outreach during 2008 explained forthcoming requirements. Some dealers indicated they might register but, with the Handbook’s publication, many indicated they would cease accepting high value cash payments. - The transitional registration period was open until December 11, 2008; to date, no parties have applied for registration as high value dealers (or have since applied). - Announcement of formal regulatory requirements appears to have prompted a number of high value dealers to cease accepting payment in cash. - The compliance regime for high value dealers is still quite new and implementation has not yet been systematically evaluated by the authorities. ### Application of FATF Recommendations to DNFBPs (R.6, R.8–R.11) - R.6 (PEPs): - The CDD regime with respect to PEPs for all DNFBPs is the same as that for all financial institutions; strengths and weaknesses in section 3 apply equally. - Trust companies in Jersey have numerous PEPs as clients; industry is alert to AML vulnerabilities but specific CDD deficiencies with respect to PEPs have been noted in JFSC compliance examinations and recent themed visits. Shortfalls cited in the June 20, 2008 JFSC letter to CEOs. - Lawyers, accountants, estate agents, and high value dealers have only recently become subject to AML/CFT oversight; effectiveness regarding PEPs has not yet been tested. Firms contacted were aware of responsibilities to identify PEPs. - R.8 (Non Face-to-Face Transactions): - The CDD regime for DNFBPs on non face-to-face transactions and new technologies is the same as for financial institutions; refer to section 3 for strengths and weaknesses. - Jersey firms typically do not conclude business relationships via electronic technologies. - Risk mitigation procedures include working through, if not relying on, third party introducers; requiring certified documentation of identity; having traveling officers call on overseas clients. - R.9 (Intermediaries/Introduced Business): - Requirements for DNFBPs dealing with intermediaries and introduced business are, with minor exceptions, the same as for financial institutions; see section 3 for discussion. - Article 16 of the MLO allows financial institutions to adopt simplified and reduced CDD for certain intermediary customers. DNFBPs may apply the concession in Article 17 with respect to regulated persons and persons carrying on equivalent business. - Effectiveness of implementation by lawyers, accountants, estate agents, and high value dealers has not yet been systematically tested; authorities report early indications are positive and firms contacted were aware of requirements. - R.10 (Recordkeeping): - Recordkeeping requirements of DNFBPs are the same as those for financial institutions; refer to section 3 for strengths and weaknesses. - JFSC examination reports, themed visits, and the recent letter to CEOs highlighted shortfalls in some TCBs’ recordkeeping, including incomplete CDD and delayed CDD measures, incomplete or inadequate customer business profiles, and post-dated payment authorizations. - Lawyers, accountants, estate agents, and high value dealers have only recently become subject to oversight; assessors were generally informed firms were aware of record-keeping requirements and the authorities view records as well maintained. - R.11 (Complex, Unusual Transactions): - Requirements for DNFBPs to pay attention to complex and unusual transactions are the same as for financial institutions; see section 3 for discussion. - JFSC examination reports, themed visits, and the recent letter to CEOs highlighted inadequate TCB profiling of client business risk and weaknesses in TCBs’ ability to monitor prospective transactions. - Lawyers, accountants, estate agents, and high value dealers have only recently become subject to oversight; firms contacted were generally aware of obligations regarding complex and unusual transactions. - Overall assessment: - Jersey has put in place a comprehensive regime for CDD and recordkeeping by DNFBPs addressing the topics covered in the FATF Recommendations. With minor qualifications, the formal legal framework satisfies relevant criteria. Implementation issues remain due to the newness of regulation for several DNFBP sectors and identified TCB weaknesses. ### Recommendations and Compliance (section 4.1.2 and 4.1.3) - The authorities should: - Remove the concession which allows lawyers to apply reduced or simplified CDD measures in cases where funds may only be received and paid to an account in a customer’s name. - Repeal the concession that allows lawyers and accountants to self-certify identification of existing clients. - Sustain close supervision of TCBs to improve compliance with CDD and record-keeping requirements. - Continue the program to evaluate the effectiveness of implementation by lawyers, accountants, real estate agents, and high value dealers as these sectors gather experience with the new compliance arrangements. - Compliance with Recommendation 12: - Rating: R.12 — PC - Factors underlying rating: - Compliance weaknesses identified in some TCBs. - Testing of compliance by lawyers, accountants and estate agents only recently commenced. - Application to DNFBPs as appropriate of factors identified in section 3 for financial institutions. ### Suspicious Transaction Reporting (R.16): legal framework and professional privilege - Legal framework: - Obligation of Jersey DNFBPs to file suspicious activity reports, and Recommendation 15 requirements for internal policies and controls and for screening, training and audit, derive from the POCL, DTOL, TL and the MLO and are, except for lawyer professional privilege (LPP), the same as for all financial institutions. - With effect from September 2008, all DNFBPs are subject to JFSC regulation for AML/CFT compliance, including SAR reporting obligations. Trust companies have been regulated by the JFSC for AML/CFT compliance since 2000. - JFSC issued a Handbook for Accountants, Handbook for Estate Agents and Dealers in High-Value Goods and a Handbook for Lawyers using SBL powers; these Handbooks contain regulatory requirements and guidance. - With these developments, statutory and regulatory SAR reporting frameworks for DNFBPs are identical to those for financial institutions, except for professional privilege. Strengths and weaknesses are analyzed in section 3. - Requirement to make STRs on ML and TF to FIU: - Statutory requirement: an employee of a relevant person (and the relevant person itself) commits an offense if he or she knows or suspects, or has reasonable grounds for knowing or suspecting, that another person is engaged in ML or drug money laundering. This requirement is contained in various statutes, including Articles 34D of the POCL; Article 40A of the DTOL; and Articles 23 of the TL. Full details are in section 3.7 and apply equally to DNFBPs. - Legal privilege: - All parts of the legal profession are subject to reporting requirements under the POCL, DTOL and TL. However, Article 34D(5) of the POCL, Article 40A(5) DTO and Article 23(5) of the TL allow for an exemption from reporting for “professional legal advisers” in privileged circumstances. - The POCL and the TL define “legal privilege” to extend to any communication between the legal professional and the client or his/her representative for the purposes of giving legal advice or in contemplation of and for the purpose of legal proceedings, extending to all items enclosed or referred to in such communications if those items are in possession of someone entitled to their possession. Items held with the intention of furthering a crime are not privileged. - The DTOL defines privilege as any communication between a professional legal adviser and a client which would in legal proceedings be protected from disclosure by virtue of any rule of law relating to confidentiality of communications; communications held with the intention of furthering a criminal offense are not covered. - The Handbook for Lawyers clarifies that privilege only applies to communications which directly seek or provide legal advice or are given in a legal context, involve the lawyer using legal skills and are directly related to the performance of professional duties. With respect to advice relating to a transaction in which a lawyer has been instructed for the purpose of obtaining legal advice, legal privilege would apply even if the instructions did not contain advice on matters of law and construction. *Source: content unit _cr09280 - 666.* ### 699. The practitioners with whom the assessors met stated that they would determine the ### _cr09280 - 699. The practitioners with whom the assessors met stated that they would determine the ### Suspicious Transaction/Activity Reporting (STR/ SAR) by DNFBPs - Privilege application: - Legal privilege is determined by transaction or matter, not by client; privilege attaches only to the specific matter that is privileged and would not prevent filing an SAR for a different matter of the same client (paragraph 699). - MLROs and reporting practice: - All law firms met had a designated MLRO at senior management level responsible for receiving, reviewing and, if applicable, forwarding SARs to the JFCU directly (paragraph 700). - MLROs review staff reports to substantiate grounds for suspicion before submitting to the JFCU (paragraph 700). - All Jersey legal professionals combined file an average of 15 SARs per calendar year (paragraph 700). - STRs related to terrorism financing: - DNFBPs have the same obligations to report suspicious activity related to terrorist financing as financial institutions (paragraph 701). - No reporting threshold: - Reporting obligations in Article 34D of the POCL, Article 40A of the DTOL, and Article 23 of the TL cover known or suspected money laundering and include attempted transactions and turned-away business; there is no de minimis threshold for reporting (paragraph 702). - Suspicions involving tax matters: - Suspicions related to tax matters must be reported (paragraph 703). - Reporting of all criminal acts: - DNFBPs must report to the JFCU when they know or suspect or have reasonable grounds to know or suspect that funds are proceeds of any criminal act that would constitute a predicate offense in Jersey (paragraph 704). - Protections and tipping-off: - Protections from civil and criminal liability for directors, officers, and employees of DNFBPs who report to the MLRO or JFCU are the same as for financial institutions (paragraph 705). - Tipping-off provisions applicable to DNFBP directors, officers, and employees are the same as for financial institutions; some weaknesses in Jersey tipping-off provisions are analyzed in Section 3.7 (paragraph 706). ### Internal Controls, Audit, Training, and Compliance (Recommendation 15 related) - Legal and regulatory basis: - DNFBPs are subject to the MLO requirements to maintain policies and procedures to prevent and detect ML and FT: Article 37 of POCL and Article 11(1) of the MLO (paragraph 707). - Communication of policies to employees is required by Articles 11(9) and 11(11) of the MLO (paragraph 707). - CDD obligations in Article 11 of the MLO; record retention in Articles 19 and 20; transaction monitoring in Articles 13 and 3; reporting in Article 34D of POCL, Article 40A of DTOL, Article 23 of TL, and Part 5 of the MLO (paragraph 707). - Handbooks supplement statutory obligations with detailed regulatory requirements for DNFBP sectors (paragraph 707). - Compliance management and officer designation: - Requirement for DNFBPs to have compliance management arrangements: Article 11(1) of the MLO (paragraph 708). - Designation of an MLCO at senior level: Article 7 of the MLO; designation of an MLRO: Article 8 of the MLO (paragraph 708). - MLCO and MLRO must have timely access to necessary information per Articles 7 and 8 of the MLO and Handbooks; Handbooks state officers must have “unfettered access to all business lines, support departments and information necessary to appropriately perform the function” (paragraph 708). - Exception: Handbook for Estate Agents and Dealers in High-Value Goods does not mention MLRO access (though MLO provisions still apply) (paragraph 708). - Independent audit of controls: - Article 11(1) of the MLO requires DNFBPs to establish and maintain procedures for monitoring and testing effectiveness of systems and internal controls (paragraph 709). - Handbooks provide guidance on scope and intensity of audit function based on firm size, nature, scale, complexity, and risk considerations (paragraph 709). - Employee training: - Training requirements established in Articles 11(9), (10) and (10A) of the MLO (paragraph 710). - Handbooks require firms to ensure relevant employees are adequately screened, aware of ML/TF risks and personal obligations, provided with training, and kept informed of new developments; training must: - be tailored to the business and relevant to employees; - highlight employees’ contribution to prevention/detection of ML/TF; - cover key aspects of legislation to prevent and detect ML/TF (paragraph 710). - Employee screening: - Handbooks require firms to “vet and monitor the competence and probity of relevant employees”; no such provision in the Handbook for Estate Agents and Dealers in High-Value Goods (paragraph 711). - Independence of compliance officer: - Statutory and regulatory requirements require the MLCO and MLRO to be appointed at senior level, have unfettered access to senior management, and be able to act independently (paragraph 712). ### Country Risk and FATF-related Measures (Recommendation 21 related) - Risk-based measures for jurisdictions: - Article 11 of the MLO requires Schedule 2 POCL persons to have risk-based policies including determining whether a relationship or transaction is with a person connected to jurisdictions that do not, or insufficiently apply, the FATF Recommendations; applies equally to DNFBPs (paragraph 713). - JFSC Handbooks impose additional regulatory requirements; JFSC supervision applies to all DNFBPs; extension of JFSC regulatory framework to lawyers, accountants, real estate agents and high value dealers effective as of September 2008 (paragraph 713). - Appendix D of Handbooks: - Provides details of jurisdictions covered by FATF statements or related public statements; table updated as JFSC becomes aware of amendments (paragraph 714). - Examinations and counter-measures: - Examinations of transactions with no apparent economic or lawful purpose from non-compliant countries: analyzed in Section 3 (paragraph 715). - Ability to apply counter-measures with regard to jurisdictions not sufficiently applying FATF Recommendations: analyzed in Section 3 (paragraph 716). ### Effectiveness of Implementation and Statistics - SARs filing distribution and sectoral reporting (paragraphs 717–718): - Reports by TCBs regularly accounted for 20 percent or more of all SARs filed by Jersey firms; Post Office (MSB) became regulated mid-2007 and was a significant SAR reporter (paragraph 717). - Lawyers and accountants (not supervised during the period covered) accounted for small percentages of reports each year (paragraph 717). - Table: SARs filed by DNFBPs — Number, percent of total reports (as presented) - 2006: - TCBs 216 21% - Lawyers 12 1% - Accountants 9 1% - Estate Agents - - - High-Value Dealers - - - 2007: - TCBs 362 24% - Lawyers 14 1% - Accountants 19 1% - Estate Agents - - - High-Value Dealers - - - 2008: - TCBs 328 23% - Lawyers 37 3% - Accountants 12 1% - Estate Agents - - - High-Value Dealers - - (paragraph 717 table) - Observations on sectoral compliance: - TCBs had SAR reporting obligations in place for several years (introduced for most in February 2008) and were supervised for compliance; they regularly filed about 20 percent of SARs (paragraph 718). - Limited reporting by lawyers and accountants and none by real estate agents and high value dealers during 2006–08; other DNFBPs were not supervised for SAR compliance during much of the period (paragraph 718). - DNFBP counterparts appeared familiar with SAR obligations; TCBs experienced with AML/CFT regulation; other DNFBPs had recently become regulated and were taking steps to implement Handbooks (paragraph 719). - JFSC monitoring of TCBs is well developed; formal compliance monitoring for newly regulated DNFBPs had only recently begun at time of on-site visit (paragraph 719). - Summary assessment: - Jersey has recently updated the SAR regime for all DNFBPs to address FATF criteria; legal framework now satisfies most relevant criteria (paragraph 720). - Framework was only recently extended to lawyers, accountants, estate agents, and high value dealers; supervision of these sectors had only begun; except for TCBs, effective implementation of SAR regime for DNFBPs had not yet been fully tested (paragraph 720). ### Recommendations and Compliance Rating - Recommendation (paragraph 4.2.2): - The authorities should continue to conduct on-site monitoring of SAR reporting practices by lawyers, accountants, and estate agents. - Compliance with Recommendation 16 (paragraph 4.2.3): - Rating: R.16 PC - Factors underlying rating: - Low level of STR reporting by DNFBP sectors that until very recently were not subject to the MLO nor supervised for AML/CFT compliance. - Effective implementation by lawyers, accountants, and estate agents under new regulatory requirements has not been fully tested by the authorities. ### Regulation and Supervision of Casinos (Recommendation 24 related) - Legal status and applicability: - Casino gaming is illegal in Jersey under the Gambling (Jersey) Law 1964, as amended; business may be carried on outside Jersey by Jersey companies (paragraph 721). - Schedule 2 of the POCL lists “the business of operating a casino” as an activity subject to the POCL and the MLO (paragraph 721). - Articles 13 and 4 of the MLO require identification/CDD for any transaction amounting to not less than EUR3,000 carried out in course of operating a casino; identification measures also apply where a business relationship is formed (paragraph 721). - Remote gambling and hosting: - Gambling Regulations enable remote gambling operators to locate servers in Jersey only for business continuity in cases of a verified disaster in their home jurisdiction; both gambling operators and local hosting facility providers must be licensed (paragraph 722). - Regulation 25 conditions remote gambling facility provider’s license on compliance with Jersey laws relating to money laundering, drug trafficking, data protection, and terrorist financing (paragraph 722). - At on-site visit, JFSC not aware of any Jersey companies operating casinos outside Jersey; only one application for a remote gambling facility provider (hosting) had been received and was subject to due diligence checks by the Economic Development Department (paragraph 723). - Registration and supervisory powers: - Under the SBL all relevant Schedule 2 activities, including operating a casino (including an internet casino), must be registered by an AML/CFT supervisory body; JFSC is the authorized AML/CFT supervisory body for all DNFBPs (paragraph 724). - Under Article 8(2) of the SBL, a designated supervisory body may: - require a relevant person to supply information in a format and at times specified; - require a relevant person to provide answers to questions; - require officers or agents of the supervisory body to enter relevant person’s premises. - A designated supervisory body may also require information and documents under Article 30, conduct investigations under Article 31, and, with an order issued by the Bailiff and a Police officer, enter and search premises under Article 32 of the SBL (paragraph 724). - Licensing authority: - Gambling Regulations require licensing of remote gambling operators and local hosting providers; Minister for Economic Development is the licensing authority (Regulation 15) (paragraph 725). *Source: Excerpt from _cr09280 (IMF assessment document), paragraphs 699–725.* ### 726. Casinos gaming is illegal in Jersey and hence no competent authority is specifically ### _cr09280 - 726. Casinos gaming is illegal in Jersey and hence no competent authority is specifically ### Casinos and gambling regulatory framework - Casino gaming is illegal in Jersey under the Gambling (Jersey) Law 1964, as amended. - Article 10 of the SBL makes it an offense for a relevant person to carry on an activity in or from within Jersey (or through a Jersey company) that is specified in the Schedule to the SBL without being registered under the SBL. The Schedule includes the business of operating a casino. - Article 13 of the SBL deals with an application for level 1 registration (specified in the Schedule to the SBL) – by a person in the business of operating a casino. - Articles 14 and 15 of the SBL set out the provisions that apply to granting or refusing a license by a designated supervisory body. - Article 14(3) of the SBL: a designated supervisory authority may refuse to register a casino on the ground that the applicant, a principal person in relation to that applicant, or a key person in relation to that applicant is not a fit and proper person. - Article 14(4) of the SBL: a person is not a fit and proper person if, inter alia, that person: - has been convicted of a ML or FT offense; - has been convicted of an offense involving fraud or other dishonesty; - is otherwise considered not to be fit and proper for reasons related to the risk of ML or FT. - Article 23(2)(b) of the SBL: a direction may require any principal person, key person or person having a function to be removed. - Article 23(2)(c) of the SBL: a direction may ban any individual from being employed by a relevant person. - Definitions in Article 1(1) of the SBL: - “principal person” includes any director and any person who directly or indirectly holds 10 percent or more of the share capital issued by a relevant person. - “key person” includes a MLCO and a MLRO. - Gambling Regulations permit remote gambling operators to locate servers in Jersey only as part of business continuity provisions in cases of a verified disaster in their home jurisdiction. - Gambling Regulations require both gambling operators and local hosting facility providers to be licensed before any operation can be carried out from Jersey; due diligence is conducted on any person holding 5 percent or more of the shares in the gambling operator and host facility provider (Regulation 15). ### Monitoring systems for DNFBPs (compliance with c. 24.2 & 24.2.1) - The SBO (in force September 2008) designated the JFSC as the AML/CFT supervisor for financial services business activities listed in Schedule 2 of the SBL. - Article 5 of the SBL makes the JFSC the supervisory body to exercise supervisory functions in respect of “any regulated person” (broadly—those businesses that it prudentially supervises). - JFSC responsibility: oversight of AML/CFT compliance for all activities listed in Schedule 2 of the POCL. - Schedule 2 of the POCL is divided into Part A (Businesses Regulated by the JFSC) and Part B (Other Businesses). - TCBs are Part A business and are prudentially supervised by the JFSC as a financial service business. - Lawyers, accountants, real estate agents and high value dealers are Part B business and are subject to JFSC regulation for AML/CFT compliance. - Registration requirements: - Persons carrying out Level 1 and Level 2 activities in the Schedule to the SBL must register with the JFSC. - Lawyers, accountants, estate agents, and high value dealers carrying on activities specified in Schedule 2 of the SBL are required to register at “level 2”. - Application for registration began in late September 2008 with the transitional application period open through December 19, 2008. - Persons prudentially supervised by the JFSC are not required to be registered under SBL because they are already registered under other legislation; they remain subject to the SBL. - Supervisory powers under SBL and SBO give the JFSC the ability to: - issue Codes of Practice; - monitor and conduct reasonable routine inspections; - require answers to questions and enter premises. - Enforcement powers include: - issue directions (restrict, limit, prohibit activities, cease operations and wind up business); - issue public statements; - require provision of information and documents; - appoint investigators; - enter and search premises with a Police officer (on order by the Bailiff); - additional enforcement actions under Court authority. ### JFSC supervisory resourcing and frontline supervision - Frontline supervision of trust companies: JFSC’s trust company business team – part of the Supervision Division – with a professional staff of 18. - Supervision of other DNFBPs: carried out by the AML Unit with a staff of five. - The AML Unit activities: development of Handbooks, outreach, consultation and training, preliminary supervisory visits, and development of onsite and offsite supervisory programs. - As preparatory phase winds down, the AML Unit will focus on implementing onsite and offsite supervisory programs. - Assessment: these teams, with other JFSC support units, appear to have adequate technical and human resources for supervising DNFBPs. ### Guidelines and supervision for DNFBPs - JFSC has issued Handbooks: - Handbook for Regulated Businesses covers trust companies. - Separate handbooks for lawyers and accountants. - Composite handbook for estate agents and high value dealers. - Handbooks summarize sector risks/vulnerabilities; statutory and regulatory requirements; and provide detailed guidance on risk-based implementation of AML/CFT responsibilities. - Lawyers: - All categories of lawyers, including foreign lawyers, are supervised by the JFSC for AML/CFT requirements under Jersey law pursuant to Article 2 SBO. - Article 3 of the Order limits the JFSC’s mandate to 18 months after enactment of the Order; upon expiration the Minister of Economic Development will issue a new designation. - Concerns expressed by lawyers and Jersey Law Society about JFSC access to documents potentially conflicting with legal professional privilege. - Attorney General advice (October 2008) incorporated into the Handbook for Lawyers advises lawyers to keep their CDD files separate from other client files to avoid conflict between legal privilege and JFSC supervision; at time of mission it was not yet established how this would be applied in practice. - Preference among practitioners for the Jersey Law Society to take over supervision is not feasible due to resource shortages and lack of enforcement powers; both JFSC and Jersey Law Society expect JFSC mandate to be extended. - Supervision activity snapshot: - About 40 law firms are supervised by the JFSC. - At time of mission, three onsite visits of lawyers had been conducted; JFSC provided six weeks’ notice and requested a self assessment questionnaire and AML/CFT procedures. - None of the onsite visits involved review of actual client files or led to drafting of an audit report. - For lawyers admitted under the Advocates and Solicitors (Jersey) Law 1997: disciplinary procedures before an independent Disciplinary Committee may be instituted; the Committee can issue a rebuke; in more serious cases it may refer to the Royal Court, which may impose a fine, suspend or revoke license. - Complaints against foreign lawyers received by the Law Society may be forwarded to the supervisory body in the licensing jurisdiction. - Recommendation: - The