Money Laundering (Amendment No. 4) (Jersey) Order 2010

Information about the publication of Ministerial Decisions

A formal published “Ministerial Decision” is required as a record of the decision of a Minister (or an Assistant Minister where they have delegated authority) as they exercise their responsibilities and powers.

Ministers are elected by the States Assembly and have legal responsibilities and powers as “corporation sole” under the States of Jersey Law 2005 by virtue of their office and in their areas of responsibility, including entering into agreements, and under any legislation conferring on them powers.

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demonstrating that good governance, and clear lines of accountability and authority, are in place around decisions-making – including the reasons and basis on which a decision is made, and the action required to implement a decision
providing a record of decisions and actions that will be available for examination by States Members, and Panels and Committees of the States Assembly; the public, organisations, and the media; and as a historical record and point of reference for the conduct of public affairs

Ministers are individually accountable to the States Assembly, including for the actions of the departments and agencies which discharge their responsibilities.

The Freedom of Information Law (Jersey) Law 2011 is used as a guide when determining what information is be published. While there is a presumption toward publication to support of transparency and accountability, detailed information may not be published if, for example, it would constitute a breach of data protection, or disclosure would prejudice commercial interest.

A decision made 11 January 2010 regarding: Money Laundering (Amendment No. 4) (Jersey) Order 2010.

Decision Reference: MD-TR-2009-0219
Decision Summary Title:	Money Laundering (Amendment No. 4) (Jersey) Order 2010		Date of Decision Summary:	30/12/2009
Decision Summary Author:	Director, Jersey Financial Services Commission		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:
Written Report Title:	Money Laundering (Amendment No. 4) (Jersey) Order 2010		Date of Written Report:	16/12/2009
Written Report Author:	Director, Jersey Financial Services Commission		Written Report : Public or Exempt?	Public
Subject: Money Laundering (Amendment No. 4) (Jersey) Order 2010
Decision(s): The Minister made the Money Laundering (Amendment No. 4) (Jersey) Order 2010.
Reason(s) for Decision: The Order deals with a number of minor comments made by the International Monetary Fund in its recent review of Jersey’s framework for countering money laundering and terrorist financing. The Order also revises the application of some customer due diligence concessions.
Resource Implications: None.
Action required: Notify the Greffe and the Law Draftsman that the Order has been made and forward the signed and sealed Order to the Greffe for archiving. Request the Greffier of the States to table the Order before the States at the next meeting.
Signature:		Position: Senator P F C Ozouf, Minister for Treasury and Resources
Date Signed:		Date of Decision:

Money Laundering (Amendment No. 4) (Jersey) Order 2010

Treasury & Resources Minister

Money Laundering (Amendment No. 4) (Jersey) Order 2010

Purpose of report

The purpose of this report is to support the making of the Money Laundering (Amendment No. 4) (Jersey) Order 2010 (the “Amending Order”).

The Amending Order revises the Money Laundering (Jersey) Order 2008 (the “Money Laundering Order”) which came into force in February 2008 (and which was last amended in November 2008). Inter alia, the Money Laundering Order establishes requirements for customer due diligence measures to be carried out when a customer relationship is established and for a record of the measures that are carried out to be kept.

References to “relevant person” in this report mean a person that is required to comply with the Money Laundering Order.

Background

Following its recent review of Jersey’s framework to counter money laundering and the financing of terrorism, the International Monetary Fund (the “IMF”) has said that some provisions in the Money Laundering Order are not as clearly expressed as it would wish.

The main purpose of the Amending Order is to deal with such comments, and to clarify and revise the application of some of the concessions established by Article 18 of the Money Laundering Order.

The Amending Order does not address any of the more substantive points that have been made in the IMF’s final report.

Overview of key amendments

Articles 2 and 3 of the Amending Order amend Articles 1 and 3 of the Money Laundering Order in order to make it absolutely clear that - in law - customer due diligence measures are to be applied to legal arrangements (including trusts) and legal persons.

In particular, Article 3(2)(b) of the Money Laundering Order is amended to explicitly cover the case where a customer is a trustee of a trust. The effect of the amendment is that, where a relationship is established for a trust or one-off transaction carried out for a trust:

The trustee will be identified under Article 3(2)(a).

Article 3(2)(b) will establish that the trustee is acting for a third party.

The trust itself will be identified as the third party under Article 3(2)(b)(i).

The type of trust will be established under Article 3(2)(b)(iii)(A) (e.g. fixed interest or discretionary).