JFSC should continue with testing implementation of AML/CFT requirements for all DNFBPs not previously subject to its supervision. - Compliance ratings (section 4.3.3): - R.24: LC — Requirements for certain DNFBPs are new and their implementation was incomplete at the time of the assessment. - R.25: C ### Other Non-Financial Businesses and Professions — Modern and secure transaction techniques (R.20) - FATF Recommendations applied (c. 20.1) to: - the provision of external accountancy services, advice about the tax affairs of another person, audit services, and insolvency services; - the sale of high-value goods; - the provision of investment advice; - those providing advice to undertakings on capital structure and industrial strategy as well as services relating to mergers and the purchase of undertakings. - Implementation notes: - Some providers already subject to AML/CFT regulation as financial institutions or DNFBPs. - Accountants who provide external accountancy services are subject to AML/CFT preventive measures requirements. - Investment advice is defined as a financial service business in Article 2(2)(c) of the FSJL and regulated under that law by the JFSC, including for AML/CFT compliance. - Advice on capital structure and industrial strategy and services related to mergers/purchase of undertakings frequently provided by lawyers, accountants, or TCBs. - High value dealers (Schedule 2 of POCL): - Definition: “High value dealer” means persons who, by way of business, trade in goods when they receive, in respect of any transaction, a payment or payments in cash of at least EUR15,000 (or sterling equivalent) in total, whether the transaction is executed in a single operation or in several operations which appear to be linked. - In this paragraph, “cash” means any of the following in any currency-notes, coins, travelers’ checks, and bearer negotiable instruments. - Regime for high-value dealers came into force in September 2008. - JFSC engaged in outreach with high value dealers (e.g., car dealers and yacht brokers) explaining AML/CFT obligations. - Authorities observed occasional high-value cash transactions prior to regime announcement, particularly in yacht purchases. - Numerous high-value dealers reported they no longer accept cash payment above EUR15,000 and JFSC spot checks confirm adoption of required internal controls. - Modernization of transaction conduct (c. 20.2): - Jersey market is well served by banks and money transmission businesses offering modern techniques: internet banking, debit/credit cards, electronic money transfers, and checks. - APACS-like statistics (likely similar in Jersey): - 60 percent of all retail spending is paid for by debit or credit card; - 84 percent of all adults hold a debit card; - Nine out of 10 debit/credit cardholders now hold a chip and PIN card; - Spending on plastic cards has grown fourfold in the past 10 years. - Telecommunications infrastructure: in 2006, 53 percent of Jersey homes had a broadband connection; in 2007 this had increased to 84 percent. - Domestic currency maximum denomination is GBP50; U.K. currency accepted in Jersey (Scottish GBP100 notes sometimes seen). - States’ Treasury encourages local banks to use Jersey notes whenever possible, resulting in fewer U.K. notes circulating. - Handbook for Regulated Businesses includes provisions to guard against financial exclusion and alternative CDD measures for low-risk applicants to allow access to basic banking facilities. - Planning underway to bring forward legislation in 2009 to encourage provision of electronic money (“e-money”) in Jersey; current provision may be restricted to top-500 banks (measured by tier 1 capital). - Authorities are considering requesting European Payments Council membership for Jersey to join the Single Euro Payments Area. - Payment systems for migrant workers (particularly from Portugal and Poland) are kept under review; at present no measures considered necessary as private sector is responding to demand. - Compliance and ratings: - 4.4.2 Recommendations and Comments: none - 4.4.3 Compliance with Recommendation 20 — R.20: C ### Legal persons and access to beneficial ownership information (R.33) - Jersey law permits incorporation of: private companies, public companies, and Limited Liability Partnerships. - Measures to obtain, maintain, and verify beneficial ownership information for companies and LLPs: - Requirement to obtain JFSC consent pursuant to the COBO prior to issuing shares or admitting members; - Requirement to have a registered office in Jersey (providing office services is a regulated activity subject to AML/CFT requirements); - Requirement for companies to maintain shareholder and director registers and to file annual returns. - Article 2 of the COBO: prior to issuing any shares or admitting any person to be a member of a Jersey company in any form, the consent of the JFSC must be obtained. The COBO provides the JFSC with absolute discretion and does not limit the factors the JFSC may consider in deciding whether to give consent. *Source: _cr09280 - 726. Casinos gaming is illegal in Jersey and hence no competent authority is specifically* ### 749. Since the enactment of the COBO, all Jersey companies have been required to disclose ### _cr09280 - 749. Since the enactment of the COBO, all Jersey companies have been required to disclose ### Beneficial ownership disclosure under the COBO and company law - Since the enactment of the COBO, all Jersey companies have been required to disclose information on their beneficial owners at the time of incorporation. - Certain beneficial ownership information had been obtained as far back as 1958 when the COBO first came into force. - The current standard application form for JFSC consent expressly asks for information on “ultimate beneficial owners”, including: - date of birth - occupation - address - place of birth - The JFSC may condition its consent (Article 12 of the COBO) and requires approval prior to subsequent changes to the ownership or control structure of a Jersey company, subject to exemptions: - exemption from updating requirement if the company is provided services by a registered TCB, or if combined changes result in any person holding less than 25 percent of the legal ownership and/or control of the company. - beneficial ownership information still required to obtain initial consent. - For companies registered in Jersey: - required to have and provide the Registrar with the address of a registered office in Jersey. - changes of the registered office take effect only upon filing with the Registrar; in special circumstances a grace period of 14 days may apply. - public companies must register information on all directors. ### Definitions, scope, and regulated activities - The term “by way of business” is not defined in the POCL but is interpreted broadly by authorities and a JFSC-requested legal opinion: - includes any person acting with a view to obtain a reward, fees, or benefits of any kind and holding himself out as willing to provide such services for one or more companies. - covers “one off” contracts on a self-employed basis. - Providing a registered office or business address “by way of business” is a regulated activity pursuant to Schedule 2 of the POCL and subjects the provider to CDD measures of the MLO. - Under the COBO (as introduced in 1947): - all Jersey companies and LLPs must obtain consent from the JFSC before issuing any shares, securities, subscriptions, or sales or exchange of any partnership interest. - to grant consent, the JFSC requires disclosure of the name, address, date of birth and occupation of each ultimate beneficial owner with a holding of 10 percent or more in the company. ### Access to information on beneficial owners of legal persons (c. 33.2) - All legal entities incorporated in Jersey obtain legal personality upon registration with the Companies Register. - The CL does not require the Registrar to be provided with beneficial ownership information; the Register contains: - names and addresses of each founder - registered office - for public companies, name, address, and other particulars of each director - Changes to memorandum or articles must be filed within 21 days after passing of a resolution; changes to the registered office generally valid only upon registration. - Companies Registry information and documentation is publicly accessible, including online. - Information obtained and maintained by the JFSC pursuant to the COBO may be accessed by other supervisory agencies from the JFSC under Article 36 of the FSJL. - Article 8 of the SBL grants the JFSC powers to access information held by supervised persons; law enforcement may apply for a court order to access information and documentation held by TCBs. - Shareholder registers are accessible by the public for a small fee; director registers are freely accessible by company directors and the Registrar but not by the public (public may access directors of a public company through the Registrar of Companies). Annual returns filed are public. ### Prevention of misuse of bearer shares (c. 33.3) - Jersey law does not expressly prohibit the issuance of bearer shares. - Article 41 CL requires every company to keep a register of its members including: - name and address of each member - number of shares held by the member - if applicable, numbers printed on each share - Article 42 CL: transfer of shares valid only if an instrument of transfer has been delivered to the company; company must enter transferee details in its register. - Failure to maintain shareholder registers can result in criminal prosecution of the company and the officer at fault. - Even where bearer shares are issued, companies are obliged to obtain and maintain shareholder information; ownership information is available via shareholder register. - Nominee shareholders would generally be relevant persons pursuant to Schedule 2 POCL and thus obliged under the MLO to obtain, verify and maintain beneficial ownership and control information. - Authorities and TCBs stated that, in practice, bearer shares are not issued in Jersey; Jersey’s AML/CFT strategy has not identified bearer shares as an issue. - COBO provisions further ensure beneficial ownership information on bearer shares would be available if such shares were issued. ### Access to beneficial ownership information by financial institutions (c. 33.4) - Financial institutions have full access to all information and documentation held at the Registry pursuant to the CL. - No specific measures are in place to facilitate access by financial institutions to beneficial ownership and control information held by TCBs or by the JFSC pursuant to the COBO to aid verification of customer identification data. ### Effectiveness assessment (summary) - Conditions applied by the JFSC pursuant to the COBO result in information on natural beneficiaries of all legal entities established in Jersey being obtained, verified, and maintained. - JFSC consent is conditioned on notification of subsequent changes to ownership or control; violations may be sanctioned by withdrawal of consent. - Information held by the JFSC under the COBO is available to law enforcement (court order) and other supervisory authorities (Article 36 FSJL). - Requirement for a registered office in Jersey ensures beneficial owner information is maintained and available to law enforcement. - Schedule 2 POCL makes providing a registered office “by way of business” a regulated activity subject to MLO CDD requirements; the broad interpretation of “by way of business” means the measure applies at a minimum to all companies not commercially active. - For companies outside that measure (e.g., grocery stores, restaurants, other businesses operating in Jersey), COBO plus requirements to keep shareholder and director registries ensure availability of ultimate beneficiary and controller information. - Law enforcement has wide powers to access information held by Jersey TCBs. - All Jersey companies must keep shareholder and director registers accessible by the Registrar; public companies’ directors’ information is public. - Bearer shares, while not expressly prohibited, are not practiced in Jersey; if issued, existing measures ensure beneficial ownership information would be obtained, verified, and maintained. - Combined, applicable measures place Jersey in a very strong position to ensure legal entities are transparent and that accurate, adequate, and current information concerning beneficial ownership and control of all legal persons is available to law enforcement and other competent authorities. - Final assessment note: While no single measure alone guarantees beneficial ownership information for all companies, the package of measures is effective in practice. ### Recommendations, compliance and ratings - 5.1.2. Recommendations and Comments - none - 5.1.3. Compliance with Recommendations 33 - Rating: R.33 C ### Legal arrangements — trusts and partnerships (R.34) - Trusts, general partnerships, and limited partnerships are available under Jersey legislation. - Schedule 2 POCL: any person who, by way of business, acts as or arranges for another to act as trustee of an express trust conducts a regulated activity and is subject to AML/CFT requirements in the MLO. - Article 2 of the MLO defines “beneficial owner” in line with the FATF standard. - Article 3 of the MLO requires TCBs to identify the beneficial owner and verify identity. - Persons providing trustee services other than “by way of business” are not required to register with the JFSC. - POCL Schedule 2 contains narrowly-defined exemptions from registration for trust service providers (examples include provision of trust company business services from outside Jersey where only connection is residence of the customer; private trust companies administering specific trusts). - In exempt cases, obligations to comply with CDD fall on the person that is subject to Schedule 2 who administers the trust. - Authorities could not provide an estimate of trustees not covered by or exempted from registration; broad interpretation of “by way of business” and narrow exemptions suggest the vast majority of trustees and all professional trustees are covered by MLO obligations. - Trusts (Jersey) Law 1984 imposes a general obligation on trustees to keep accurate accounts and records and to act in beneficiaries’ interests, but does not expressly require trustees to identify and verify all persons falling under the definition of beneficial owners (e.g., enforcers, beneficiaries, persons exercising ultimate effective control) or to maintain records of their identity. - In the vast majority of cases trustees will obtain and verify such information during trust administration, but the Trusts (Jersey) Law 1984 does not itself mandate it. - Only limited partnerships (not general partnerships) are subject to registration under Jersey law; no information is held on number of general partnerships or beneficial owners thereof. - Limited Partnerships (Jersey) Law 1994: - Article 4 requires filing a declaration indicating registered office and full name and address of each general partner. - Article 5 requires changes to filed information to be provided within 21 days. ### Access to beneficial ownership information of legal arrangements (c. 34.2) - No requirement for trusts to be registered or to file information with a central authority. - Registered trust service providers must file an annual statement with the JFSC, but those statements do not typically contain information on trusts administered, number of trusts, or assets administered. - The FSC obtains information on the number of trusts administered by TCBs and value of assets as part of on-site examinations; all TCBs have been examined. - Article 8 of the SBL grants the JFSC wide powers to access information and documentation held by registered TCBs. - For trustees not covered by Schedule 2, the completeness, accuracy, and currency of beneficial ownership information held by unregulated and unsupervised trustees is questionable. - Law enforcement may apply for a court order to access any information and documentation held by TCBs and any trustee not covered by Schedule 2. *Source: _cr09280 - excerpt on COBO, company and trust disclosure, and access to beneficial ownership information* ### 781. Information on LPs held by the Registrar is publicly accessible pursuant to Article 32 of the ### _cr09280 - 781. Information on LPs held by the Registrar is publicly accessible pursuant to Article 32 of the ### Access to information on legal arrangements and beneficial owners - Information on LPs held by the Registrar is publicly accessible pursuant to Article 32 of the Limited Partnerships (Jersey) Law 1994. - Beneficial ownership information on legal arrangements held by TCBs is not publicly available; financial institutions may not access such information from a public source to verify customer identification data. - Information held by TCBs may be accessed by the JFSC pursuant to Article 8 of the SBL and be shared with law enforcement and other competent authorities pursuant to Article 36 of the SBL. - Information on limited partnerships is available through the Registry. - Information on the beneficial ownership of general partnerships is not obtained under the MLO and maintained and therefore may not be available to law enforcement and other competent authorities. - Many partnerships trading in Jersey register their business name under the Registration of Business Names (Jersey) Law 1956, in which case the name and address of the individual partners will be available for public inspection. ### Effectiveness of CDD and supervisory coverage for trusts and trustees - Articles 2 and 3 of the MLO require trust service providers conducting activity “by way of business” to identify in all cases the beneficial owner or controller of a legal arrangement, including the ultimate beneficial owner or person controlling or otherwise exercising control over the management of a customer, and to take reasonable steps to verify the identity of those persons based on reliable information. - The term “by way of business” is not defined but is interpreted rather broadly; intended to exclude only trustees acting in a family arrangement or similar situations. - Trust service providers falling under narrowly-defined exemptions under Schedule 2 of the POCL would be exempt from the CDD measures of the MLO. - Authorities could not provide an exact or estimated number of trustees operating outside the POCL or falling under Schedule 2 exemptions (except those relating to private trust companies). - It appears that due to the wide interpretation of “by way of business” and the narrow scope of the exemptions: - the vast majority of Jersey trustees and all professional trustees are covered by the obligations of the MLO to obtain, verify, and maintain information on the beneficial ownership of legal arrangements. - for trustees not covered by Schedule 2, the completeness, accuracy and currency of any beneficial ownership information held by such unregulated and unsupervised trustees is questionable. - Law enforcement may apply for a court order to access any information and documentation held by TCBs and any trustee not covered by Schedule 2. - No measures other than the provisions of the Trusts (Jersey) Law 1984 are in place to ensure beneficial ownership information is obtained, verified, and maintained for trusts administered by trustees not covered or exempted from the scope of the POCL (other than private trust companies). - No specific measures are in place to facilitate access by financial institutions to beneficial ownership and control information to more easily verify customer identification data. ### Recommendations and supervisory ratings (R.34) - Recommendations: - Even though the vast majority of trust arrangements are covered by the CDD requirements of the MLO, the authorities should further seek to put in place measures to ensure that accurate, complete, and current beneficial ownership information is available for legal arrangements administered by any trustees not covered by, or exempted from, the registration requirements under the FSJL or SBL. - The authorities should put in place measures to ensure that beneficial ownership information is obtained, verified, and maintained for all general partnerships. - Compliance summary: - R.34 rating: LC - Factors underlying rating: - While the vast majority of trust arrangements are covered by the CDD requirements of the MLO, no measures are in place to ensure accurate, complete, and current beneficial ownership information is available for legal arrangements administered by any trustees not covered by or exempted from the registration requirement under the POCL. - Beneficial ownership information is not obtained, verified, and maintained for general partnerships. ### Non-Profit Organizations (SR.VIII) — registration, oversight, and related measures - NPO Law: - Came into effect in August 2008; requires non-profit organizations to register with the JFSC. - Registration period closed on November 8, 2008. - Definition of organizations required to register includes organizations established solely or primarily for charitable, religious, cultural, educational, social, or fraternal purposes with the intention of benefiting the public or a section of the public; and that raises or disburses funds in pursuance of those stated purposes. - Organizations which have raised funds of less than GBP1,000 during the previous 12 months are not required to register. - Registration information required: - the amount of funds raised in a year, the amount of funds disbursed, and whether the funds were raised and disbursed in Jersey or in other jurisdictions; - a brief statement of purpose, objectives, and activities and a statement of the legal form. - JFSC actions and supervisory scope: - The JFSC will carry out a systematic analysis of the NPO sector and its vulnerability to terrorist financing. - The Commission does not regulate trusts; some NPOs are administered by a TCB and these are “regulated NPOs.” - As part of its review, the JFSC will collect internal information on charitable funds flows through regulated NPOs, including charitable trusts. - Outreach and engagement: - AML/CFT Strategy Group engaged with the NPO sector since January 2008; consultation paper, feedback paper, and a public meeting on April 10, 2008 attended by well over 200 people. - The JFSC to publish information highlighting vulnerabilities of NPOs and is running “surgeries” to help NPOs register under the NPO Law. - Ongoing obligations and monitoring: - Article 4: NPO (but not a regulated NPO) must register where established in Jersey or administered in/from Jersey. - Article 9: NPO (but not a regulated NPO) must update registration information where it changes. - Article 10: Minister may prescribe NPOs (but not regulated NPOs) to provide a financial statement each year to the JFSC; intention is to target “significant NPOs.” - Article 11: NPO must keep financial records and retain them for at least five years; make records available to the JFSC. - Article 17: JFSC must help determine if an NPO is assisting or being used to assist terrorism and has power to monitor activities of each NPO. - Article 29: offense to fail to keep required records, keep false or misleading records, fail to retain records for five years, fail to make records available to the JFSC, or provide the JFSC with false or misleading records. - Registration availability and public access: - Based on the register, the JFSC must, if requested, inform a person if a name specified by that person is in the register and, if so, provide the registration number and details of how the NPO may be contacted. - Sanctions and enforcement: - Offenses under the NPO Law include failure to register, failure to provide information, and providing false information. - Deregistration is the specific sanction; may be ordered by the Royal Court as a result of court proceedings related to the TL or by the Minister for persistent non-compliance. - Information sharing and coordination: - The JFSC has effective means of information sharing with all domestic authorities relevant for potential terrorist financing concerns. - There are no barriers to JFSC sharing of NPO information with law enforcement investigations. - Recommendations: - Based on registration information, the authorities should analyze the FT vulnerability of the NPO sector. - Compliance summary: - SR.VIII rating: C *Source: Excerpt from the assessed chapter on beneficial ownership, partnerships, trustees, and NPO oversight.* ### 815. Jersey has implemented most of the Vienna Convention’s provisions relevant to the FATF ### _cr09280 - 815. Jersey has implemented most of the Vienna Convention’s provisions relevant to the FATF ### Implementation of international conventions (Vienna, SFT, Palermo) - Jersey has implemented most provisions of the Vienna Convention relevant to the FATF Recommendations. - The defense in Article 38(2) of the DTOL may undermine application of criminal liability for the “acquisition, possession and use” of proceeds of drug-related offenses. - Self-laundering is not criminalized with respect to those acts. - Measures to enforce foreign freezing/seizing and confiscation orders do not relate to all property required, including to property of corresponding value. - Implementation of the Suppression of the Financing of Terrorism (SFT) Convention: - Jersey’s legislation meets most requirements of the SFT Convention. - The terrorist financing offense does not fully meet the requirements of the international standard (see section 2 of the report). - Shortcomings identified with respect to enforcement of foreign freezing/seizing and confiscation orders relating to terrorist assets. - Implementation of the Palermo Convention: - Jersey has implemented most Palermo provisions relevant to the FATF Recommendations. - The defense in Article 33(2) POCL may undermine application of criminal liability for the “acquisition, possession and use” of proceeds of drug-related offenses. - Self-laundering is not criminalized with respect to those acts. - Measures to enforce foreign freezing/seizing and confiscation orders do not relate to all property required, including to property of corresponding value. - Confiscation measures: - Measures to confiscate proceeds of crime and instrumentalities used/intended for use in the crime are not fully in line with the international standard (see section 2). - Implementation of UNSCRs relating to Prevention and Suppression of FT: - Implementation of UNSCRs 1267 and 1373 seems largely sufficient. - No formal procedures governing receipt and assessment of requests based on foreign freezing lists are in place. - Measures do not expressly extend the definition of ‘funds’ subject to freezing to cover assets ‘jointly’ or ‘indirectly’ owned or controlled by the relevant persons. - Additional instruments: - The 1959 European Convention on Mutual Legal Assistance in Criminal Matters has been extended to Jersey. - Extension of the U.K.’s ratification of the 1990 Council of Europe Convention on Laundering, Search, Seizure, and Confiscation of the Proceeds from Crime and of the UN Convention Against Corruption has been requested by Jersey. ### Recommendations and comments (concise) - The authorities should ensure that all provisions of the Palermo and Vienna Conventions are fully implemented. - The authorities should ensure that all provisions of the United Nations International Convention for the Suppression of Financing of Terrorism are implemented. - Jersey should consider requesting extension of the remaining 10 international counter-terrorism related legal instruments. ### Compliance: Recommendation 35 and Special Recommendation I — Rating summary - R.35 LC - Ratification of the Palermo Convention has not yet been extended to Jersey. - Not all provisions of the Palermo and Vienna Conventions are fully implemented. - SR.I LC - Not all provisions of the FT Conventions are fully implemented. - Not all requirements under UNSCR 1267 and 1373 are fully implemented. ### Mutual Legal Assistance (R.36-38, SR.V) — Legal framework and practice - Treaty status and primary authorities: - Jersey has not entered into any bilateral or multilateral MLA treaties. - The U.K.’s ratification of the 1959 European Convention on Mutual Legal Assistance in Criminal Matters (with Additional Protocol of March 1978) has been extended to Jersey. - The U.K.’s ratification of the Vienna Convention and the Suppression of the Financing of Terrorism Convention has been extended to Jersey; these include MLA components. - The AG (Attorney General) is the designated authority to receive and deal with MLA requests; domestic law gives the AG discretion in providing MLA when requests are made under those Conventions. - Other instruments and requests: - Extension of the U.K.’s ratification of the 1990 Council of Europe Convention on Laundering, Search, Seizure, and Confiscation had been requested but not granted at the time of assessment. - Jersey has entered into bilateral tax information exchange agreements with the United States (2002), the Netherlands (2007), and Denmark, the Faroe Islands, Finland, Greenland, Iceland, Norway, Sweden, and Germany (2008). - Five additional bilateral tax information exchange agreements were being finalized at time of assessment (the U.K., France, Ireland, Australia, and New Zealand). - Criminal tax requests by treaty countries are to be dealt with in accordance with the agreements, but Jersey authorities had not insisted for many years upon a treaty base for criminal tax information requests. - Domestic legislative basis for MLA: - No overarching MLA legislation; relevant laws include: - Criminal Justice (International Co-operation) (Jersey) Law 2001 (CJ(IC)LJ) - Investigation of Fraud (Jersey) Law 1991 - Evidence (Proceedings in Other Jurisdictions)(Jersey) Order 1983 - Proceeds of Crime (Enforcement of Confiscation Orders) (Jersey) Regulations 2008 - Drug Trafficking Offences (Enforcement of Confiscation Orders)(Jersey) Regulations 2008 ### Scope and practical measures for MLA - Widest possible range of mutual assistance (c. 36.1): - The Criminal Justice (International Co-operation) (Jersey) Law 2001 applies to all offenses with maximum sentence in Jersey of not less than one year’s imprisonment (“serious offenses”) and therefore applies to all money laundering offenses and terrorism financing offenses. - The Proceeds of Crime (Enforcement of Confiscation Orders) (Jersey) Regulations 2008, the Drug Trafficking Offences (Enforcement of Confiscation Orders) (Jersey) Regulations 2008, and the Terrorism (Enforcement of External Orders) (Jersey) Regulations 2008 contain specific provisions dealing with seizing property upon request to secure funds or property that is or may become subject to foreign confiscation orders. - The scope of the Drug Trafficking Offences Regulations 2008 is limited to drug trafficking offenses, including drug-related money laundering cases based on Article 38 of the DTOL. - The CJ(IC)LJ extends to all other criminal offenses not covered by the DTOL and sanctioned with imprisonment of one year or more. - Jersey may provide MLA based on the Investigation of Fraud (Jersey) Law 1991 for fraud-related money laundering. - Production, search and seizure of information, documents or evidence: - Main provisions: Articles 5 and 6 CJ(IC)LJ 2001; Article 2 Investigation of Fraud (Jersey) Law 1991; Article 2(2) Evidence (Proceedings in other Jurisdictions) (Jersey) Order 1983 for cases already at trial stage. - Article 5 CJ(IC)LJ 2001: AG may issue notice requiring attendance, production of documents, or testimony; production may include materials otherwise covered by banking confidentiality. - Failure to comply with AG’s notice is an offense under Article 4 CJ(IC)LJ 2001. - Article 5A CJ(IC)LJ 2001: a person cannot be compelled to give evidence if they could not be compelled in Jersey or the requesting jurisdiction; claim to exemption must be confirmed by the requesting prosecution, court, tribunal, or authority. - Article 6 CJ(IC)LJ 2001: coercive measures by warrant issued by the Bailiff for search and seizure; Article 6 requires dual criminality. - Article 2 Investigation of Fraud 1991: AG discretion for suspected ‘serious or complex fraud’ wherever committed; provides notices requiring answers or documents and power to apply for search warrants. - Foster vs. Attorney General: “fraud” interpreted broadly to cover any deliberate false representation causing prejudice and benefit; used in practice to provide MLA in fraud-related money laundering cases. - Taking of evidence or statements: - Article 5 CJ(IC)LJ 2001 and Article 2 Investigation of Fraud 1991 allow AG to require persons to appear, give voluntary witness statements, or provide testimony; coercive measures may secure attendance. - Article 2(2) Evidence (Proceedings in other Jurisdictions) (Jersey) Order 1983: AG may apply to Royal Court for examination of witnesses on behalf of requesting country. - Transmission of documents and originals: - Article 5B CJ(IC)LJ 2001: evidence received by court or Viscount forwarded to AG for transmission; AG may transmit original documents or copies, pictures, descriptions, or other representations as necessary. - Article 3 Investigation of Fraud 1991: evidence or documents obtained may be provided to requesting authorities for investigation or prosecution of complex or serious fraud, including money laundering. - Service of judicial documents and voluntary appearances: - Article 2 CJ(IC)LJ 2001: AG may cause summons or other process or court decisions to be served in Jersey, but service does not create a legal obligation under Jersey law to comply. - Voluntary appearances facilitated as normal AG practice without special legal provision. - Freezing, seizing and confiscation of ML and TF related assets: - See comments under Recommendation 38; with exceptions outlined under Recommendation 38, Jersey seems able to provide a wide range of MLA in AML/CFT investigations, prosecutions, and related proceedings. ### Timeliness, conditions and practice (c. 36.1.1 and c. 36.2) - Timeliness: - No formal time requirements for MLA requests. - Public guidelines state requests would generally be dealt with within three months from receipt. - Average timeframe between 2003 and 2007 was 2.8 months. - Conditions and grounds for refusal: - All assistance is within AG discretion; no binding guidelines on grounds for refusal. - Requests are considered on merit for proportionality and whether “reasonably serious.” - Policy thresholds (as practice, not absolute rules): - Hesitancy to provide assistance in cases involving less than GBP 100,000 (or equivalent). - In serious or complex fraud, hesitancy in cases under GBP 2 million (or equivalent). - Policy does not exclude provision of MLA on public policy grounds where thresholds not met. - Example: Jersey granted assistance in cases involving less than 50,000 GBP due to preservation of the democratic process in the requesting country. *Source: _cr09280 - 815. Jersey has implemented most of the Vienna Convention’s provisions relevant to the FATF* ### 852. As outlined above, all forms of mutual legal assistance provided by Jersey are based on the ### _cr09280 - 852. As outlined above, all forms of mutual legal assistance provided by Jersey are based on the ### Principle of mutual legal assistance, dual criminality, and political/human rights considerations - All forms of mutual legal assistance (MLA) provided by Jersey are based on the principle of reciprocity. - Coercive measures of search and seizure pursuant to Article 6 of the Criminal Justice (International Co-operation) (Jersey) Law 2001 and measures pursuant to Article 2 Investigation of Fraud (Jersey) Law 2001 may only be taken based on dual criminality. - Mutual legal assistance pursuant to Article 5 of the Criminal Justice (International Co-operation) (Jersey) Law 2001 may be granted even in the absence of instituted criminal proceedings or a conviction. - In cases where a request relates to an offense of a political character, the Attorney General (AG) would contact the U.K. Foreign Office for further background information. - The AG stated that in about five cases, mutual legal assistance was denied based on the political nature of the offense involved. - Considerations are given to human rights and the nature of the trial process in the requesting country before a request is granted. - Overall conclusion in the text: Jersey’s law does not unduly or unreasonably restrict the provision of mutual legal assistance. ### Efficiency of processes and institutional roles (c. 36.3) - The Criminal Justice (International Co-operation) (Amendment) (Jersey) Law 2008 makes the AG the focal point for all MLA-related matters. - All evidence received by the Royal Court or the Viscount shall be provided to the AG for transmission to the requesting court or authority. - No formal procedures exist for handling MLA requests; practice: - Requests received by the AG are handled by an Assistant Legal Adviser. - The Assistant Legal Adviser reports to and obtains advice from a Crown Advocate. - The matter is then taken before the AG, who approves the proposed course of action, issues notices for implementation, and authorizes transmission of information or evidence. ### Assistance regardless of fiscal aspects and confidentiality (c. 36.4 & c. 36.5) - The presence of fiscal aspects in a request does not constitute grounds for refusal. - MLA requests relating to fiscal offenses would most likely be dealt with under the Investigation of Fraud (Jersey) Law 1991. - Between 2003 and 2007, Jersey granted mutual legal assistance in 42 cases relating exclusively to fiscal offenses. - Article 5(10) of the Criminal Justice (International Co-operation) (Jersey) Law 2001 provides that Article 6 of the Bankers’ Books Evidence (Jersey) Law 1986 applies to information and evidence provided to the AG for MLA purposes, allowing production of banking-confidential information via AG notice if Article 5 requirements are met. - Article 2(9) Investigation of Fraud (Jersey) Law 1991 permits the AG to require disclosure of information covered by banking confidentiality for MLA under that law. - Neither the Criminal Justice (International Co-operation) (Jersey) Law 2001 nor the Investigation of Fraud (Jersey) Law 1991 permit compelled production of documents or evidence covered by legal professional privilege, unless there is a suspicion that the lawyer committed a criminal offense. ### Availability of powers of competent authorities and mutual assistance channels (c. 36.6, c. 36.8) - Pursuant to Articles 5 and 6 Criminal Justice (International Co-operation) (Jersey) Law 2001: - Competent authorities can obtain a production order through a notice by the AG. - Competent authorities can obtain an order to search premises or seize documents based on a warrant by the Royal Court upon request by the AG. - Similar powers are available under the POCL, the DTOL, and the TL. - There is no direct requesting process between the JFCU and foreign counterparts or other law enforcement authorities; all MLA requests to secure information for evidential purposes must go through the Law Officers’ Department. ### Avoiding conflicts of jurisdiction (c. 36.7) - No formal proceedings exist to deal with conflicts of jurisdiction; the authorities handle conflicts on a case-by-case basis. - In practice, Jersey has coordinated with the Governments of the United Kingdom, the United States, and Nigeria to determine the best venue for prosecution. ### International cooperation under SR V (c. 36.1–36.6; c. V.1 & c. V.6) - The Criminal Justice (International Co-operation) (Jersey) Law 2001 and the Criminal Justice (International Cooperation) (Jersey) Regulations 2008 apply to all conduct outside Jersey that would constitute a “serious offense” if committed in Jersey. - “Serious offense” is defined as an offense for which the maximum sentence under Jersey law is not less than one year’s imprisonment. - The range of MLA that may be provided under these instruments extends to requests relating to terrorism financing offenses. - No formal proceedings for conflicts of jurisdiction under SR V; issues dealt with case-by-case, depending on where prosecution is most likely to succeed. ### Dual criminality specifics and scope of MLA (c. 37.1 & 37.2) - Many forms of MLA, including taking witness statements and production of documents and other evidence pursuant to Article 5 of the Criminal Justice (International Co-operation) (Jersey) Law 2001, are available without proof that dual criminality is met. - Powers under Article 2(2) of the Evidence (Proceedings in other Jurisdictions) (Jersey) Order 1983 for production of evidence and examination of witnesses in trial-level cases may be invoked even in the absence of dual criminality. - Dual criminality is required for: - Search and seizure measures under Article 6 of the Criminal Justice (International Co-operation) (Jersey) Law 2001. - Seizing and confiscation measures pursuant to the POCL as amended by Proceeds of Crime (Enforcement of Confiscation Orders) (Jersey) Regulations 2008. - Seizing and confiscation measures pursuant to the DTOL as amended by Drug Trafficking (Enforcement of Confiscation Orders) (Jersey) Regulations 2008. - Applicability of the Investigation of Fraud (Jersey) Law 1991 requires conduct to constitute “serious fraud” under Jersey law. - Authorities confirmed that for MLA forms requiring dual criminality, mere technical differences between the law of the requesting state and Jersey law do not pose an impediment to MLA provision. ### Identification, provisional measures, freezing, seizing, and restraint (c. 38.1 & c. 38.2) - Measures under Articles 5 and 6 Criminal Justice (International Co-operation) (Jersey) Law 2001 and Article 2 Investigation of Fraud (Jersey) Law 1991 may be used to identify and trace property that may become subject to confiscation through foreign court proceedings, including access to banking-confidential information. - Foreign seizing or freezing orders cannot be directly implemented in Jersey; they are implemented through domestic restraint or seizing orders. - Jersey law does not provide for any freezing measures; requests to freeze or seize assets are implemented only through issuance of: 1. A domestic seizing order (saisie judiciaire), or 2. A domestic restraint order. - Domestic seizing orders may be issued upon request by a foreign jurisdiction pursuant to: - The POCL as amended by Proceeds of Crime (Enforcement of Confiscation Orders) (Jersey) Regulations 2008, or - Articles 15 and 16 DTOL as amended by Drug Trafficking Offences (Enforcement of Confiscation Orders) (Jersey) Regulations 2008. - Domestic restraint orders in MLA context are based on the Criminal Justice (International Co-operation) (Jersey) Law 2001. - The AG may apply for issuance of a seizing order on behalf of a requesting jurisdiction to the Royal Court pursuant to Articles 15 and 16 of the POCL as amended or Articles 15 and 16 DTOL as amended. - For the Royal Court to grant the AG’s request, the Court must be satisfied that proceedings have been instituted or are to be instituted against the defendant in the requesting country and have resulted in an external confiscation order or it appears to the Jersey court that there are reasonable grounds for believing such an order may be made. - An application for a seizing order may be made either ex parte or with notice. - Both Regulations provide for seizing orders to extend to any “realizable property,” defined to include: - Any property specified in the external confiscation order, or - Where such an order has not yet been made, any property held by the defendant, property held by a person to whom the defendant has directly or indirectly made a gift caught, or any property to which the defendant is beneficially entitled. - Definitions of “confiscation order”: - Under the enforcement regulations to the DTOL: “an order made by a court [outside of Jersey] for the purpose of recovering payments or other rewards received in connection with drug trafficking or their value.” - Under the enforcement regulations pursuant to the POCL: “an order [...] for the purpose of recovering property obtained as a result of or in connection with criminal conduct or for the purpose of recovering the value of property so obtained or for the purpose of depriving a person of a pecuniary advantage so obtained.” - The scope appears to extend to money laundered, proceeds from predicate offenses, instrumentalities used or intended to be used in commission of money laundering or predicate offenses, and may allow seizing of legitimate assets equivalent to the value of illegitimate property or instrumentalities (confirmed by the authorities). ### Restraint Orders under the Criminal Justice (International Co-operation) (Jersey) Regulations 2008 - Regulation 3 provides for the Royal Court to issue restraint orders with respect to property that has been or may become subject to an external forfeiture order. - A restraint order may be issued even where proceedings have not yet been instituted in the foreign jurisdiction if it appears proceedings will be instituted and there are reasonable grounds to believe an external forfeiture order may be issued. - “Forfeiture Order” is defined in Regulation 2 as “an order [...] for the forfeiture and destruction or forfeit ure and other disposal of anything in respect of which a serious offense has been committed or which was used or intended for use in connection with the commission of such an offense.” - The Criminal Justice (International Co-operation) (Jersey) Law 2001 and Regulations 2008 apply to all “serious offenses,” covering all acts of money laundering, terrorism financing offenses, and all categories of predicate offenses. - Regulation 3 allows seizure and detention of any property that may become subject to an external forfeiture, including: - Proceeds of any predicate offense, - Instrumentalities used or intended to be used in commission of predicate, terrorism financing, or money laundering offenses, - In stand-alone money laundering cases, any property laundered. - Limitation noted: - Regulation 3’s language referring to “instrumentalities and property in respect to which a serious offense has been committed” appears to apply only to illegitimate property and does not allow restraint of legitimate property equivalent in value to illegitimate property or instrumentalities (confirmed by authorities). - The definition does not seem to cover benefits or property received from an offense but only “property in respect of which a serious offense has been committed.” Example: where a third party launderer received a fee, the proceeds of the money laundering offense itself could not be restrained pursuant to Regulation 3 (confirmed by authorities). ### Summary conclusion on seizing and restraint across statutes - For predicate offenses and ML cases under the POCL, and drug-related money laundering pursuant to Article 38 DTOL, Jersey may seize any property that may become subject to confiscation upon request by a foreign jurisdiction, including: - Proceeds from the offenses, - Instrumentalities used or intended to be used for commission of such crimes, - Legitimate property equivalent in value to any such property. - Where a specific case cannot be seized pursuant to the POCL as amended by Proceeds of Crime (Enforcement of Confiscation Orders) (Jersey) Regulation 2008 and the DTOL as amended by Drug Trafficking Offences (Enforcement of Confiscation Orders) (Jersey) Regulations 2008, requesting countries may still seek application of restraint measures under the Criminal Justice (International Co-operation) (Jersey) Regulations 2008. - Countries that do not recognize “civil forfeiture” may utilize measures under the Criminal Justice (International Co-operation) (Jersey) Regulations 2008 on the basis of a confiscation order or in proceedings assumed likely to result in a confiscation order. ### Confiscation and enforcement of foreign orders - Two legal provisions allow enforcement of foreign confiscation orders in Jersey: 1. The POCL, as amended by the Proceeds of Crime (Enforcement of Confiscation Orders) (Jersey) Regulations 2008. 2. The DTOL, as amended by Drug Trafficking Offences (Enforcement of Confiscation Orders) (Jersey) Regulations 2008. - Foreign confiscation orders are not directly implemented in Jersey but are registered and implemented through domestic saisie judiciaire or a restraint order pursuant to the Criminal Justice (International Co-operation) (Jersey) Law 2001. - The Criminal Justice (International Co-operation) (Jersey) Law 2001 allows registration and implementation of forfeiture orders with respect to all serious offenses, including ML, TF and predicate offenses to ML. - The TL as amended by the Terrorism (Enforcement of External Orders) (Jersey) Regulations 2008 provides specific provisions for registration and implementation of external (criminal or civil) forfeiture orders relating to “terrorist property.” ### External confiscation orders — definitions and scope - Under the Proceeds of Crime enforcement regulations (POCL): - “External confiscation order” extends to “any property obtained as a result of or in connection with criminal conduct, for the purposes of recovering the equivalent value of such property or for the purpose of depriving a person of a pecuniary advantage.” - Under the DTOL enforcement regulations: - “External confiscation order” includes “payments and other rewards received in connection with drug trafficking, or their value.” - Pursuant to Regulation 2, “drug trafficking” would include the acts of “acquisition, possession, and use” but not the acts of “concealing or transferring” of drug-related proceeds. *Source: _cr09280 - 852. As outlined above, all forms of mutual legal assistance provided by Jersey are based on the (excerpt).* ### 890. Once an external confiscation order has been registered, the court may issue a saisie ### _cr09280 - 890. Once an external confiscation order has been registered, the court may issue a saisie ### Enforcement of registered external confiscation orders - Once an external confiscation order has been registered, the court may issue a saisie judiciaire. - Upon application of the AG, the court may empower the Viscount to realize the seized property to satisfy the external confiscation order and to subsequently pay the confiscated assets into the Criminal Offenses Confiscation Fund or the Drug Trafficking Confiscation Fund, as the case may be. ### External (civil) forfeiture orders and terrorism-related provisions - Article 7 of the Criminal Justice (International Co-operation) (Jersey) Law 2001 and Regulation 2 in connection with Regulation 5 Criminal Justice (International Co-operation) (Jersey) Regulations 2008 provide for registration of final external forfeiture orders with the Royal Court. - Regulation 6: where an external forfeiture order has been registered, the Royal Court may, upon application by the AG, order forfeiture of the property specified in the external order through issuance of a restraint order. - Terrorism-specific measures: - Terrorism (Enforcement of External Orders) (Jersey) Regulations 2008 contains specific provisions for implementation and enforcement of external (civil) forfeiture orders. - “External forfeiture order” in the TL extends to “terrorist property” as defined in Article 3 of the TL, including “property which is likely to be used for terrorism and to proceeds of the commission of acts of terrorism or of acts carried on for the purpose of terrorism.” - The provisions therefore do not apply to terrorism financing offenses or terrorism related money laundering, but may be used to seize assets constituting proceeds of a terrorism predicate offense and instrumentalities used in or intended for use in the commission of a terrorism predicate offense. ### Scope and application of enforcement measures - Foreign confiscation orders for proceeds from, instrumentalities used or intended to be used in the commission of the money laundering or predicate offense within the scope of the POCL as amended by the Proceeds of Crime (Enforcement of Confiscation Orders) (Jersey) Regulations 2008 and the DTOL as amended by Drug Trafficking Offences (Enforcement of Confiscation Orders) (Jersey) Regulations 2008 may be enforced in Jersey through issuance of seizing orders. - Provisions appear to allow seizing of legitimate assets equivalent to the value of illegitimate property or instrumentalities; this was confirmed by the authorities. - Foreign jurisdictions may seek to have Jersey secure property via civil forfeiture orders; however, foreign forfeiture orders may not be implemented towards legitimate property of equivalent value to the illegitimate property or instrumentalities. Proceeds from the money laundering or terrorism financing offense seem to be excluded from the scope of those forfeiture provisions. - Countries not recognizing “civil forfeiture” may utilize measures in the Criminal Justice (International Co-operation) (Jersey) Regulations 2008 on the basis of a confiscation order or in proceedings assumed to result in issuance of a confiscation order. ### Coordination of seizure and confiscation actions (c. 38.3) - No formal procedures exist to coordinate seizure and confiscation actions with other countries. - Jersey has cooperated and liaised with other countries on a case-by-case basis in the past. ### International cooperation under SR V (applying c. 38.1-38.3 in R. 38, c. V.3) - The Criminal Justice (International Co-operation) (Jersey) Law 2001 and Regulations 2008 apply to all conduct outside of Jersey that would constitute a “serious offense” had it been committed in Jersey. - “Serious offense” is defined as an offense for which the maximum sentence under Jersey law is not less than one year’s imprisonment. - Relevant provisions dealing with enforcement of external confiscation orders therefore also apply with respect to terrorist financing offenses. ### Asset Forfeiture Funds (c. 38.4) - Jersey has established three asset forfeiture funds: - the Drug Trafficking Confiscation Funds, - the Criminal Offenses Confiscation Funds, and - the Civil Asset Recovery Fund. - For the first two funds, all amounts recovered under or in satisfaction of confiscation orders or received under asset-sharing arrangements are to be paid into those funds. - Money paid into those funds shall be used to assist in preventing, suppressing, or otherwise dealing with criminal conduct, with the consequences of criminal conduct, or in facilitating enforcement of any enactment dealing with criminal conduct. ### Sharing of confiscated