The settlor and any protector must be identified under Article 3(2)(b)(iii)(B) and, dependent upon an assessment of risk, beneficiaries and objects of powers.

The provisions of Article 3(2)(b) mirror provisions that are currently covered by regulatory requirements and guidance in Section 4.4 of the Handbook for the Prevention and Detection of Money Laundering and the Financing of Terrorism for Financial Services Business regulated under the Regulatory Laws (the “AML/CFT Handbook”).

Article 3 of the Amending Order also amends Article 3(2)(c)(ii) of the Money Laundering Order. It introduces an alternative term to “legal arrangement” (the term that is currently used) to avoid confusion with the term as it is used (and defined) in the Financial Action Task Force (“FATF”) Recommendations.

Articles 7(2A)(b), 8(2A)(b), and 9(2)(b) of the Money Laundering Order are amended by Articles 4 to 6 of the Amending Order to say that the records that a compliance officer and reporting officer (or designated person) must have access to will include the records that must be kept by a relevant person under Article 19 of the Money Laundering Order. This includes records of customer due diligence measures carried out.

Similarly, Article 21(1)(g) of the Money Laundering Order is amended by Article 11 of the Amending Order to say that the relevant information that a reporting officer or designated person must have access to when considering whether to make a report to the Joint Financial Crimes Unit (the “JFCU”) will include the records that must be kept by a relevant person under Article 19.

Article 7 of the Amending Order amends Article 11(1)(b) of the Money Laundering Order. The policies and procedures relating to reporting that a relevant person must maintain are now linked back to the procedures that are referred to in reporting provisions in the Drug Trafficking Offences (Jersey) Law 1988, the Proceeds of Crime (Jersey) Law 1999 and the Terrorism (Jersey) Law 2002. [These procedures provide for an employee of a relevant person to make a report to that person’s reporting officer (or deputy) rather than directly to an officer of the JFCU.]

Article 7 of the Amending Order also amends Article 11(3)(b) of the Money Laundering Order to refer to the need for additional measures to prevent the misuse of technological developments in money laundering. This requirement is already set in Section 2.4 of the AML/CFT Handbook.

Article 7 of the Amending Law adds Article 11(3)(g) to the Money Laundering Order. This provides that particular attention must be paid to implementing policies and procedures that are sufficient to prevent and detect money laundering in subsidiaries and branches of a relevant person that are situated in countries and territories that do not, or insufficiently apply, the FATF Recommendations.

Article 9 of the Amending Order amends Article 16(4)(c) of the Money Laundering Order so that it is absolutely clear that, in accordance with Articles 3 and 13 of the Money Laundering Order, customer due diligence information that is held by a person that introduces a customer to a relevant person must be provided before a relationship may be established or one-off transaction carried out by the relevant person with the customer that is introduced. This is in line with FATF Recommendation 9 which provides that a financial institution should be required to immediately obtain from the third party the necessary information concerning the elements of the customer due diligence process.

Article 10 of the Amending Order revokes Article 18(2) of the Money Laundering Order and substitutes Article 18(6A) of the Money Laundering Order with a new paragraph. The effect of this is that, in future, where a prospective customer is a public authority in Jersey or particular type of body corporate, identification measures must be applied to any third party for whom the public authority or body corporate may be acting.

Article 10 of the Amending Order also amends Article 18(3) of the Money Laundering Order to extend the application of the concession that may be applied by a relevant person to any prospective relationship in respect of a pension, superannuation or similar scheme. Currently, the exemption may not be applied where it is possible for a member of such a scheme to assign an interest that he or she has in that scheme, and the effect of the change is to permit application of the concession to a scheme that permits the assignment of an interest of a member to a person that is a member’s widow, widower or dependant.

Finally, Article 10 of the Amending Order amends Article 18(8) of the Money Laundering Order in a way that limits the scope of the concession to the identification of any person purporting to act on behalf of the customer. The effect of this is that, where an individual is employed by a trust company and acts on behalf of a company that is a customer of that trust company, a relevant person will be required to verify the authority of the trust company employee to act for the company.

Consultation

The Commission published a consultation paper covering the Amending Order on 7 September 2009.

Seven responses were received to the consultation paper, and those responses are summarised in a feedback paper, which also lists the names of respondents. The feedback paper was published on 14 December 2009.

Financial/ manpower implications

There are no financial or manpower implications for the States.

Recommendation

The Minister is requested to make the Amending Order.