assets (c. 38.5) - No formal procedures are in place for sharing confiscated assets. - Authorities stated Jersey considers asset sharing to be good practice and arrangements have been made on a case-by-case basis (examples given: the US, the UK, and South Africa). - Various requests to share assets have arisen in discussions with the U.S., the U.K., Spain, and Andorra; these have not been considered suitable for asset sharing agreements to date because of an intention not to create international obligations on the part of the U.K., but that policy is being reconsidered. ### Recognition of foreign orders and terrorism-related asset sharing - The Civil Asset Recovery (International Co-operation) (Jersey) Law 2007 provides for a wide range of mutual legal assistance in civil proceedings, including obtaining evidence and enforcement of foreign restraint and civil asset recovery orders. - Asset forfeited in terrorism financing cases must be handed over to the Viscount. There have been no cases in which Jersey shared assets relating to terrorism funding with another jurisdiction. - The authorities stated the Minister for Treasury and Resources may share at his discretion. - An amendment to the TL ensures that, where a forfeiture order is made under Article 26, the balance of any sums in the hands of the Viscount is paid into the Criminal Offences Confiscation Fund, from which asset sharing is possible pursuant to the terms of the POCL. ### Statistics on mutual legal assistance (applying R.32) - Between 2003 and 2008, Jersey received a total of 557 requests for mutual legal assistance in criminal matters, most related to cases of fraud. - Of those 557 requests, 63 related to money laundering, most involving fraud or drug related predicate offenses. - Between 2003 and 2008, five requests for assistance in terrorism cases were received (four from the U.S., one from the U.K.), all of which have been granted. - The majority of requests were for the production of oral or documentary evidence. - Only 17 requests related to the freezing or seizing of funds and 12 requests related to the registration of external confiscation orders. - Of the 557 requests received, only 25 (which is about 4.49 percent) were denied compared to 395 granted requests. - The average timeframe within which mutual legal assistance requests are handled is 2.68 months. - The majority of MLA requests related to fraud offenses, followed by fiscal, theft, drug trafficking, and corruption offenses. - Total number of requests for MLA received by Jersey (annual breakdown): - NEW REQUESTS RECEIVED: 2003: 104; 2004: 101; 2005: 107; 2006: 77; 2007: 77; 2008: 91 - REQUESTS GRANTED: 2003: 79; 2004: 97; 2005: 76; 2006: 42; 2007: 42; 2008: 59 - REQUESTS UNDER REVIEW: 2003: 27; 2004: 24; 2005: 25; 2006: 32; 2007: 33; 2008: 26 - REQUESTS REFUSED: 2003: 8; 2004: 6; 2005: 2; 2006: 3; 2007: 2; 2008: 4 - AVERAGE TIME WITHIN WHICH ASSISTANCE WAS GRANTED (IN MONTHS): 2003: 2.6; 2004: 3.1; 2005: 3.2; 2006: 2.6; 2007: 2.8; 2008: 2 - Underlying offenses for requests received (annual totals by category 2003–2008, and TOTAL): - ML: 11, 10, 10, 8, 12, 12 — TOTAL 63 - Terrorism: 2, 1, 1, 0, 1, 0 — TOTAL 5 - Pure Fiscal Offenses: 16, 12, 15, 9, 10, 7 — TOTAL 69 - Fraud: 40, 35, 34, 31, 31, 39 — TOTAL 210 - Theft/Deception: 11, 6, 6, 13, 12, 6 — TOTAL 54 - Corruption: 4, 1, 3, 6, 6, 13 — TOTAL 33 - Drug Trafficking: 2, 3, 7, 6, 9, 10 — TOTAL 37 ### Recommendations and compliance observations (6.3.2 and 6.3.3) - Recommendation: - Amend the law to correct the deficiencies affecting the criminalization of ML and FT offenses, and thus facilitate full compliance with MLA requests where the dual criminality principle applies. - Compliance with Recommendations 36 to 38 and Special Recommendation V — Rating Summary of factors relevant to s.6.3 underlying overall rating: - R.36: LC - Deficiencies in the ML criminalization affect the MLA capacity where the dual criminality principle applies. - R.37: C - R.38: LC - Deficiencies in the ML criminalization affect the MLA capacity where the dual criminality principle applies. - SR.V: LC - Deficiencies in the FT criminalization affect the MLA capacity where the dual criminality principle applies. ### Extradition framework (R.37, 39, SR.V) - Legal framework: - Primary law: Extradition (Jersey) Law 2004, modeled on the Extradition Act 2002 of the U.K. - The AG is the competent authority to make and receive extradition requests and sets procedures for responding to such requests. - Parts 1–3 deal with extraditions from Jersey; Part 4 with extraditions to Jersey. - Involvement of the U.K. is not required at any stage of extradition proceedings, including those relating to U.K. citizens. - The bilateral Extradition treaty between the U.K. and the U.S. has been extended to Jersey. - The Council of Europe Convention on Extradition 1957 applies to Jersey per Article 27(2). - Designated vs non-designated territories: - The Law differentiates “designated” and “non-designated” territories; “designated” territories further categorized in “class 1” and “class 2”. - “Category 1” countries mainly include countries in Europe as well as the U.S., Australia, New Zealand, South Africa, and a limited number of countries in Asia. - “Category 2” countries mainly include countries in Asia, Africa, the Caribbean, and South America. - Article 6: the Jersey Parliament, by Regulation, may add, change or remove any territory from the list; Privy Council approval not required; formal process could be concluded within ten weeks. - At assessment visit, list of designated countries extended to 112. - Any members to a treaty relevant for extradition and extended by the U.K. to Jersey would automatically be added to the list of designated countries. - Non-designated countries and Article 109: - For non-designated country requests, Article 109 allows application of Extradition (Jersey) Law 2004 if the AG believes the U.K. has made arrangements on behalf of Jersey for extradition of a person from Jersey. - Authorities stated any such arrangements by the U.K. require Jersey’s concurrence. - Extradition from non-designated territories is possible on an ad-hoc basis pursuant to Article 109. ### Article 32 and special arrangements - Article 32: the AG may grant extradition to designated countries only if the requesting country has special arrangements with Jersey for a particular case, class of cases, or all cases. - All members to the Council of Europe Convention automatically have a special arrangement. - Jersey has extradition arrangements with the U.S. - Jersey may enter into an arrangement with a country after receiving a request for extradition. ### Dual criminality, mutual assistance, and implications - Articles 3 and 4 of the Extradition (Jersey) Law 2004: dual criminality required in all cases for extradition: - (1) conduct must constitute an offense under both Jersey law and the law of the requesting jurisdiction; and - (2) be punishable with imprisonment for a term of 12 months or more under both Jersey law and the law of the requesting jurisdiction. - If requirements met, conduct is extraditable regardless of how denominated in the requesting jurisdiction. - In countries without a statutory penalty, the level of penalty that can be imposed shall be taken into account. - Extradition requests may only be certified by the AG as “valid” if the person has been charged or convicted in the requesting jurisdiction and the requesting jurisdiction is listed in Schedule 1 or an ad-hoc Article 109 arrangement applies. - Shortcomings in money laundering and terrorism financing criminalization (section 2) may negatively impact Jersey’s ability to grant extradition requests. ### Money laundering as extraditable offense (c. 39.1) - All money laundering offenses as defined in the POCL, the DTOL and the TL may be sanctioned with imprisonment of up to 14 years. - Provided the act or omission is a criminal offense punishable with imprisonment of more than 12 months under the requesting country’s law, money laundering is an extraditable offense. ### Extradition procedures and safeguards - Extradition process includes a hearing before the Magistrate and rights to appeal decisions by the Magistrate or the AG. - AG’s initial step: ensure a valid request (statement indicating the person is accused or unlawfully at large after conviction). - AG issues a certificate of validity and forwards to the Magistrate. - Magistrate reviews documents; may issue a provisional arrest warrant if reasonable grounds exist that the offense is extraditable and evidence would justify arrest. - Following arrest, an extradition hearing determines whether all relevant information and documents have been received (certificate of validity, particulars of person, particulars of offense, warrant or certificate of conviction where applicable). - If documents/information incomplete, Magistrate shall order discharge. - No formal grace period for requesting country to remedy formal deficiencies, but AG may appeal the Magistrate’s decision on behalf of the requesting country. - Article 44: if immediately after a Magistrate orders discharge the Magistrate is informed on behalf of the requesting country of an intention to appeal, the Magistrate shall remand the person in custody or on bail while the appeal is pending, ensuring no risk of flight while the case is remitted to the requesting country to fix formal requirements. *Source: _cr09280 - 890. Once an external confiscation order has been registered, the court may issue a saisie* ### 920. Once it has been established that a request meets the formal requirements, the Magistrate ### _cr09280 - 920. Once it has been established that a request meets the formal requirements, the Magistrate ### Extradition procedure and initial judicial review - Paragraph 920: Once a request meets formal requirements, the Magistrate: - determines whether there are any bars to extradition; - determines whether the person’s extradition would be in line with rights pursuant to certain provisions of the Convention for the Protection of Human Rights and Fundamental Freedoms; - determines that the person for whom extradition is sought is physically and mentally fit for extradition. - Paragraph 921: For cases without a conviction where the requesting country is designated “category 2,” the Magistrate: - decides whether there is sufficient evidence for the person to stand trial in the requesting country; - may take into account any evidence provided from the requesting country. - Paragraph 922: If requirements are met, the Magistrate forwards the request to the AG to decide whether extradition is to be granted. ### Attorney General decision criteria and death-penalty safeguard - Paragraph 923: The AG decides based on: - provisions relating to the death penalty (see next paragraph); - whether an extradition arrangement exists between Jersey and the requesting jurisdiction relevant to the case; - whether the person has been extradited to Jersey from another jurisdiction. - If none of the cited provisions prohibit extradition, the AG must issue a written extradition order. - Paragraph 925 (Article 31): The AG must refuse extradition if the person could, will be, or has been sentenced to death for the offense unless the requesting country provides written assurance that the death penalty will not be imposed or carried out. ### Bars to extradition and related provisions - Paragraph 924 (Article 16 Extradition (Jersey) Law 2004): Bars include: - double jeopardy; - extraneous considerations (e.g., prosecution to punish on account of race, religion, nationality, gender, sexual orientation, or political opinion); - passage of time (invokable only if it would be unjust or oppressive to extradite due to lapse of time since offense or since person became unlawfully at large); - hostage-taking considerations. - Additional notes: - The authorities stated that the “passage of time” ground has never been invoked in practice. - If extradition were denied based on “passage of time,” the AG on behalf of the requesting country could appeal the court’s decision. ### Restrictions, deferrals, and simplified procedures - Paragraph 926: Extradition is possible only in very limited circumstances if the person has been extradited to Jersey by another jurisdiction. Decisions must be deferred where the person was charged with the offense in Jersey and may be deferred if the person is serving a sentence in Jersey. - Paragraph 930: Timeframes: - The Extradition (Jersey) Law 2004 does not provide clear timeframes for extradition hearings. - Once a case is forwarded by the Magistrate to the AG, the AG has two months to either grant the request or discharge the person. - If extradition is granted, Article 55 provides that extradition to the requesting territory must take place within 28 days of the day on which the AG granted the extradition request. - Paragraphs 931 and 933 (Articles 62–64): Simplified extradition procedures apply where the person consents to be extradited. ### Extradition of nationals and prosecution cooperation - Paragraph 928: Jersey may and in the past has extradited its own nationals (British citizens), albeit not in the context of money laundering. - Paragraph 929 (Article 16): The law provides for a person to be discharged if extradition is barred. There is no express provision requiring prosecution in Jersey courts prior to extradition. Because Jersey has extradited British citizens in the past, the criteria requiring prosecution prior to surrender do not apply. ### Extradition for terrorism financing and money laundering - Paragraph 932: Terrorism financing as defined in the TL: - may be sanctioned with imprisonment of up to 14 years; - provided the dual criminality requirement is met, is an extraditable offense pursuant to Articles 3 and 4 of the Extradition (Jersey) Law 2004; - all provisions and procedures under R 39 apply with respect to extradition requests for terrorism financing offenses. - Paragraph 934 (Effectiveness): As of the time of the assessment visit, Jersey had not received or made any extradition requests involving money laundering or terrorism financing. ### Identified legal deficiency and recommendation - Recommendation (6.4.2): - Amend the law to correct the deficiencies affecting the criminalization of ML and FT offenses, and thus remove possible obstacles to complying with extradition requests where the dual criminality principle applies. ### Compliance ratings and key factors - 6.4.3 Compliance summary: - R.39: LC - Deficiencies in the ML criminalization affect the extradition capacity due to the application of the dual criminality principle. - R.37: C - SR.V: LC - Deficiencies in the ML criminalization affect the extradition capacity due to the application of the dual criminality principle. ### Other forms of international cooperation (R.40 & SR.V) - JFCU (Paragraphs 935, 946, 949): - Shares intelligence on ten percent of SARs received, mostly with the U.K. and Crown Dependencies. - Active in the Egmont network over the Egmont Secure Web; cooperation governed by Egmont principles. - Policy of informing FIUs of jurisdictions involved in a SAR at least 10 percent of the time. - JFCU Intelligence Wing handles Police and FIU ML/FT-related requests; requests are dealt with promptly in practice (Paragraph 942). - JFCU has three levels of making inquiries on behalf of foreign counterparts: - Level One: searching JFCU databases and disclosing intelligence per Egmont principles; - Level Two: search of Jersey’s Companies Register and other public domain information; - Level Three: informally approaching institutions to share intelligence-obtained information. - Customs (Paragraphs 936–938, 947): - Exchanges information with counterparts practically on a daily basis; operational cooperation with U.K. counterpart well developed and compliant with the Data Protection Law. - Customs and Excise (Jersey) Law 1999 permits cooperation with other Customs services and arrangements with EU member states; being part of the customs territory of the EU enables cooperation under mutual assistance agreements. - Provides spontaneous and upon-request information via officers seconded to the JFCU. - Police (Paragraph 939, 951): - Use Interpol and Europol networks; bilateral links with SOCA via MOU for information sharing. - Assistance beyond intelligence exchange is routinely provided through MLA requests once AG consent is granted. - Police and JFCU routinely conduct investigations on behalf of foreign counterparts as part of formal MLA processes. - Supervisory authorities (Paragraphs 940–941, 954–957): - JFSC legally empowered to cooperate with regulators in other jurisdictions; responded 11 times in 2008 and 18 times in 2007 to overseas requests for information (Paragraph 941). - Under Article 39 of the SBL (and similar provisions in BBJL, CIFL, IBJL, FSJL), JFSC may not pass on information unless satisfied that: - the overseas authority will treat information with appropriate confidentiality; - information is provided to assist the supervisory authority in supervision; - the overseas authority will comply with any conditions JFSC applies. - Factors JFSC may consider when exchanging information include whether corresponding assistance would be given, whether the matter has no close parallel in Jersey law, seriousness and importance to Jersey, and public interest. - Timeliness, gateways, and safeguards (Paragraphs 942–945, 953–963): - Disclosure of JFCU information to overseas agencies requires AG consent; generally given if request falls within AG guidelines. - Intelligence initially communicated for intelligence use only; evidentiary use requires MLA request. - Information exchanged for investigations typically subject to conditions: - only to be used for criminal investigations or prosecutions; - remains property of Jersey law enforcement agencies and not to be onward transmitted without consent; - intelligence should prompt an MLA application if needed for formal investigation or prosecution. - Processing and storage: - All relevant information is stored in the secured JFCU IFIS or a secure system in the Law Officers’ Department; - Processing covered by the Data Protection (Jersey) Law 2005, with special provisions for crime prevention and detection. - Fiscal matters and confidentiality (Paragraphs 958–960): - Requests with fiscal ramifications are not automatically refused; pure tax offense requests are considered more cautiously but not prohibited. - Provision of assistance for coercive/invasive evidence collection requires AG powers under IOFL, CJ (IC)JL, Civil Asset Recovery (International Co-operation) (Jersey) Law 2007, or Regulation of Investigatory Powers (Jersey) Law 2005, which can override common law confidentiality. - Intelligence sharing for preparation of MLA requests is commonly done agency-to-agency without special formalities. _Source: _cr09280 - 920. Once it has been established that a request meets the formal requirements, the Magistrate (IMF assessment excerpt)._ ### 964. Information supplied by counterpart FIUs is also registered in the JFCU IFIS database, but ### _cr09280 - 964. Information supplied by counterpart FIUs is also registered in the JFCU IFIS database, but ### International cooperation (SR V / R.40; c.40.1-40.9 in R.40, c. V.5) - Paragraph 964: Information supplied by counterpart FIUs is registered in the JFCU IFIS database; access is restricted to only the JFCU and in some cases the Police intelligence bureau. - Egmont rules imposing general confidentiality guarantees and prior consent conditions for the use of supplied information are observed. - Paragraph 965: The direct cooperation regime between law enforcement authorities and FIUs applies equally in FT-related matters. ### Analysis of cooperation and information exchange - Paragraph 966: The JFCU, whether acting as an FIU or as an investigative body, maintains cooperative relationships with its counterparts. - The JFCU estimates it exchanges information in approximately 10 percent of its cases, with counterpart requests responded to in a constructive way. - Paragraph 967: Cooperation with other Egmont Group FIUs is actively conducted under Egmont principles; free exchange of information for analytical purposes and no refusals on record. - JFCU follows a policy of flexibility in responding to requests for sharing intelligence; consent to supply information for intelligence purposes is not refused. - Requests aimed at collecting evidence must follow appropriate MLA procedures. - Paragraph 968: Constructive and effective international cooperation is also seen with Customs, facilitated by JFCU being jointly staffed by both equally authorized Police and Customs officers. - Paragraph 969: Statistics published by the JFSC indicate its constructive approach to international cooperation with supervisory counterparts. ### Statistics and data collection (applying R.32) - Paragraph 970: - Statistics on international requests for intelligence and assistance and data provided for this recommendation are based on specific sampling. - The JFCU introduced a statistical collection system which commenced on January 1, 2009. - The JFSC website provides up-to-date statistics on bilateral agreements in place and on the numbers of occasions on which information exchange has occurred. ### Recommendations, Compliance, and Ratings - Paragraph 6.5.2: Recommendations and Comments — none. - Paragraph 6.5.3: Compliance with Recommendation 40 and Special Recommendation V — Ratings: - R.40: C - SR.V: LC - Paragraphs 971–973 and Table summary (section 7): - R.30: LC — "Additional resources needed for JFCU to deal with increasing workload" - R.32: LC — "The JFCU needs to develop its capacity to maintain relevant statistics on all aspects of SAR analysis and external cooperation." - Paragraph 972: "There are no additional matters to raise." - Paragraph 973: "The general framework is addressed in Section 1 of the report. No issues were identified that warrant further analysis." ### Key findings from Table 1 (selected items relevant to cooperation, FIU capacity, and statistics) - R.26 The FIU: LC - "Resource constraints impacted on the effectiveness of the Intelligence Wing of the JFCU." - R.27 Law enforcement authorities: LC - "The JFCU should be adequately staffed to perform its investigative function effectively." - R.32 Statistics: LC - "The JFCU needs to develop its capacity to maintain relevant statistics on all aspects of SAR analysis and external cooperation." - SR.V International cooperation: LC - Identified issues affecting MLA and extradition linked to deficiencies in ML and FT criminalization; seizing and confiscation measures not available for all types of property as required by the FATF Recommendations. ### Relevant recommended actions (prioritized excerpts) - From 2.5 The Financial Intelligence Unit and its functions (R.26): - "The Intelligence Wing of the JFCU should be adequately staffed to perform its functions effectively." - "The JFCU should issue periodic reports including statistics, typologies and trends and information on its activities." - "The JFCU should maintain comprehensive statistics on the work of the Intelligence Wing on matters relevant to the effectiveness and efficiency of systems for combating ML and FT." - From 2.6 Law enforcement, prosecution and other competent authorities (R.27 & 28): - "The authorities should implement steps to improve effectiveness by seeking to increase investigative resources." - "Competent authorities should maintain comprehensive statistics on matters relevant to the effectiveness and efficiency of systems for combating ML and FT." - From 2.3 and 2.4 (confiscation/freezing and SR.III): - Amend legal frameworks to address deficiencies affecting scope of ML and FT offenses, provide for restraint/corresponding value, and formalize procedures for freezing terrorist funds in compliance with UNSCR 1373. - From 3.2 (R.5–8) — relevant to information exchange and risk-based measures: - Conduct risk-based reviews and tighten concessions allowing reliance on third parties for CDD; issue more detailed guidance on ML/FT risks of new technologies. *Source: IMF assessment text (paragraphs 964–973 and Tables 1–2 excerpts as provided).* ### 3.3 Third parties and introduced ### 3.3 Third parties and introduced business (R.9) ### Key recommendations and findings - Require that a relevant person must obtain all necessary CDD information from the intermediary or introducer immediately. - Consider requiring relevant persons to perform spot-testing of an intermediary or introducer’s performance of CDD obligations. - Limit the concession allowing financial institutions to rely on intermediaries or introducers to conduct CDD in the following cases: - intermediaries or introducers outside Jersey that could be legally restricted in providing CDD evidence to Jersey institutions; - certain domestic DNFBPs until newly-introduced AML/CFT requirements have been fully implemented. - Eliminate the concession in the Handbook for Regulated Businesses permitting reliance on an intermediary or introducer that is a group member not itself subject to, nor supervised for compliance with, CDD requirements compliant with Recommendation 5. --- ### 3.4 Financial institution secrecy or confidentiality (R.4) ### Key recommendation - Provide explicitly that financial institutions do not breach their confidentiality duty in exchanging customer information between themselves for AML/CFT purposes. --- ### 3.5 Record keeping and wire transfer rules (R.10 & SR.VII) ### SR.VII finding/recommendation - The authorities should take steps to ensure a stricter approach by Jersey financial institutions when dealing with incoming wire transfers that lack originator information. --- ### 3.6 Monitoring of transactions and relationships (R.11 & 21) ### Recommendation - Amend the power to apply countermeasures to remove the limitation tying it to the actions of the FATF. --- ### 3.7 Suspicious transaction reports and other reporting (R.13, 14, 19, 25, & SR.IV) ### R.13 / SR.IV - The JFCU and JFSC should consider steps to enhance the timeliness of reporting of suspicious transactions to the JFCU. ### R.14 - Amend the law to limit protection for those reporting suspicious transactions to those acting in good faith. - Broaden the tipping-off offense by removing the limitation referring to situations that might prejudice an investigation. --- ### 3.8 Internal controls, compliance, audit and foreign branches (R.15 & 22) ### R.15 - Introduce a requirement in law, regulation, or other enforceable means that, having regard to the size and nature of the business, financial institutions maintain an adequately resourced and independent audit function to test compliance with AML/CFT procedures. - Clarify that the current provisions for timely information access for compliance officers must include customer identification data and other CDD information, transaction records, and other relevant information, including where that documentation or information is held by third parties, in or outside Jersey. ### R.22 - Introduce a requirement in law, regulation, or other enforceable means for financial institutions to pay particular attention to the requirement to apply AML/CFT measures at least equivalent to those in Jersey in the cases of branches or subsidiaries in countries that do not or insufficiently apply the FATF Recommendations. - Introduce a requirement that financial institutions must apply consistent AML/CFT requirements at group level to customers doing business with different parts of the group. --- ### 3.9 Shell banks (R.18) - (No specific recommendations listed in this section of the source text.) --- ### 3.10 The supervisory and oversight system–competent authorities and SROs: Role, functions, duties and powers (including sanctions) (R.23, 29, 17 & 25) ### R.17 - Consider expanding the range of sanctioning powers available to the JFSC to include monetary fines. --- ### 3.11 Money value transfer services (SR.VI) - The JFSC should sustain its training and onsite supervision to improve compliance for MSBs. --- ### 4. Preventive Measures–Nonfinancial Businesses and Professions ### 4.1 Customer due diligence and record-keeping (R.12) - Remove the concession which allows lawyers to apply reduced or simplified CDD measures in cases where funds may only be received and paid to an account in a customer’s name. - Repeal the concession that allows lawyers and accountants to self-certify identification of existing clients. - Sustain close supervision of TCBs to improve compliance with CDD and record keeping requirements. - As lawyers, accountants, real estate agents, and high value dealers gather experience with the new compliance arrangements, continue the program to evaluate the effectiveness of implementation by these sectors of their CDD requirements. ### 4.2 Suspicious transaction reporting (R.16) - Continue to conduct on-site monitoring of SAR reporting practices by lawyers, accountants, and estate agents. ### 4.3 Regulation, supervision, monitoring, and sanctions (R.17, 24, & 25) - The JFSC should continue with testing implementation of AML/CFT requirements for all DNFBPs not previously subject to its supervision. ### 4.4 Other designated non-financial businesses and professions (R.20) - none --- ### 5. Legal Persons and Arrangements & Nonprofit Organizations ### 5.1 Legal Persons–Access to beneficial ownership and control information (R.33) - none ### 5.2 Legal Arrangements–Access to beneficial ownership and control information (R.34) - Although the vast majority of trust arrangements are covered by the CDD requirements of the MLO, authorities should further seek to put in place measures to ensure that accurate, complete, and current beneficial ownership information is available for legal arrangements administered by any trustees not covered by, or exempted from, the registration requirements under the POCL. - Put in place measures to ensure that beneficial ownership information is obtained, verified, and maintained for all general partnerships. ### 5.3 Nonprofit organizations (SR.VIII) - Based on registration information, analyze the FT vulnerability of the NPO sector. --- ### 6. National and International Cooperation ### 6.1 National cooperation and coordination (R.31) - none ### 6.2 The Conventions and UN Special Resolutions (R.35 & SR.I) - Ensure that all provisions of the Palermo and Vienna Conventions are fully implemented. - Ensure that all provisions of the United Nations International Convention for the Suppression of Financing of Terrorism are implemented. - Jersey should consider requesting extension of the remaining 10 international counter-terrorism related legal instruments. ### 6.3 Mutual Legal Assistance (R.36, 37, 38 & SR.V) - Amend the law to correct the deficiencies affecting the criminalization of ML and FT offenses, and thus facilitate full compliance with MLA requests related to seizure and confiscation where the dual criminality principle applies. ### 6.4 Extradition (R.39, 37 & SR.V) - Amend the law to correct the deficiencies affecting the criminalization of ML and FT offenses, and thus remove possible obstacles to complying with extradition requests where the dual criminality principle applies. ### 6.5 Other Forms of Cooperation (R.40 & SR.V) - none --- ### 7. Other Issues ### 7.1 Resources and statistics (R.30 & 32) - Provide additional resources to the JFCU to deal with increasing workload. - The JFCU should develop its capacity to maintain relevant statistics on all aspects of SAR analysis and external cooperation. --- ### Annex 1 — Authorities’ Response to the Assessment (highlights) - Jersey’s previous IMF assessment findings were published in late 2003. - The report confirms Jersey has a “high level of compliance” with almost all aspects of the revised FATF Recommendations and has been assessed as “compliant” or “largely compliant” with 44 of the 49 Recommendations and 15 of the 16 “core” and “key” Recommendations. - Jersey has been assessed as “partially compliant” with Recommendation 5, and also with Recommendations 9, 12, 14, and 16. - Authorities consider their implementation of Recommendations 5 and 9 equivalent to the European Union Third Money Laundering Directive. - DNFBP measures have been applied in Jersey since February 2008 (with trust and company service providers subject to measures for much longer). - At the time of the on-site assessment, the JFSC had only recently started to monitor compliance by lawyers, accountants, and estate agents; since then the JFSC has visited half of the lawyers, accountants, and estate agents that are now registered with it and is generally satisfied with the level of compliance observed. - The insular authorities will publish an annual report on how they have considered the recommendations and action that they have taken. - As a first step, an amendment to the MLO will address some of the technical points raised in the report. *Source: _cr09280 - 3.3 Third parties and introduced* ### 3. Money Laundering (Jersey) Order 2008. ### 3. Money Laundering (Jersey) Order 2008. ### Key definitions and scope - “drug money laundering” means doing any act which constitutes an offence under Article 30, 37 or 38 or which would constitute such an offence if done in Jersey; possession of any property is taken to be doing an act in relation to it. - “drug trafficking offence” includes: - offences under Articles 5, 6, 8(2), 21(5) of the Misuse of Drugs (Jersey) Law 1978, Article 61 of the Customs and Excise (Jersey) Law 1999 in specified connection, Articles 30, 37, 38 or 46, conspiracy, attempt, incitement, and aiding, abetting or participating in those offences. ### Confiscation orders (Drug Trafficking Offences (Jersey) Law 1988) - Court may proceed to determine benefit from drug trafficking where: - Attorney General asks, or - Court considers it appropriate to proceed under Article 3. - Court may determine whether the person has benefited from drug trafficking (Article 3(2)). - “Benefit” includes any payment or reward received in connection with drug trafficking at any time (Article 3(3)). - If benefit found, Court may determine amount to be recovered in accordance with Article 8 and: - order person to pay that amount (Article 3(5)(a)); - take account of the order before imposing fines, making payment orders, or making orders under Article 29 of the Misuse of Drugs (Jersey) Law 1978 (Article 3(5)(b)); - subject to (b), leave the order out of account in sentencing (Article 3(5)(c)). - Standard of proof for benefit or amount to be recovered is that applicable in civil proceedings (Article 3(7)(a)–(b)). ### Saisies judiciaires (Judicial seizures) — powers and procedure - Article 15 sets conditions when powers under Article 16 are exercisable: - where Court has made a confiscation order; - where proceedings instituted or specified Attorney General applications made and Court satisfied of reasonable cause to believe defendant benefited from drug trafficking (Article 15(1)(a)–(b)); - pre-proceedings situation where Court is satisfied proceedings are to be instituted and related reasonable cause exists (Article 15(1)(c)). - Article 16 (Saisies judiciaires): - Court may make a saisie judiciaire on application by or on behalf of the Attorney General, including ex parte to the Bailiff in Chambers (Article 16(1)–(2)). - On making a saisie judiciaire: - all realisable property held by defendant in Jersey vests in the Viscount (Article 16(4)(a)); - specified persons may be prohibited from dealing with realisable property, including after transfer to them (Article 16(4)(b)–(c)); - Viscount must take possession and manage the property per Court directions; possession may be required to be surrendered to Viscount (Article 16(4) final). - Vesting subject to existing hypothecs and security interests (Article 16(5)). - Saisie judiciaire may be discharged or varied; shall be discharged on satisfaction of confiscation order (Article 16(6)). - Notice to affected persons required; registration in Public Registry where immovable property affected (Article 16(3), (8)). - Police may seize property to prevent removal from Jersey; seized property dealt with per Court directions (Article 16(10)–(11)). - “Dealing with property” includes payment on debts and removing property from Jersey (Article 16(9)(a)–(b)). ### Offences relating to proceeds of drug trafficking - Article 30 — Concealing or transferring proceeds of drug trafficking: - Offence to conceal, disguise, convert, transfer, or remove from jurisdiction property representing proceeds for purpose of avoiding prosecution or enforcement of confiscation order (Article 30(1)(a)–(b)). - Offence where person knows or has reasonable grounds to suspect property represents another’s proceeds and conceals, converts, transfers, or removes it to assist avoidance (Article 30(2)(a)–(b)). - “Concealing or disguising” includes nature, source, location, disposition, movement, ownership, or rights (Article 30(3)). - Penalty: fine or imprisonment not exceeding 14 years, or both (Article 30(4)). - Article 37 — Assisting another to retain benefit of drug trafficking: - Offence to enter into or be concerned in an arrangement facilitating retention or control of A’s proceeds of drug trafficking or using them to secure funds or acquire property for A, knowing or suspecting A carried on or benefited from drug trafficking (Article 37(1)(a)–(b)). - Defences and disclosure protections for reporting suspicions to police are specified (Article 37(3)–(5)); disclosure to police does not breach restrictions (Article 37(3)(a)). - Penalty: imprisonment not exceeding 14 years, or fine, or both (Article 37(6)). - Article 38 — Acquisition, possession or use of property representing proceeds: - Offence to acquire, possess or use property knowing it represents another’s proceeds (Article 38(1)). - Defence if acquired or used for adequate consideration; “inadequate consideration” defined as value significantly less than property/value of use (Article 38(2)–(3)). - Services or goods assisting in drug trafficking not treated as consideration (Article 38(4)). - Disclosure protections for reporting suspicions to police; permitted acts with police consent; defences for intended disclosure with reasonable excuse (Article 38(5)–(7)). - Police officers acting in enforcement are not guilty of an offence under this Article (Article 38(10)). - Penalty: imprisonment not exceeding 14 years, or fine, or both (Article 38(9)). ### Registration and enforcement of external confiscation orders - States may by Regulations apply Law to external confiscation orders and proceedings outside Jersey, and make provision for evidence, proof, incidental, consequential and transitional matters (Article 39(1)–(3)). - “External confiscation order” defined and Regulations may provide for satisfaction and treatment of proceeds retained abroad (Article 39(4) and (2)(b)). - Court may register an external confiscation order on application by or on behalf of government of another country if: - order in force and not subject to appeal at time of registration (Article 39(5)(a)); - person received notice of proceedings in sufficient time to defend if absent (Article 39(5)(b)); - enforcing order in Jersey would not be contrary to interests of justice (Article 39(5)(c)). - Court shall cancel registration if order appears satisfied by payment, imprisonment in default, or other means (Article 39(7)). ### Investigative powers and production of material (Article 42) - Police officer may apply to the Bailiff for order to produce particular material or give access for investigation into drug trafficking (Article 42(1)–(2)). - Bailiff may order production or access within 7 days or such period as appropriate (Article 42(2)). - Conditions: reasonable grounds for suspecting specified person carried on or benefited from drug trafficking; material likely of substantial value to investigation and not include items subject to legal professional privilege; public interest considerations (Article 42(3)(a)–(c)). - Bailiff may order entry to premises to obtain access (Article 42(4)). - Orders apply to computer information in form visible and legible (Article 42(6)(a)–(b)); orders do not confer right to items subject to legal professional privilege and have effect notwithstanding obligations as to secrecy (Article 42(7)(a)–(b)). - Applications may be made ex parte to the Bailiff in Chambers (Article 42(8)). ### Financial information and monitoring (Drug Trafficking Law cross-references) - Part 1 of Schedule 2 has effect for obtaining financial information (Article 44A(1)). - Part 2 of Schedule 2 has effect in respect of account monitoring orders (Article 44A(2)). --- ### Proceeds of Crime (Jersey) Law 1999 — scope and major provisions - “criminal conduct” means conduct constituting an offence specified in Schedule 1, including conduct outside Jersey that would be such an offence if occurring in Jersey (Article 1(1)). - “money laundering” defined to include conduct that is an offence under Articles 32, 33, 34 of this Law; Articles 30, 37, 38 of the Drug Trafficking Offences (Jersey) Law 1988; Articles 15–18 of the Terrorism (Jersey) Law 2002; and equivalent conduct outside Jersey (Article 1(1) definition). ### Confiscation orders (Proceeds of Crime Law) - Article 3 largely mirrors prior confiscation procedure: - Court may proceed if Attorney General asks or Court considers appropriate (Article 3(1)(a)–(b)). - Article does not apply if defendant convicted of offence committed before Article comes into force (Article 3(2)). - Court may determine whether defendant benefited from relevant criminal conduct (Article 3(3)). - If benefit found, Court may determine amount to be recovered in accordance with Article 4 and make confiscation order that defendant pay that amount (Article 3(4)(a)–(b)). - Confiscation order must be taken into account before fines, other payment orders or specified forfeiture orders; otherwise left out of account for sentencing (Article 3(5)(a)–(b)). - If both confiscation and compensation orders made and insufficiency of means, Court shall direct payment of unrecoverable compensation out of sums recovered under confiscation order (Article 3(7)). - Standard of proof for benefit or amount is that applicable in civil proceedings (Article 3(8)(a)–(b)). - States may amend Schedule 1 by Regulations (Article 3(9)). ### Cases in which saisies judiciaires may be made (Article 15) and Article 16 (Saisies judiciaires) - Provisions parallel those in Drug Trafficking Law (Article 15(1)–(5) and Article 16(1)–(11)), including ex parte applications, vesting in Viscount, duties, registration, police seizure, discharge or variation, treatment of security interests, and treatment of dealings with property (Article 15–16). ### Offences concerning proceeds of criminal conduct - Article 32 — Assisting another to retain benefit of criminal conduct: - Offence to enter into arrangement facilitating retention or control of A’s proceeds or to use them to secure funds or acquire property for A, knowing or suspecting A engaged in or benefited from criminal conduct (Article 32(1)(a)–(b)). - Disclosure protections and defences for reporting suspicions to police, including police consent and reasonable excuse, mirror Drug Trafficking provisions (Article 32(3)–(5)). - Penalty: imprisonment not exceeding 14 years or fine or both (Article 32(6)). - No prosecution without consent of the Attorney General (Article 32(7)). - Article 33 — Acquisition, possession or use of proceeds of criminal conduct: - Offence to acquire/use/possess property knowing it represents another’s proceeds (Article 33(1)). - Defence if acquired/used/possessed for adequate consideration; inadequate consideration defined (Article 33(2)–(3)). - Services or goods assisting criminal conduct not treated as consideration (Article 33(4)). - Disclosure protections for reporting suspicions to police; acts with police consent permitted (Article 33(5)). - Possession is treated as doing an act in relation to property (Article 33(6)). - Defences relating to intended disclosure and reasonable excuse (Article 33(7)). - Employment-related disclosure procedures treated equivalently (Article 33(8)). - Penalty: imprisonment not exceeding 14 years or fine or both; police acting in enforcement not guilty (Article 33(9)–(10)); prosecutions require Attorney General consent (Article 33(11)). - Article 34 — Concealing or transferring proceeds of criminal conduct: - Offence to conceal, disguise, convert, transfer, or remove property representing one’s proceeds to avoid prosecution or enforcement; similar offence when knowing or suspecting property represents another’s proceeds and assisting avoidance (Article 34(1)–(2)). - “Concealing or disguising” defined as including nature, source, location, disposition, movement, ownership or rights (Article 34(3)). - Penalty: imprisonment not exceeding 14 years or fine or both (Article 34(4)). - Prosecutions require Attorney General consent (Article 34(5)). ### Failure in financial institutions to report (Article 34D) - Offence created where three conditions met: 1. Person knows or suspects, or has reasonable grounds for knowing or suspecting, another person is engaged in money laundering (Article 34D(2)); 2. Information or matter giving rise to knowledge/suspicion comes to person in course of carrying on a financial services business (Article 34D(3)); 3. Person does not disclose the information or matter to a police officer or nominated officer as soon as practicable (Article 34D(4)). - Exceptions: reasonable excuse for not disclosing; professional legal adviser where information comes in circumstances of legal privilege (Article 34D(5)). - Additional non-liability where employee did not receive required training from employer and would not have known or suspected (Article 34D(6)(a)–(d)). - Court must consider relevant guidance issued by the Commission when deciding whether offence committed (Article 34D(7)(a)–(b)). - “Nominated officer” defined as person nominated by employer to receive disclosures and made in course of employment following employer’s procedure (Article 34D(8)). - Disclosures to police or nominated officer not treated as breach of any restriction (Article 34D(9)). - Penalty: imprisonment not exceeding 5 years or fine or both (Article 34D(10)). ### Financial services business and supervisory measures - Article 36: “financial services business” means a business described in Schedule 2; States may amend Schedule 2 by Regulations (Article 36(1)–(2)). - Article 37 — Procedures to prevent and detect money laundering: - Minister shall, by Order, prescribe measures to be taken by persons carrying on financial services business for preventing and detecting money laundering (Article 37(1)); measures may include identification, record keeping, internal reporting, and training procedures (Article 37(1A)(a)–(d)). - Orders may specify supervisory authorities, authorize disclosure of information to police, Commission, or related persons/institutions, and make incidental provisions (Article 37(2)(a)–(c)). - Disclosure in accordance with such an Order not treated as breach of restriction on disclosure (Article 37(3)). - Contravention of Order by person carrying on financial services business is an offence; corporate officers and persons in management may also be guilty if consent, connivance or neglect attributable (Article 37(4)–(6)). - Penalty: bodies corporate liable to a fine; non-corporate persons liable to imprisonment not exceeding 2 years or to a fine or both (Article 37(7)). - Courts must take account of relevant Codes of Practice or guidance from supervisory bodies in determining compliance (Article 37(8)–(9)). - Defence: took all reasonable steps and exercised due diligence (Article 37(10)). ### Recognition, registration and enforcement of external confiscation orders (Proceeds of Crime Law) - States may by Regulations apply Law to external confiscation orders and proceedings outside Jersey, and make provision for evidence and incidental matters (Article 38(1)–(2)). - Article 39 (Registration of external confiscation orders) largely parallels Drug Trafficking Law provisions: - Court may register external confiscation order on Attorney General application if order in force and not subject to appeal; person had notice if absent; enforcing order would not be contrary to interests of justice (Article 39(1)(a)–(c)). - “Appeal” includes proceedings to discharge or set aside a judgment and applications for new trial or stay of execution (Article 39(2)(a)–(b)). - Court shall cancel registration if order appears satisfied by payment, imprisonment in default, or other means (Article 39(3)). ### Investigative powers relating to proceeds of criminal conduct (Article 40) - Police officer may apply to Bailiff for order to produce material or give access for investigation into benefit, extent or whereabouts of proceeds (Article 40(1)–(2)). - Period for production normally 7 days unless Bailiff specifies otherwise (Article 40(3)). - Conditions mirror drug trafficking investigation conditions: reasonable grounds for suspecting person benefited from criminal conduct; material likely of substantial value and not include items subject to legal privilege; public interest considerations (Article 40(4)(a)–(c)). - Bailiff may order entry to premises to obtain access; applications may be ex parte; orders for computer material to be produced or accessed in visible and legible form (Article 40(5)–(9)). - Orders do not confer right to items subject to legal privilege and operate notwithstanding secrecy obligations (Article 40(9)(a)–(b)). - Consent of Attorney General or Crown Advocate required for application under Article 40 (Article 40(10)). - Failure to comply without reasonable excuse or obstruction of police acting under order: offence liable to imprisonment not exceeding 2 years or fine or both (Article 40(12)(a)–(b)). - Offence of falsifying, concealing, destroying or disposing of material relevant to investigation where person knows or suspects investigation is or likely to be carried out: imprisonment for 7 years or fine or both, unless act was inadvertent (Article 40(13)(a)–(b)). ### Financial information and account monitoring (Proceeds of Crime Law) - Part 1 of Schedule 3 applies to obtaining financial information (Article 41A(1)). - Part 2 of Schedule 3 applies to account monitoring orders (Article 41A(2)). ### Schedules - Schedule 1: Offences for which confiscation orders may be made — any offence in Jersey for which a person is liable on conviction to imprisonment for a term of one or more years, but not being a drug trafficking offence. - Schedule 2: Financial services business — Part A lists businesses regulated by the Commission under regulatory laws (Article 36 and Schedule 2 reference). *Source: text of “3. Money Laundering (Jersey) Order 2008.”* ### 1. Any deposit-taking business as defined in Article 1 of the Banking Business ### _cr09280 - 1. Any deposit-taking business as defined in Article 1 of the Banking Business ### Deposit-taking business (Banking Business (Jersey) Law 1991) - Any deposit-taking business as defined in Article 1 of the Banking Business (Jersey) Law 1991 except the doing of anything described in Article 8(2)(a) to (c) of that Law. ### Long-term insurance business (Insurance Business (Jersey) Law 1996) - Any long-term business as defined in Article 1(1) of the Insurance Business (Jersey) Law 1996 except – - (a) insurance business described in Article 5(5)(a) of that Law; - (b) insurance business described in Article 1 of the Insurance Business (General Provisions) (Jersey) Order 1996. ### Collective Investment Funds (Collective Investment Funds (Jersey) Law 1988) - (1) Any of the following within the meaning of the Collective Investment Funds (Jersey) Law 1988 – - (a) the business of being a functionary; - (b) the business of a recognized fund; - (c) the business of an unclassified fund. - (2) However, business referred to in sub-paragraph (1) does not include the business of a company, being a company issuing units that is within Article 1A of the Collective Investment Funds (Permits) (Exemptions) (Jersey) Order 1994. *Source: _cr09280 (excerpt).* ### 4. Financial service business as defined in Article 1(1) of the Financial Services ### _cr09280 - 4. Financial service business as defined in Article 1(1) of the Financial Services ### Financial service business: scope and specific inclusions/exclusions - Defined as in Article 1(1) of the Financial Services (Jersey) Law 1998, including activities described in Schedule 2 to that Law except those specifically mentioned. - Specific exclusions from Schedule 2 activities: - Paragraphs 1, 3B, 3C, 4, 10, 14, 15, 18A and 21. - Paragraph 7 where a person accepts or becomes a party to an instrument as principal. - Paragraph 8 where the persons described in sub-paragraphs (1), (2) or (3) are connected companies, except in the circumstances described at the end of sub-paragraph (2) or (3). - Paragraph 16 except where a person is acting as a protector of a trust by way of business. - Paragraph 18, where the relevant special purpose vehicle is provided with any service that falls within Article 2(3) and (4) of the Financial Services (Jersey) Law 1998 by a person registered under that Law to carry on trust company business. - Additional explicit exclusions: - General insurance mediation business. - Investment business carried on by an overseas person mentioned in Article 1 of the Financial Services (Investment Business (Overseas Persons – Exemption)) (Jersey) Order 2001 where that business is carried on in the circumstances described in that Order. - Special purpose investment business carried on in accordance with the Financial Services (Investment Business (Special Purpose Investment Business – Exemption)) (Jersey) Order 2001 by a person who: - (i) is acting as a functionary within the meaning of that Order, and - (ii) is provided with any service that falls within Article 2(3) and (4) of the Financial Services (Jersey) Law 1998 by a person registered under that Law to carry on trust company business or is provided with any service within fund services business (within the meaning of that Law) by a person who is registered under that Law to carry on fund services business. - Restricted investment business carried on in accordance with the Financial Services (Investment Business (Restricted Investment Business – Exemption)) (Jersey) Order 2001 by a person who: - (i) is acting as a functionary within the meaning of that Order, and - (ii) is provided with any service that falls within Article 2(3) and (4) of the Financial Services (Jersey) Law 1998 by a person registered under that Law to carry on trust company business or is provided with any service within fund services business (within the meaning of that Law) by a person who is registered under that Law to carry on fund services business. - Trust company business carried on by persons specified in exemptions Orders (multiple Orders and specified paragraphs listed) where the business is carried on in the circumstances described in those paragraphs. - Money service business specified in Article 3 of the Financial Services (Money Service Business) (Exemptions) (Jersey) Order 2007. ### Part B — Other business categories captured - Lawyers - Business of providing services by independent legal professionals. - “Independent legal professionals” means those who by way of business provide legal or notarial services to third parties when participating in financial, or immovable property, transactions concerning: - (a) buying and selling of immovable property or business entities; - (b) buying and selling of shares the ownership of which entitles the owner to occupy immovable property; - (c) managing client money, securities or other assets; - (d) opening or management of bank, savings or securities accounts; - (e) organization of contributions necessary for the creation, operation or management of companies; - (f) creation, operation or management of trusts, companies or similar structures. - Excludes legal professionals employed by public authorities or undertakings which do not by way of business provide legal services to third parties. - Participation defined as assisting in planning or execution or otherwise acting for/on behalf of a third party in the transaction. - Accountants - Business providing: - (a) external accountancy services; - (b) advice about the tax affairs of another person; - (c) audit services; - (d) insolvency services. - Definitions: - “External accountancy services” = accountancy services to third parties; excludes accountants employed by public authorities or undertakings which do not by way of business provide accountancy services to third parties. - “Audit services” = audit services provided by way of business pursuant to any function under any enactment. - “Insolvency services” = services where, by way of business, the person accepts appointment as: - (a) a liquidator under Chapter 4 of Part 21 of the Companies (Jersey) Law 1991; - (b) an insolvency manager appointed under Part 5 of the Limited Liability Partnerships (Jersey) Law 1997 as applied; or - (c) agent of an official functionary in cases of remise de biens, cession, or désastre. - Estate agency services - Business of providing estate agency services for third parties concerning buying or selling of freehold or leasehold property, or shares the ownership of which entitles occupation, whether situated in Jersey or overseas. - Services provided by high value dealers - “High value dealers” = persons who, by way of business, trade in goods when they receive, in respect of any transaction, a payment or payments in cash of at least 15,000 Euros (or sterling equivalent) in total, whether in a single operation or several operations which appear to be linked. - “Cash” = notes, coins, travellers’ cheques, bearer negotiable instruments in any currency. - Casinos (including internet casinos) - Business of operating a casino. - Casino = arrangement whereby people are given an opportunity to participate in one or more casino games. - “Casino game” = a game of chance that: - (a) involves playing or staking against a bank; and - (b) chances are not equally favourable to all participants. - Provision of Crown and Anchor in circumstances permitted under Regulation 9 of the Gambling (Gaming and Lotteries) (Jersey) Regulations 1965 does not fall within sub-paragraph (1). - Unregulated funds - Business of an unregulated fund as defined by the Collective Investment Funds (Unregulated Funds) (Jersey) Order 2008. - Other services (paragraph 7) - Services to third parties where not otherwise included in Schedule, including: - (a) acceptance of deposits and other repayable funds from the public; - (b) lending, including consumer credit, mortgage credit, factoring (with or without recourse), financing of commercial transactions (including forfeiting); - (c) financial leasing; - (d) money transmission services; - (e) issuing and administering means of payment (credit/debit cards, cheques, travellers’ cheques, money orders, bankers’ drafts, electronic money); - (f) guarantees and commitments; - (g) trading for the account of third parties in money market instruments, foreign exchange, futures and options, exchange/interest rate/index instruments, transferable securities; - (h) participation in securities issues and related services; - (i) advice to undertakings on capital structure, industrial strategy and related questions, and services relating to mergers and purchases of undertakings; - (j) money broking; - (k) portfolio management and advice; - (l) safekeeping and administration of securities; - (m) safe custody services; - (n) otherwise investing, administering or managing funds or money on behalf of third parties. - References to providing services to third parties exclude services to a connected company. - “Connected” defined by group membership, voting control, or equity interest carrying rights to vote in all circumstances for purposes of securing contributions or influence. - “Group” and “holding company” have the same meanings as in the Financial Services (Jersey) Law 1998. - Business of forming and administering legal persons or arrangements - Services to or in respect of types of legal person or arrangement other than those in Article 2(5)(a) and (b) of the Financial Services (Jersey) Law 1998, where services are similar or equivalent to those described in Article 2(4) as if Article 2(4) referred to that type. ### Terrorism (Jersey) Law 2002: definitions and offences - Definition of “terrorism” - “Terrorism” means use or threat of action where: - (a) action falls within paragraph (2); - (b) use or threat is designed to influence the States of Jersey or government of any other place or to intimidate the public or a section of the public; - (c) use or threat is made for the purpose of advancing a political, religious or ideological cause. - Paragraph (2) actions include: - (a) serious violence against a person; - (b) serious damage to property; - (c) endangering a person’s life other than the person committing the action; - (d) creating a serious risk to health or safety of the public or section of the public; - (e) designed seriously to interfere with or seriously to disrupt an electronic system. - Use or threat involving firearms or explosives is terrorism whether or not paragraph (1)(b) is satisfied. - “Action” includes action outside Jersey; references to any person or property are wherever situated; “public” includes public of other places/countries. - Action for terrorism includes action for benefit of a proscribed organization. - “Terrorist property” - Means: - (a) property likely to be used for the purposes of terrorism (including any resources of a proscribed organization); - (b) proceeds of the commission of acts of terrorism; - (c) proceeds of acts carried out for the purposes of terrorism. - “Proceeds” includes property which wholly or partly, directly or indirectly, represents proceeds (including payments or other rewards). An organization’s resources includes property applied or to be applied for use by the organization. - Offences and penalties (selected articles) - Article 13 Support - Offences include inviting support for a proscribed organization; arranging/managing/assisting meetings to support/further activities; addressing meetings to encourage support. - “Meeting” means 3 or more persons. Private meeting = public not admitted. - Penalty: liable to imprisonment for a term not exceeding 10 years or to a fine, or both. - Article 15 Fund-raising - Offences for inviting another to provide property, receiving property, providing property where intended or reasonably suspected to be used for terrorism. - Penalty: liable to imprisonment for a term not exceeding 14 years or to a fine, or both. - “Provision of property” includes given, lent or otherwise made available, whether or not for consideration. - Article 16 Use and possession - Offences for using property for purposes of terrorism; possessing property with intent or reasonable cause to suspect it may be used for terrorism. - Penalty: liable to imprisonment for a term not exceeding 14 years or to a fine, or both. - Article 17 Funding arrangements - Offence for entering into or becoming concerned in an arrangement making property available to another knowing or reasonably suspecting it will/may be used for terrorism. - Penalty: liable to imprisonment for a term not exceeding 14 years or to a fine, or both. - Article 18 Money laundering - Offence for entering into or becoming concerned in an arrangement which facilitates retention or control by or on behalf of another person of terrorist property by concealment, removal from Jersey, transfer to nominees, or any other way. - Defence: proves no knowledge and no reasonable cause to suspect arrangement related to terrorist property. - Penalty: liable to imprisonment for a term not exceeding 14 years or to a fine, or both. - Article 19 Articles 15 to 18: jurisdiction - Conduct outside Jersey which would have constituted an offence under Articles 15 to 18 if done in Jersey is an offence; Article 18(1)(b) read as if “Jersey” substituted by “any country or place outside Jersey”. - Articles 20–24: duties and protections on disclosure - Article 20 Duty to disclose: persons who in course of trade/profession/business/employment believe or suspect another person has committed an offence under Articles 15 to 18 must disclose to an officer of the Force or customs officer as soon as reasonably practicable, except where information came in course of business of a financial institution. - Defences include reasonable excuse, employer-established disclosure procedures, and professional legal adviser privilege for privileged circumstances. - Article 21 Permission to disclose: permits disclosure notwithstanding restrictions; applies to disclosures based on Article 20(1) and (2); employer procedures may substitute. - Article 22 Co-operation with police: acting with express consent of an officer of the Force or customs officer is not an offence; disclosure conditions and limitations set out; defence for intended disclosure with reasonable excuse where not done. - Article 23 Failure to disclose: financial institutions - Conditions for offence: (1) person knows or suspects or has reasonable grounds for knowing or suspecting another person committed Articles 15–18; (2) information came in course of business of a financial institution; (3) person does not disclose to an officer of the Force, customs officer or nominated officer as soon as practicable. - Defences: reasonable excuse; professional legal adviser where privileged; training defence under sub-paragraph (5A) where employee was not trained despite requirement and employee does not know or suspect an offence. - Court must take account of relevant Code of Practice or guidance issued by supervisory bodies. - Penalty: liable to imprisonment for a term not exceeding 5 years or to a fine, or both. - Article 24 Protected disclosures: disclosure satisfying three conditions (information from business of a financial institution; causes discloser to know or suspect or gives reasonable grounds for knowing or suspecting offence under Articles 15–18; disclosure to an officer of the Force or customs or nominated officer as soon as practicable) is not a breach of any restriction on disclosure. - Article 26 Forfeiture of property - Court may make forfeiture orders where person convicted under Articles 15 to 18; specific provisions for Articles 15(1) or (2), 15(3), 16, 17, 18 and any property received as payment or reward in connection with commission of the offence. - Schedule 3 makes further provision for forfeiture orders. - Additional powers and orders - Article 31 Powers: Schedule 5 confers powers required for terrorist investigations. - Article 32 Financial information: Schedule 6 confers powers to obtain financial information. - Article 33 Account monitoring orders: Schedule 7 confers powers to obtain information regarding terrorist finance. ### Customs and Excise (Jersey) Law 1999: cash disclosure and offences - Article 37B Officer may require disclosure of cash - Officer may require person exporting/importing goods to disclose if goods consist of or include cash with a value in excess of the prescribed amount and to answer questions about such cash. - Article 37C Persons entering and leaving Jersey - Officer may require person entering or leaving Jersey to disclose the value of any cash contained in baggage or carried, answer questions, and produce baggage for inspection. - Refusal to produce baggage = guilty of an offence and liable to a fine of: - (a) level 3 on the standard scale; or - (b) an amount equal to 3 times the value of the cash not disclosed, - whichever is the higher. - Officer may search person where reasonably suspect carrying cash in excess of the proscribed amount, with same-sex search provisions and right to be taken before a Jurat or superior for consideration of grounds. - Article 37D Offences in respect of disclosures - Refusal to make a required disclosure = guilty of an offence and liable to imprisonment for 2 years and a fine. - Making an untrue disclosure: - (a) if made knowingly or recklessly = imprisonment for 2 years and a fine; - (b) otherwise = fine of level 4 on the standard scale. - Article 37E Postal packet - Where officer reasonably suspects postal packet contains cash with value in excess of the prescribed amount, proper postal officer must produce and open packet on direction. - Article 37F Cash on ships and aircraft - Where officer reasonably suspects cash in excess of prescribed amount on board ship/aircraft, officer may search ship or aircraft. - Article 36G Questions and information - Officer may ask about origin and intended use of cash and require evidence to support information; Agent of the Impôts may issue directions on questions and manner of recording answers. ### Proceeds of Crime (Cash Seizure) (Jersey) Law 2008 - Article 4 Seizure of cash - Authorized officer may seize any cash if reasonable grounds for suspecting it is tainted cash. - May seize cash if part is suspected tainted and not reasonably practicable to seize only that part. - Receipt must be provided specifying amount, denominations and currency. - Article 5 Detention initially for 48 hours - Cash may be detained initially for a period of up to 48 hours if authorized officer continues to have reasonable grounds for suspicion. - Article 6 Orders authorizing detention longer than 48 hours - Attorney General, or with consent of Attorney General an authorized officer, may apply to the Bailiff for a cash detention order. - Bailiff may make a cash detention order if satisfied: - (a) reasonable grounds for suspecting cash is tainted cash; and - (b) continued detention justified while origin/derivation investigated or consideration given to bringing proceedings in Jersey or elsewhere. - Cash detention order: - (a) may only authorize detention for a period not exceeding 3 months beginning with date of order; - (b) shall not authorize detention for an aggregate period of more than 2 years beginning with date of first cash detention order in relation to it. - Applications must be made before expiry of authority for detention (Article 5 or previous order). - Cash detention order shall provide for notice to persons affected. - Article 9 Forfeiture of seized cash - Attorney General may apply to Royal Court for forfeiture order. - Royal Court shall forfeit cash unless person satisfies court cash is not tainted cash. - Proceedings are civil; order may be made whether or not proceedings brought for associated offence. - Forfeited cash paid into a special fund designated by Order of the Minister for Treasury and Resources. ### Extradition (Jersey) Law 2004: definitions and procedures - Article 3 “Extradition offence” – persons not sentenced - Applies to persons accused in a designated territory or alleged to be unlawfully at large after conviction but not sentenced. - Conduct constitutes extradition offence if: - occurs in designated territory and would constitute offence in Jersey punishable with imprisonment or detention for a term of 12 months or greater; or - occurs outside designated territory where conduct is punishable under law of designated territory with imprisonment or detention for term of 12 months or greater and equivalent conduct would be extra-territorial offence under Jersey law punishable with imprisonment/detention for term of 12 months or greater; or - occurs outside designated territory and no part occurs in Jersey where conduct would constitute offence under Jersey law punishable with imprisonment or detention for 12 months or greater if occurred in Jersey and is so punishable under designated territory law. - Paragraph (6) references offences under sections of the International Criminal Court Act 2001 (UK) as applied to Jersey. - Article 4 “Extradition offence” – persons sentenced - Applies to persons alleged to be unlawfully at large after conviction and sentenced. - Conduct constitutes extradition offence if: - occurs in designated territory and would constitute an offence in Jersey punishable with imprisonment or detention for 12 months or greater, and a sentence of imprisonment or detention for a term of 4 months or greater has been imposed in designated territory in respect of the conduct; or - other territorial permutations as set out, with 4 months threshold for imposed sentence. - Articles 7, 16, 21–22 and others set out request, certificate, bars to extradition (double jeopardy, extraneous considerations, passage of time, hostage-taking considerations), and procedural matters. - Article 32 Specialty - Attorney General shall not order extradition if there are no specialty arrangements with designated territory; exceptions where person consented under Article 62; specialty arrangements and scope defined. - Article 109 Special extradition arrangements - Attorney General may certify arrangements made between UK on behalf of Jersey and another territory not a designated territory; Law applies as if territory were a designated territory of second category with specified modifications; certificate conclusive evidence. ### Sanctions / Freezing orders: Al Qa’ida and Taliban / Terrorism (United Nations Measures) Orders - Al Qa’ida and Taliban (United Nations Measures) (Channel Islands) Order 2002 - Article 8 Freezing of funds - Licensing authority with reasonable grounds for suspecting a person by/for/on behalf of whom funds are held is or may be a listed person or acting on behalf may direct funds not to be made available except under a licence under article 7. - Direction must specify a period or that it remains until revoked. - Licensing authority may revoke direction; expiry or revocation does not affect application of article 7. - Notice given in writing to recipient and requires recipient to send copy without delay to owner. - Recipient treated as complying if sends copy to owner at last-known address or arranges supply at first available opportunity. - Person by/for/on behalf of whom funds are held may apply to Royal Court to set aside direction; copy of application and witness statements/affidavits must be given to licensing authority and Attorney General not later than seven days before hearing. - Contravention of direction or failure to comply with notice requirement = offence. - Terrorism (United Nations Measures) (Channel Islands) Order 2001 - Article 6 Freezing of funds on suspicion - Licensing authority may direct funds not to be made available where reasonable grounds for suspecting person by/for/on behalf of whom funds are held is or may be: - (a) a person who commits/attempts/participates/facilitates commission of terrorism; - (b) a person controlled or owned directly or indirectly by such a person; - (c) a person acting on behalf of or at the direction of such a person. - Notice mechanics, revocation, owner notification, and offences for contravention or failure to comply mirror Article 8 provisions. ### Companies (Jersey) Law 1991 and related provisions - Article 67 Registered office - Company must at all times have a registered office in Jersey to which communications and notices may be addressed. - On incorporation the registered office is that specified in statement to registrar under Article 7. - Company may change situation of registered office by giving notice to registrar; change takes effect upon registration, but until end of 14 days beginning with date registered a person may validly serve documents at previous registered office. - For duties to keep documents at registered office or mention address, company may act on change date as determined but not more than 14 days after notice. - If company unavoidably ceases to perform duties at registered office and resumes at other premises as soon as practicable and gives notice to registrar within 14 days, it shall not be treated as failing to comply. - In proceedings for offence of failing to comply with duties, burden for person charged to show matters referred to in paragraph (5) or (6) apply. ### Control of Borrowing (Jersey) Order 1958 - Article 2 Admission to membership of Jersey body corporate - Body corporate incorporated under law of Jersey shall not, without consent of the Commission: - (a) issue any shares for any purpose; or - (b) admit any person to membership otherwise than by reason of issue or transfer of shares. - Article 12 Provisions as to consent of Commission - Any consent by Commission may be general or special, revoked, absolute or conditional, and may be limited to expire at end of a specified period unless renewed. - Any consent granted by Minister under Control of Borrowing Order 1956 has effect as if granted under corresponding provision of this Order. ### Non-Profit Organizations (Jersey) Law 2008: registration and terrorism obligations - Article 4 Obligation of NPOs to register - Except as provided by Article 2, an NPO must be registered if: - (a) it is established in Jersey; or - (b) it is administered in or from Jersey, - whether or not it carries on any activity in Jersey. - Article 17 Obligation of the Commission in respect of terrorism - Commission obligation to help determine if an NPO is assisting or being used to assist terrorism. - Commission must as soon as practicable after receiving an application for registration or a proposed NPO consider if it raises any suspicion that NPO/proposed NPO is assisting or being used to assist terrorism or is likely to assist or be used to assist terrorism. - Commission must as soon as practicable after receiving a financial statement from an NPO consider if it raises any suspicion that the NPO is assisting or being used to assist terrorism. - Commission may otherwise monitor activities of each NPO. - If Commission considers an NPO is assisting or being used to assist terrorism it must immediately inform the Attorney General, giving any evidence for its suspicions. *Source: _cr09280 - 4. Financial service business as defined in Article 1(1) of the Financial Services (text provided).* ### PART 1 ### _cr09280 - PART 1 ### PART 1 — INTRODUCTORY - Articles: - 1 Interpretation - 2 Meanings of expressions relating to realisable property ### PART 2 — CONFISCATION ORDERS - Articles: - 3 Confiscation orders - 4 Amount to be recovered under confiscation order - 5 Confiscation order relating to a course of relevant criminal conduct - 6 Postponed determinations - 7 Statements relating to criminal offences - 8 Provision of information by defendant - 9 Powers of the Court where defendant has died or absconded - 10 Effect of confiscation order on sentencing of absconder - 11 Enforcement of confiscation orders - 12 Reconsideration of case where Court has not considered a confiscation order - 13 Reconsideration of determination that defendant has not benefited - 14 Revised assessment of benefit already determined - 15 Cases in which saisies judiciaires may be made - 16 Saisies judiciaires - 17 Realisation of property - 18 Interest on sums unpaid under confiscation orders - 19 Increase in realisable property - 20 Application of proceeds of realisation and other sums - 21 Variation of confiscation order where realisable property is inadequate - 22 Bankruptcy of defendant - 23 Limitation of liability of Viscount - 24 Criminal Offences Confiscations Fund - 25 Compensation where defendant not convicted - 26 Cancellation of confiscation order, and compensation, where absconder acquitted - 27 Cancellation of confiscation order, and compensation, where absconder returns - 28 Variation of confiscation order, and compensation, where absconder returns - 28A Enforcement of confiscation orders in a country or territory outside Jersey ### PART 3 — MONEY LAUNDERING - Articles: - 29 Restrictions on disclosure under this Part - 30 Disclosure for purposes within Jersey - 31 Disclosure for purposes outside Jersey - 32 Assisting another to retain the benefit of criminal conduct - 33 Acquisition, possession or use of proceeds of criminal conduct - 34 Concealing or transferring proceeds of criminal conduct - 34A Failure to disclose knowledge or suspicion of money laundering - 34B Statutory defences - 34C Cases to which Article 34A does not apply - 34D Failure in a financial institution to report to police officer or nominated officer - 35 Tipping-off - 36 Financial services business - 37 Procedures to prevent and detect money laundering ### PART 4 — EXTERNAL CONFISCATION ORDERS - Articles: - 38 Recognition of external confiscation orders - 39 Registration of external confiscation orders ### PART 5 — MISCELLANEOUS - Articles: - 40 Investigations relating to proceeds of criminal conduct - 41 Authority for search - 41A Financial information and monitoring - 42 Criminal liability of accessories - 43 Orders - 44 Rules of Court - 45 Citation ### SCHEDULE 1 - Offences for which confiscation orders may be made ### SCHEDULE 2 — FINANCIAL SERVICES BUSINESS - Parts and headings preserved: - PART A Business regulated by the Commission under regulatory laws - PART B OTHER BUSINESS - 1 Lawyers - 2 Accountants - 3 Estate agency services - 4 Services provided by high value dealers - 5 Casinos (including internet casinos) - 6 Unregulated funds - 7 Other services - 8 The business of forming and administering legal persons or arrangements ### SCHEDULE 3 — FINANCIAL INFORMATION AND MONITORING ORDERS - PART 1 ORDERS FOR PROVISION OF FINANCIAL INFORMATION - 1 Order to provide customer information - 2 Who may apply for order - 3 Who may make order - 4 Consent required for application - 5 Criteria for making order - 6 Customer information - 7 Self-incrimination - PART 2 ACCOUNT MONITORING ORDERS - 1 Account monitoring orders - 2 Applications - 3 Discharge or variation - 4 Effect of orders - 5 Statements ### MONEY LAUNDERING (JERSEY) ORDER 2008 — Arrangement and PARTS - PART 1 INTRODUCTORY PROVISIONS - 1 Interpretation - 2 Beneficial ownership and control - 3 Meaning of “customer due diligence measures” - 4 Meaning of “one-off transaction” - 5 Equivalent business - 6 Designated police and customs officers - 7 Compliance officer - 8 Reporting officer - 9 Designated persons - 10 Exemptions from Articles 7 and 8 - 10A Financial services business carried on outside Jersey - PART 2 PREVENTION AND DETECTION OF MONEY LAUNDERING - 11 Policies, procedures and training to prevent and detect money laundering - 12 Exception from Article 11 - PART 3 CUSTOMER DUE DILIGENCE MEASURES - 13 Application and timing of customer due diligence measures - 14 Termination where customer due diligence measures are not completed - 15 Enhanced customer due diligence - 16 Reliance on introducers and intermediaries - 17 Reliance in certain circumstances where the intermediary is a regulated person - 18 Exceptions from customer due diligence measures - PART 4 RECORD-KEEPING REQUIREMENTS - A19 Interpretation of Part 4 - 19 Records to be kept - 20 Periods for which records must be kept - PART 5 REPORTING AND DISCLOSURE - 21 Reporting procedures and related disclosure requirements - 22 Reports that need not be forwarded - 22A Disclosure within the relevant person’s organization - 23 Duty to report evidence of money laundering - PART 5A OTHER MEASURES - 23A Shell banks - 23B Anonymous accounts - 23C Directions where the Financial Action Task Force applies counter- measures - PART 6 MISCELLANEOUS AND CLOSING - 24 Citation and commencement - 24A Application to certain businesses - Opening text preserved from the source: - "THE MINISTER FOR TREASURY AND RESOURCES, in pursuance of Articles 37 and 43 of the Proceeds of Crime (Jersey) Law 1999, and having consulted the Jersey Financial Services Commission, orders as follows –" *Content unit: _cr09280 - PART 1* ### PART 1 ### PART 1 INTRODUCTORY PROVISIONS ### Interpretation (Article 1) - Definitions include: - “branch” — a branch that is under the control of that relevant person. - “business relationship” — a business, professional or commercial relationship between a relevant person and a customer, which is expected by the relevant person, at the time when contact is established, to have an element of duration. - “compliance officer” — (a) an individual appointed under paragraph (1) or (4) of Article 7; or (b) an individual described in Article 7(2). - “customer due diligence measures” — the measures described in Article 3(1). - “designated customs officer” — an officer of the Impôts who is designated under Article 6(2) or, if no one is for the time being designated, the Agent of the Impôts. - “designated person” — an individual who is designated under Article 9. - “designated police officer” — a police officer who is designated under Article 6(1) or, if no one is for the time being designated, the Chief Officer of the States of Jersey Police Force. - “designated supervisory body” — a supervisory body designated under Article 6 of the Proceeds of Crime (Supervisory Bodies) Law. - “Drug Trafficking Offences Law” — the Drug Trafficking Offences (Jersey) Law 1988. - “enhanced customer due diligence measures” — has the meaning in Article 15(2). - “equivalent business” — has the meaning in Article 5. - “FATF recommendations” — the Forty Recommendations (incorporating the amendments of 22nd October 2004) of the international body known as the Financial Action Task Force on Money Laundering. - “identification measures” — those measures described in Article 3(2). - “insurance business” — any insurance business to which Article 5 of the Insurance Business (Jersey) Law 1996 applies. - “intermediary” — has the meaning in Article 16(6). - “introducer” — has the meaning in Article 16(6). - “Jersey body corporate” — a body that is incorporated in Jersey. - “Jersey limited liability partnership” — a limited liability partnership that is registered under the Limited Liability Partnerships (Jersey) Law 1997. - “Law” — the Proceeds of Crime (Jersey) Law 1999. - “one-off transaction” — has the meaning in Article 4. - “on-going monitoring” — has the meaning in Article 3(3). - “overseas regulatory authority” — in respect of a country or territory outside Jersey, means an authority discharging in that country or territory a function that is the same or similar to a function of the Commission in respect of the prevention and detection of money laundering. - “Proceeds of Crime (Supervisory Bodies) Law” — the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008. - “public authority” — a person holding a public office in Jersey. - “public notice” — a notice published in the Jersey Gazette, or a notice whose contents are brought to the attention of the public by the taking of other reasonable steps for that purpose. - “regulated business” — a financial services business in respect of which a person — (a) is registered under the Banking Business (Jersey) Law 1991; (b) holds a permit or is a certificate holder under the Collective Investment Funds (Jersey) Law 1988; (c) is registered under the Financial Services (Jersey) Law 1998; or (d) is authorized by a permit under the Insurance Business (Jersey) Law 1996. - “regulated person” — a person carrying on a regulated business. - “relevant person” — (a) a person carrying on a financial services business in or from within Jersey; or (b) either (i) a Jersey body corporate, or (ii) a Jersey limited liability partnership, carrying on a financial services business in any part of the world. - “reporting officer” — an individual who is appointed under Article 8(1) or (3). - “secondary recipient” — any person to whom information has been passed by the Commission or a designated supervisory body. - “sole trader” — an individual carrying on a financial services business, who does not in the course of doing so — (a) employ any other person; or (b) act in association with any other person. - “source of the funds” — the source of the funds that are used or to be used in a business relationship or a one-off transaction. - “subsidiary” — has the same meaning as in Article 2 of the Companies (Jersey) Law 1991. - “Terrorism Law” — the Terrorism (Jersey) Law 2002. - Additional interpretative provisions: - a reference to a document, information or record, or to anything else in writing, includes a reference to a document, information, record or writing in electronic form. - a reference to any amount that is expressed in sterling or euros includes a reference to an equivalent amount in any other currency. ### Beneficial ownership and control (Article 2) - Persons treated as beneficial owners or controllers of a non-individual (“other person”): - an individual who is an ultimate beneficial owner of that other person (whether or not the individual is its only ultimate beneficial owner); and - an individual who ultimately controls or otherwise exercises control over the management of that other person (whether the individual does so alone or with any other person or persons). - Additional rules: - It is immaterial whether an individual’s ultimate ownership or control is direct or indirect. - No individual is to be treated by reason of this Article as a beneficial owner of a person that is a body corporate the securities of which are listed on a regulated market. - Regard must be had to all the circumstances, in particular the size of an individual’s beneficial ownership or degree of control having regard to the risk of that individual or that other person being involved in money laundering. - “regulated market” has the same meaning as in the Money Laundering Regulations 2007 S.I. 2007/2157 of the United Kingdom. ### Meaning of “customer due diligence measures” (Article 3) - “Customer due diligence measures” comprises identification measures and on-going monitoring. - Identification measures must include: - identifying the customer; - determining whether the customer is acting for a third party and, if so: - identifying that third party; - where the third party is not an individual, understanding the ownership and control of that third party; - where clause (ii) applies, identifying each individual who is that third party’s beneficial owner or controller; - in respect of a customer that is not an individual: - identifying any person purporting to act on behalf of the customer and verifying the authority of any person purporting so to act; - understanding the ownership and control structure of that customer and the provisions under which the customer can enter into legal arrangements; and - identifying the individuals who are the customer’s beneficial owners or controllers; - obtaining information on the purpose and intended nature of the business relationship or one-off transaction. - On-going monitoring means: - scrutinizing transactions undertaken throughout the course of a business relationship to ensure that the transactions being conducted are consistent with the relevant person’s knowledge of the customer, including the customer’s business and risk profile (such scrutiny to include, where necessary, the source of the funds); and - ensuring that documents, data or information obtained under identification measures are kept up to date and relevant by undertaking reviews of existing records, including reviews where any inconsistency has been discovered as a result of the scrutiny described above. - Further requirements: - Identification of a person means finding out the identity, including name and legal status, and obtaining evidence, on the basis of documents, data or information from a reliable and independent source, reasonably capable of verifying identity. - Measures must include assessment by the relevant person of the risk that any business relationship or one-off transaction will involve money laundering, including obtaining appropriate information for assessing that risk. - Measures for obtaining evidence must involve reasonable measures having regard to all the circumstances, including the degree of risk assessed. ### Meaning of “one-off transaction” (Article 4) - A “one-off transaction” means: - a transaction (other than in respect of a money service business or operating a casino) amounting to not less than 15,000 euros; - 2 or more transactions (other than in respect of a money service business or operating a casino) where: - it appears at the outset to any person handling any of the transactions that the transactions are linked and that the total amount of those transactions is not less than 15,000 euros, or - where at any later stage it comes to the attention of any person handling any of those transactions that clause (i) is satisfied; - a transaction carried out in the course of a money service business amounting to not less than 1,000 euros; - 2 or more transactions carried out in the course of a money service business where: - it appears at the outset to any person handling any of the transactions that those transactions are linked and that the total amount of those transactions is not less than 1,000 euros, or - where at any later stage it comes to the attention of any person handling any of those transactions that clause (i) is satisfied; - a transaction amounting to not less than 3,000 euros carried out in the course of operating a casino; - 2 or more transactions carried out in the course of operating a casino where: - it appears at the outset to any person handling any of the transactions that those transactions are linked and that the total amount of those transactions is not less than 3,000 euros, or - where at any later stage it comes to the attention of any person handling any of those transactions that clause (i) is satisfied. - Definitions for this Article: - “transaction” means a transaction other than one carried out during a business relationship. - “money service business” has the same meaning as in Article 1(1) of the Financial Services (Jersey) Law 1998. ### Equivalent business (Article 5) - Business (“other business”) is equivalent business in relation to any category of financial services business carried on in Jersey if: - the other business is carried on in a country or territory other than Jersey; - if carried on in Jersey, it would be financial services business of that category; - in that other country or territory, the business may only be carried on by a person registered or otherwise authorized for that purpose under the law of that country or territory; - the conduct of the business is subject to requirements to forestall and prevent money laundering that are consistent with those in the FATF recommendations in respect of that business; and - the conduct of the business is supervised, for compliance with those requirements, by an overseas regulatory authority. ### Designated police and customs officers (Article 6) - The Chief Officer of the States of Jersey Police Force may by public notice designate one or more police officers (whether by reference to the name of the officer or officers or post), being members of that Force, for the purposes of this Order. - The Agent of the Impôts may by public notice designate one or more officers of the Impôts for the purposes of this Order. ### Compliance officer (Article 7) - Appointment requirements: - A relevant person (other than a sole trader) must appoint an individual as the compliance officer in respect of the financial services business being carried on by the relevant person. - A sole trader is the compliance officer in respect of his or her financial services business. - Duties and standards: - The individual appointed must be of an appropriate level of seniority. - The compliance officer must have timely access to all records necessary or expedient for performing his or her functions. - The compliance officer’s function is to monitor whether the enactments in Jersey relating to money laundering and any relevant Code of Practice issued under Article 22 of the Proceeds of Crime (Supervisory Bodies) Law are being complied with in the conduct of the relevant person’s financial services business. - Succession and notification: - When a named individual ceases to be compliance officer, the relevant person must appoint another individual forthwith. - The compliance officer is responsible to the relevant person (where appointed under paragraph (1) or (4)). - Subject to paragraph (9), a relevant person must give the Commission written notice within one month after the date an appointment under paragraph (1) or (4) takes effect or an individual ceases to be the compliance officer. The notice must specify the name and effective date. - A compliance officer may also be appointed as a reporting officer. - Interaction with other enactments and deemed appointments: - Paragraphs (10) and (11) provide for deemed appointment and cessation where the Commission has been notified pursuant to another enactment of the name of a person who has acquired, is to acquire, or ceased to have, the function described in paragraph (3) (“notified person”). - The requirement in paragraph (1) applies in respect of any financial services business carried on by the relevant person on or after 1st April 2008. ### Reporting officer (Article 8) - Appointment requirements: - A relevant person (other than a sole trader) must appoint an individual as the reporting officer in respect of the financial services business being carried on by the relevant person. - The reporting officer’s function is to receive and consider reports in accordance with Article 21. - Duties and standards: - The individual appointed must be of an appropriate level of seniority. - The reporting officer must have timely access to all records necessary or expedient for performing his or her functions. - Succession and notification: - When a named individual ceases to be the reporting officer, the relevant person must appoint another individual forthwith. - Subject to paragraph (7), a relevant person must give the Commission written notice, within one month after the date an appointment under paragraph (1) or (3) takes effect or a person ceases to be the reporting officer. The notice must specify the name and effective date. - A reporting officer may also be appointed as a compliance officer. - Interaction with other enactments and deemed appointments: - Paragraphs (7)–(9) provide for deemed appointment and cessation where the Commission has been notified pursuant to another enactment of the name of a person who has acquired, is to acquire, or ceased to have, the function described in paragraph (2) (“notified person”). ### Designated persons (Article 9) - A relevant person may designate one or more individuals (other than the reporting officer) to whom reports may be made in the first instance for onward transmission, where required under this Order, to the reporting officer. - Requirements for designated persons: - A relevant person must ensure that a designated person is of an appropriate level of seniority. - A relevant person must ensure that a designated person has timely access to all records necessary or expedient for performing his or her functions. ### Exemptions from Articles 7 and 8 (Article 10) - The Commission may by public notice exempt a relevant person or any class or description of relevant person carrying on any class of financial services business from the obligation in Article 7(6) or from the obligation in Article 8(4). - The Commission may by public notice revoke any such exemption from a date specified in the notice. - The date specified must allow a reasonable period of time for compliance with the obligation to which the exemption relates. ### Financial services business carried on outside Jersey (Article 10A) - Scope: - This Article applies to financial services business carried on in a country or territory outside Jersey. - Obligations for relevant persons carrying on business outside Jersey: - A relevant person who falls within paragraph (b) of the definition “relevant person” must: - comply with the requirements of this Order in respect of any financial services business to which this Article applies carried on by the relevant person; - ensure that any subsidiary of that relevant person applies measures that are at least equivalent to the requirements of this Order in respect of any such financial services business carried on by that subsidiary. - Subject to this Article, a relevant person to whom paragraph (5) applies must apply measures that are at least equivalent to the requirements of this Order in respect of any financial services business to which this Article applies carried on by any branch. - Subject to this Article, such a relevant person must ensure that any subsidiary applies at least equivalent measures in respect of financial services business carried on by that subsidiary. - Exceptions and interactions with foreign law: - Paragraph (5) applies to a relevant person who falls within paragraph (a) of the definition “relevant person” and who does not fall within paragraph (b). - A relevant person need not comply with paragraphs (2), (3) and (4) to the extent that the law of the country or territory in which that person carries on a financial services business, or has a subsidiary carrying on such a business, has the effect of prohibiting compliance with those paragraphs. - Where that prohibition applies, the relevant person must inform the supervisory body exercising supervisory functions in relation to that relevant person under the Proceeds of Crime (Supervisory Bodies) Law. - Where that prohibition applies, to the extent that the foreign law does not prohibit or prevent the relevant person from taking other reasonable steps to deal effectively with the risk of money laundering, the relevant person must take those reasonable steps. - A relevant person need not comply with paragraphs (2), (3) and (4) in a country or territory outside Jersey in respect of any financial services business that falls within paragraphs 1 to 5 of Part B of Schedule 2 of the Law. - If, in a country or territory outside Jersey, a relevant person carries on a financial services business or has a subsidiary carrying on such a business and that country or territory has more stringent requirements than those set out in this Order, the relevant person must ensure that those more stringent requirements are complied with. *Source: _cr09280 - PART 1* ### PART 2 ### PART 2 PREVENTION AND DETECTION OF MONEY LAUNDERING ### Policies, procedures and scope (Article 11 — paragraphs (1)–(3)) - (1) A relevant person must maintain appropriate policies and procedures relating to: - (a) customer due diligence measures; - (b) reporting; - (c) record-keeping; - (d) screening of employees; - (e) internal control; - (f) risk assessment and management; and - (g) the monitoring and management of compliance with, and the internal communication of, such policies and procedures, - in respect of that person’s financial services business in order to prevent and detect money laundering. - (2) “Appropriate policies and procedures” means policies and procedures that are appropriate having regard to the degree of risk of money laundering taking into account the type of customers, business relationships, products or transactions with which the relevant person’s business is concerned. - (3) The policies and procedures referred to in paragraph (2) must include policies and procedures for: - (a) the identification and scrutiny of: - (i) complex or unusually large transactions, - (ii) unusual patterns of transactions which have no apparent economic or visible lawful purpose, and - (iii) any other activity which the relevant person regards as particularly likely by its nature to be related to the risk of money laundering; - (b) the taking of additional measures, where appropriate, to prevent the use for money laundering of products and transactions which are susceptible to anonymity; - (c) determining whether: - (i) a customer, - (ii) a beneficial owner or controller of a customer, - (iii) a third party for whom a customer is acting, - (iv) a beneficial owner or controller of a third party described in clause (iii), - (v) a person acting, or purporting to act, on behalf of a customer, - is a politically exposed person; - (d) determining whether a business relationship or transaction, or proposed business relationship or transaction, is with a person connected with a country or territory that does not apply, or insufficiently applies, the FATF recommendations; - (e) determining whether a business relationship or transaction, or proposed business relationship or transaction, is with a person connected with a country or territory that is subject to measures for purposes connected with the prevention and detection of money laundering, such measures being imposed by one or more countries or sanctioned by the European Union or the United Nations; - (f) assessing the risk referred to in Article 13(4)(b). ### Scrutiny and transaction definition (paragraphs (3A)–(4)) - (3A) For the purposes of paragraph (3)(a) “scrutiny” includes scrutinising the background and purpose of transactions and activities. - (4) For the purposes of this Article “transaction” means any of the following: - (a) a one-off transaction; - (b) transactions within a one-off transaction; and - (c) transactions within a business relationship. ### Politically exposed persons (paragraph (5)) - (5) In this Article “politically exposed person” has the same meaning as in Article 15(6). ### Subsidiaries and branches (paragraph (8)) - (8) A relevant person with any subsidiary or branch that carries on a financial services business must communicate to that subsidiary or branch that person’s policies and procedures for complying with paragraph (1). ### Employee awareness and training (paragraphs (9)–(10A)) - (9) A relevant person must take appropriate measures from time to time for the purposes of making employees whose duties relate to the provision of financial services business aware of: - (a) the policies and procedures under paragraph (1) that are maintained by that person and relate to the business; and - (b) the enactments in Jersey relating to money laundering and any relevant Code of Practice issued under Article 22 of the Proceeds of Crime (Supervisory Bodies) Law. - (10) A relevant person must provide those employees from time to time with training in the recognition and handling of: - (a) transactions carried out by or on behalf of any person who is or appears to be engaged in money laundering; and - (b) other conduct that indicates that a person is or appears to be engaged in money laundering. - (10A) For the purposes of paragraph (10), such training shall include the provision of information on current money laundering techniques, methods and trends. ### Monitoring and testing effectiveness (paragraph (11)) - (11) A relevant person must maintain adequate procedures for monitoring and testing the effectiveness of the following actions: - (a) the policies and procedures maintained under paragraph (1); - (b) the measures taken under paragraph (9); and - (c) the training provided under paragraph (10). ### Exception for sole traders (Article 12) - A sole trader need not maintain policies and procedures relating to internal reporting, screening of employees and the internal communication of such policies and procedures. *Source: _cr09280 - PART 2* ### PART 3 ### PART 3 CUSTOMER DUE DILIGENCE MEASURES ### Application and timing of customer due diligence measures (Article 13) - A relevant person must apply: - identification measures before the establishment of a business relationship or before carrying out a one-off transaction, subject to paragraph (4) or (5) (Article 13(1)(a)); - on-going monitoring during a business relationship (Article 13(1)(b)); - identification measures where: - the relevant person suspects money laundering, or - the relevant person has doubts about the veracity or adequacy of documents, data or information previously obtained under the customer due diligence measures (Article 13(1)(c)). - Transitional application where: - business relationship started before 4th February 2008, or - business falls within any class described in Schedule 2 to the Law on or after 19th February 2008 and conditions in paragraph (2A) apply — the relevant person must apply customer due diligence measures, as modified by paragraph (2B) for on-going monitoring, at appropriate times on or after 1st April 2008 (Article 13(2)). - Conditions for paragraph (2)(b) (Article 13(2A)): - the business did not fall within that Schedule before 19th February 2008 (Article 13(2A)(a)); - the relevant person has a business relationship with a customer within the course of that business (Article 13(2A)(b)); - that business relationship started before 19th February 2008 (Article 13(2A)(c)). - For the purposes of paragraph (2), on-going monitoring shall mean: - the scrutiny described in Article 3(3)(a); and - ensuring that documents, data or information obtained under identification measures, or (if applicable) obtained under identification measures maintained under the Money Laundering (Jersey) Order 1999 immediately before 4th February 2008 and held immediately before 19th February 2008, are kept up to date and relevant by undertaking reviews of existing records, including reviews where any inconsistency has been discovered as a result of applying the scrutiny described in Article 3(3)(a) (Article 13(2B)). - “Appropriate times” (Article 13(3)): - for identification measures: - times appropriate having regard to the degree of risk of money laundering taking into account the type of customer, business relationship, product or transaction concerned (Article 13(3)(a)(i)); - times when the circumstance described in Article 13(1)(c)(i) applies (Article 13(3)(a)(ii)); - for on-going monitoring: throughout the business relationship as described in Article 3(3) (Article 13(3)(b)). - Identification of a person described in Article 3(4)(b) may be completed as soon as reasonably practicable after establishment of a business relationship if: - necessary not to interrupt the normal conduct of business; and - there is little risk of money laundering occurring as a result (Article 13(4)). - Where a relevant person carries out a one-off transaction to which Article 4(1)(b)(ii), Article 4(1)(d)(ii) or Article 4(1)(f)(ii) applies, that person must apply identification measures as soon as reasonably practicable (Article 13(5)). ### Termination where customer due diligence measures are not completed (Article 14) - If a relevant person is unable to apply identification measures before establishment of a business relationship or before a one-off transaction as specified in Article 13(1)(a), that person shall not establish that business relationship or carry out that one-off transaction (Article 14(1)). - If unable to apply identification measures for persons in Article 13(4) after establishment of a business relationship, that person shall terminate that relationship (Article 14(2)). - If unable to comply with Article 13(1)(b) (on-going monitoring) in respect of a business relationship, that person shall terminate that relationship (Article 14(3)). - If unable to comply with Article 13(5) in respect of a one-off transaction, that person shall not complete or carry out any further linked transactions in respect of that one-off transaction (Article 14(4)). - Subject to paragraph (6), if unable to apply identification measures in the cases described in Article 13(1)(c), the relevant person shall not establish or shall terminate that business relationship or shall not complete or carry out that transaction (Article 14(5)). - Exception where the relevant person has made a report under procedures maintained under Article 21 to a designated police officer or designated customs officer and acts with the consent of that officer: the relevant person, acting with consent, may not complete/carry out/establish or may terminate as required instead of the prohibitions in paragraph (5) (Article 14(6)). - If unable to apply identification measures at any appropriate time described in Article 13(3)(a) for Article 13(2) purposes, the relevant person shall terminate the business relationship (Article 14(7)). - Where termination/prohibition applies under paragraphs (1), (2), (3), (4), (5) or (7), the relevant person must consider whether to make a report under Part 5 (Article 14(8)). - Exceptions for legal professionals: paragraphs (1) to (5) and (7) do not apply where the relevant person’s business falls within paragraph 1 or 2 of Part B of Schedule 2 to the Law and the person is ascertaining the legal position for the client or defending/representing the client in or concerning legal proceedings, subject to membership of a professional body meeting conditions in paragraph (10) (Article 14(9) and (10)). - If a report is made under Article 21 procedures to a designated police or customs officer, paragraphs (1), (2), (3), (4), (5) and (7) do not apply to the extent the relevant person is acting with that officer’s consent (Article 14(11)). - “Transaction” for this Article means any transaction other than one carried out in the course of a business relationship, whether or not it is a one-off transaction or a transaction that falls within Article 4(1)(b), (d) or (f) (Article 14(12)). ### Enhanced customer due diligence (Article 15) - A relevant person must apply on a risk-sensitive basis: - enhanced customer due diligence measures where paragraphs (3) to (5) apply; and - enhanced customer due diligence measures in any situation which by its nature can present a higher risk of money laundering (Article 15(1)). - “Enhanced customer due diligence measures” means customer due diligence measures that involve specific and adequate measures to compensate for the higher risk of money laundering (Article 15(2)). - Paragraph (3) applies where the customer has not been physically present for identification purposes (Article 15(3)). - Paragraph (3A) applies where a relevant person has, or proposes to have, a business relationship with, or proposes to carry out a one-off transaction with, a person connected with a country or territory that does not apply, or insufficiently applies, the FATF recommendations (Article 15(3A)). - Paragraph (4) applies where a relevant person to whom paragraph 4(A) applies has or proposes to have a banking or similar relationship with an institution whose address for that purpose is outside Jersey (Article 15(4)). - Paragraph (4A) defines applicability to deposit-taking businesses as defined in Article 1 of the Banking Business (Jersey) Law 1991, except specified exclusions (Article 15(4A)). - Where paragraph (4) applies, specific and adequate measures include: - gathering sufficient information about the institution to understand fully the nature of its business (Article 15(4B)(a)); - determining the reputation of the institution and the quality of its supervision, including whether it has been subject to any money laundering investigation or regulatory action (Article 15(4B)(b)); - assessing the institution’s systems and controls to combat money laundering for consistency with FATF recommendations and effectiveness (Article 15(4B)(c)); - requiring new relationships to be approved by senior management of the relevant person (Article 15(4B)(d)); - recording respective responsibilities of the relevant person and the institution to prevent and detect money laundering (Article 15(4B)(e)); - being satisfied that the institution has applied customer due diligence measures at least equivalent to those in this Order and can provide copies of evidence, documents, data and information on request (Article 15(4B)(f)). - Paragraph (5) applies where a relevant person has or proposes to have a business relationship with, or one-off transaction with, a politically exposed person, or where certain persons connected to the customer are politically exposed persons (Article 15(5)). - Where paragraph (5) applies, specific and adequate measures must include: - requiring any new business relationship or continuation or any new one-off transaction to be approved by senior management (Article 15(5A)(a)); - measures to establish the source of the wealth of the politically exposed person and source of the funds involved in the business relationship or one-off transaction (Article 15(5A)(b)). - “Source of the wealth” means the source generating the total net worth of funds of the politically exposed person, whether or not those funds are used in the business relationship or one-off transaction (Article 15(5B)). - Definition of “politically exposed person” covers: - individuals entrusted with prominent public functions outside Jersey or by an international organization outside Jersey (examples listed) (Article 15(6)(a)); - immediate family members of such persons (Article 15(6)(b)); - close associates of such persons, including persons known to maintain a close business relationship or able to conduct substantial financial transactions on their behalf (Article 15(6)(c)). - For deciding close associate status, a relevant person need only have regard to information in that person’s possession or publicly known (Article 15(7)). ### Reliance on introducers and intermediaries (Article 16) - A relevant person may rely on an intermediary or introducer to apply identification measures specified in paragraphs (2) or (3) for that other person’s customers and persons to which paragraph (5) applies, provided: - the other person consents to being relied on, and - notwithstanding reliance, the relevant person remains liable for any failure to apply such measures (Article 16(1)). - Identification measures when relying on an intermediary are those described in Article 3(2)(b) (Article 16(2)). - Identification measures when relying on an introducer are those described in Article 3(2)(a) to (c) (Article 16(3)). - Conditions for reliance (Article 16(4)): - the relevant person knows or has reasonable grounds for believing the other person is: - a relevant person supervised by the Commission for that person’s financial services business, or - a person who carries on equivalent business (Article 16(4)(a)); - the relevant person obtains adequate written assurance from the other person that: - the other person has applied the identification measures (Article 16(4)(b)(i)); - the other person is required to keep and does keep evidence of the identification as described in Article 3(4) and a record of such evidence (Article 16(4)(b)(ii)); - the other person will keep the evidence and will provide a copy without delay to the relevant person on request (Article 16(4)(b)(iii)); - where the other person is an introducer, the relevant person obtains in writing: - confirmation that each customer is an established customer of that other person, and - sufficient information about each customer to enable assessment of the risk of money laundering (Article 16(4)(c)); - where the other person is an intermediary, the relevant person obtains in writing sufficient information about the customers for whom the intermediary is acting to enable assessment of the risk of money laundering (Article 16(4)(d)). - Paragraph (5) identifies persons to whom reliance provisions apply (beneficial owner/controller, third parties, persons purporting to act on behalf of a customer) (Article 16(5)). - Definitions (Article 16(6)): - intermediary: person who seeks to establish a business relationship or carry out a one-off transaction on behalf of that intermediary’s customer so that the intermediary becomes a customer of the relevant person (Article 16(6)(a)); - introducer: person who introduces that customer to a relevant person with the intention that the customer will form a business relationship or conduct a one-off transaction so that the introducer’s customer also becomes a customer of the relevant person (Article 16(6)(b)). - Assurance is adequate if: - reasonably capable of being regarded as reliable, and - the person who relies on it is satisfied that it is reliable (Article 16(7)). - Nothing in Article 16 applies in circumstances falling within Article 13(1)(c)(i) (Article 16(8)). ### Reliance in certain circumstances where the intermediary is a regulated person (Article 17) - Article 17 applies where a relevant person knows or has reasonable grounds for believing that an intermediary is: - a regulated person; or - a person who carries on equivalent business to any category of regulated business (Article 17(1)). - Where Article 17 applies, the relevant person need not comply with the obligation under Article 13 to apply the identification measures specified in Article 3(2)(b) in respect of the customers of the intermediary’s business if: - the intermediary’s business falls within paragraph (a), (b) or (d) in the definition of “regulated business” (Article 17(2)(a)); - that business is investment business or fund services business which the intermediary is registered to carry on under the Financial Services (Jersey) Law 1998 (Article 17(2)(b)); - that business is equivalent business to any category of business described in sub-paragraph (a) or (b) (Article 17(2)(c)). - Nothing in Article 17 applies in circumstances falling within Article 13(1)(c)(i) (Article 17(3)). ### Exceptions from customer due diligence measures (Article 18) - Identification measures under Article 13 are not required in any of Cases A to F (Article 18(1)). - Case A: customer is a public authority, acting in that capacity (Article 18(2)). - Case B: relationship or one-off transaction relates to a pension, superannuation or similar scheme where contributions are by an employer or deductions from wages and scheme rules do not permit assignment of a member’s interest (Article 18(3)). - Case C: insurance business consisting of a policy in connection with a pension scheme taken out by virtue of employment or occupation where: - the policy contains no surrender clause; and - it may not be used as collateral security for a loan (Article 18(4)). - Case D: in respect of insurance business, a premium payable in one instalment of an amount not exceeding £1,750 (Article 18(5)). - Case E: in respect of insurance business, a periodic premium payable where the total amount payable in respect of any calendar year does not exceed £750 (Article 18(6)). - Case F: customer is a body corporate the securities of which are listed on a regulated market where “regulated market” has the same meaning as in Article 2(5) (Article 18(6A)). - Where the customer is a regulated person or a person who carries on equivalent business, the relevant person need not comply with obligations under Article 13 in respect of those measures mentioned in Article 3(2)(a) and (c) (Article 18(7)). - Where a person is authorized to act on behalf of a customer, the customer is not a relevant person, the authorized person acts in the course of employment by a person carrying on a financial services business, and that business is a regulated business or equivalent, the relevant person need not comply with obligations under Article 13 in respect of Article 3(2)(c)(i) (Article 18(8)). - Specific housing-related exception for certain businesses in Part B of Schedule 2 enabling registered contracts under the Housing (Jersey) Law 1949 — such relevant persons need not apply identification of persons within Article 3(4)(b) when entering into a business relationship or one-off transaction for that purpose (Article 18(8A)). - Nothing in Article 18 applies in circumstances falling within Article 13(1)(c)(i) and 15(1)(b) (Article 18(9)). *Source: PART 3 — CUSTOMER DUE DILIGENCE MEASURES (from _cr09280 - PART 3)* ### PART 4 ### PART 4 — RECORD-KEEPING REQUIREMENTS ### Interpretation and scope - In this Part “relevant person” includes a person who was formerly a relevant person. ### Records to be kept (Article 19) - A relevant person must keep the records specified in paragraphs (2) and (2A). - Paragraph (2) requires: - (a) a record comprising: - (i) a copy of the evidence of identity obtained pursuant to the application of customer due diligence measures or information that enables a copy of such evidence to be obtained, and - (ii) all the supporting documents, data or information that have been obtained in respect of a business relationship or one-off transaction following the application of customer due diligence measures; - (b) a record containing details relating to each transaction carried out by the relevant person in the course of any business relationship or one-off transaction. - Paragraph (2A) requires keeping the records, if any, that: - (a) the relevant person was required to keep immediately before 4th February 2008 under record keeping procedures maintained under Article 8 of the Money Laundering (Jersey) Order 1999; and - (b) the relevant person held immediately before 19th February 2008. - The record referred to in paragraph (2)(b) must include sufficient information to enable the reconstruction of individual transactions. - Records must be kept so they can be made available on a timely basis to the Commission, police officer or customs officer for the purposes of complying with a requirement under any enactment. - Where the relevant person (“first person”) is an introducer or intermediary and has given the assurance required under Article 16(4)(b) to another relevant person (“second person”), the first person must make available to the second person, at the second person’s request, a copy of the evidence of identification that the first person is required to keep under this Article (the evidence referred to in Article 16(4)(b)(iii)). ### Periods for which records must be kept (Article 20) - Where records described in Article 19(2)(a) or (2A) relate to a business relationship, they must be kept for a period of at least 5 years commencing with the date on which the business relationship ends. - Where those records relate to a one-off transaction, they must be kept for a period of at least 5 years commencing with the date on which the one-off transaction is completed. - Records described in Article 19(2)(b) or (2A) in relation to each transaction must be kept for a period of 5 years commencing with the date on which all activities taking place within the course of that transaction were completed. - For the purposes of paragraph (2) a one-off transaction is completed on the date of completion of all activities taking place in that transaction. - For the avoidance of doubt, the date described in paragraphs (1), (2) and (3) from which the period commences may be a date that occurred before 4th February 2008. - The Commission may notify to the relevant person a period longer than 5 years for the purposes of paragraphs (1), (2) or (3) and such longer period shall apply instead of the 5 years specified. ### PART 5 — REPORTING AND DISCLOSURE ### Reporting procedures and related disclosure requirements (Article 21) - Reporting procedures maintained by a relevant person are in accordance with Article 21 if they comply with the following requirements: - (a) provide for communicating the identity of the reporting officer to persons who must or may wish to make reports to that officer; - (b) if any individual is designated under Article 9, provide for communicating the identity of that individual to persons who must or may wish to make reports to that individual; - (c) provide for securing that a report is made to the person referred to in paragraph (6)(a), (b) and (c) for the purposes of the provisions mentioned in that paragraph; - (d) provide that if a report is made to a designated person, it must be considered by that person, in the light of all other relevant information, for the purpose of determining whether or not the information or other matter contained in the report does give rise to knowledge, suspicion or reasonable grounds for knowledge or suspicion that another person is engaged in money laundering; - (e) provide that if a report is made to a designated person, the report must (subject to Article 22) be forwarded by the designated person to the reporting officer; - (f) provide that if a report is made or forwarded to the reporting officer, it must be considered by the reporting officer, in the light of all other relevant information, for the purpose of determining whether or not the information or other matter contained in the report does give rise to knowledge, suspicion or reasonable grounds for knowledge or suspicion that another person is engaged in money laundering; - (g) provide for the reporting officer, and any designated person through whom the report is made, to have access to all other relevant information that may be of assistance; - (h) provide for securing that the information or other matter contained in a report is disclosed, by the person considering the report under sub-paragraph (d) or (f), to a designated police officer or designated customs officer as soon as is practicable, using the form set out in the Schedule to this Order (“Form”), where the person considering the report knows or suspects, or has reasonable grounds for knowing or suspecting, that another person is engaged in money laundering; - (ha) provide for securing that the person who makes a disclosure under sub-paragraph (h) provides the designated police officer or designated customs officer with such additional information relating to that disclosure as that officer may reasonably request and that such information is provided in such form and within such reasonable period as that officer may reasonably request; - If a person considering a report under paragraph (1)(d) or (1)(f) knows or suspects, or has reasonable grounds for knowing or suspecting, that another person is engaged in money laundering, the first person must, as soon as is practicable, make a disclosure to a designated police officer or designated customs officer: - (a) by using the Form; and - (b) in compliance with the requirements indicated on the Form. - The person making the disclosure must ensure that: - (a) a completed Form is delivered in the manner indicated on the Form; and - (b) any information entered upon or accompanying the Form is legible. - The person who makes a disclosure must provide the designated police officer or designated customs officer with such additional information relating to that disclosure as that officer may reasonably request in such form and within such reasonable period as that officer may require. - Paragraphs (1)(h), (1)(ha), (2) and (4) need not apply where the relevant person’s business falls within paragraph 1 or 2 of Part B of Schedule 2 to the Law and the information was received in the course of ascertaining the legal position for the relevant person’s client or performing the task of defending or representing the client in, or concerning, legal proceedings, including advice on the institution of legal proceedings. ### Persons who are designated persons or reporting officers (Article 21(6)) - A designated person or, if there is no such person, the reporting officer, shall be: - (a) the nominated officer referred to in: - (i) Article 40A of the Drug Trafficking Offences Law, - (ii) Article 34D of the Law, and - (iii) Article 23 of the Terrorism Law; - (b) the appropriate person referred to in: - (i) Articles 37(5) and 38(8) of the Drug Trafficking Offences Law, and - (ii) Articles 32(5) and 33(8) of the Law; and - (c) the person to whom disclosure may be made under any procedure established by an employer as described in Articles 21(4) and 22(6) of the Terrorism Law. ### Reports that need not be forwarded (Article 22) - If a designated person, on considering a report under Article 21, concludes that it does not give rise to knowledge, suspicion or reasonable grounds for knowledge or suspicion that another person is engaged in money laundering, the designated person need not forward it to the reporting officer. - If a designated person, on considering a report under Article 21, has concluded that it does give rise to such knowledge or suspicion, the reporting officer need not consider whether that other person is engaged in money laundering. ### Internal disclosure permitted (Article 22A) - A relevant person may disclose to any person or institution with whom or which the relevant person shares common ownership, management or compliance control, where such disclosure is appropriate for the purpose of preventing and detecting money laundering: - (a) the information contained in any report for the purpose of any of the provisions mentioned in Article 21(6); - (b) any additional information required under Article 21(4); - (c) the information contained in any record kept by the relevant person for the purpose of this Order. ### Duty to report by the Commission and others (Article 23) - If the Commission: - (a) obtains any information; and - (b) is of the opinion that the information indicates that any person has or may have been engaged in money laundering, - the Commission shall disclose that information to a designated police officer or designated customs officer as soon as is reasonably practicable. - A secondary recipient of information obtained by the Commission who forms such an opinion may disclose the information to a designated police officer or designated customs officer. - A range of authorized or appointed persons (specified in paragraph (4)) who obtain information while acting in the course of an investigation or discharging functions and form the opinion that the information indicates money laundering shall disclose that information as soon as is reasonably practicable to the persons specified in paragraph (5) (a designated police officer or designated customs officer and the Commission). - If a designated supervisory body (other than the Commission) obtains information and is of the opinion that it indicates that any person has or may have been engaged in money laundering, that body shall disclose that information to a designated police officer or designated customs officer as soon as is reasonably practicable. - Secondary recipients of information obtained by such designated supervisory bodies may disclose that information to a designated police officer or designated customs officer. - Disclosure under this Article shall be made in writing. ### PART 5A — OTHER MEASURES ### Shell banks (Article 23A) - A relevant person to whom paragraph (3) applies must not enter into or continue a banking relationship with a shell bank. - A relevant person to whom paragraph (3) applies must take appropriate measures to ensure that he or she does not enter into, or continue, a banking relationship with a bank that is known to permit its accounts to be used by a shell bank. - Paragraph (3) applies to a relevant person who carries on a deposit-taking business as defined in Article 1 of the Banking Business (Jersey) Law 1991 except the doing of anything by or on behalf of: - (a) the States; - (b) the central bank of a member State of the European Community; or - (c) the National Savings Bank of the United Kingdom. - For the purposes of paragraphs (1) and (2): - (a) “bank” means a person or body carrying on a deposit-taking business within the meaning of the Banking Business (Jersey) Law 1991 whether or not that business is carried on from within Jersey; and - (b) “shell bank” means a bank incorporated in a jurisdiction in which it has no physical presence involving meaningful decision-making and management, and which is not subject to supervision by the Commission or by an overseas regulatory authority by reason of that bank’s connection with any other institution or person. - For the purposes of paragraph (4)(b), “connection” has the same meaning as in Article 3A of the Income Tax (Jersey) Law 1961. ### Anonymous accounts (Article 23B) - A relevant person must not, in relation to any of that person’s customers, set up an anonymous account or an account in a name which it knows, or has reasonable cause to suspect, to be fictitious. ### Directions where the Financial Action Task Force applies counter-measures (Article 23C) - The Minister may, after consultation with the Commission and any relevant supervisory body, direct any relevant person to: - (a) not to enter into a business relationship; - (b) not to carry out a one-off transaction; - (c) not to proceed any further with a business relationship or one-off transaction; - (d) to impose any prohibition, restriction or limitation relating to a business relationship or one-off transaction; - (e) to apply enhanced customer due diligence measures to any business relationship or one-off transaction, - with any person who is situated or incorporated in a country or territory to which the Financial Action Task Force on Money Laundering has decided to apply counter-measures. - “Relevant supervisory body” in paragraph (2) means the supervisory body exercising supervisory functions in relation to that relevant person under the Proceeds of Crime (Supervisory Bodies) Law. ### PART 6 — MISCELLANEOUS AND CLOSING ### Citation and commencement (Article 24) - This Order may be cited as the Money Laundering (Jersey) Order 2008. ### Transitional application to certain businesses (Article 24A) - This Order shall not apply before 1st May 2008 to a relevant person whose business falls within paragraph 1 or paragraph 2(1)(b) of Part B of Schedule 2 to the Law. *Source: _cr09280 - PART 4* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2009/_cr09280.pdf_