Draft Proceeds of Crime (Substitution of Schedule 2) (Jersey) Regulations 200-

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A decision made (20.09.07) to approve the draft Proceeds of Crime (Substitution of Schedule 2) (Jersey) Regulations 200-.

Decision Reference: MD-TR-2007-0097
Decision Summary Title:	Substitution of Schedule 2 to the Proceeds of Crime (Jersey) Law 1999 – in order to implement FATF Recommendations		Date of Decision Summary:	14th September 2007
Decision Summary Author:	Andrew Le Brun - (JFSC) Jersey Financial Services Commission		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Andrew Le Brun – (JFSC) Jersey Financial Services Commission		Date of Written Report:	14th September 2007
Written Report Author:	Substitution of Schedule 2 to the Proceeds of Crime (Jersey) Law 1999 – in order to implement FATF Recommendations		Written Report : Public or Exempt?	Public
Subject: Substitution of Schedule 2 to the Proceeds of Crime (Jersey) Law 1999 – in order to implement FATF Recommendations
Decision(s): The Minister agreed to lodge the draft Proceeds of Crime (Substitution of Schedule 2) (Jersey) Regulations 200- and instructed officers to make the necessary arrangements.
Reason(s) for Decision: § To address the risk - identified internationally - that additional sectors are vulnerable to use in money laundering and terrorist financing. § To implement international standards in Jersey - in preparation for the IMF assessment in 2008. § To implement standards in a way that is consistent with the EU - in order to facilitate continued access of Jersey businesses to EU markets. § To remove a number of business activities from the scope of Schedule 2 – on the basis that there is a low risk of money laundering.
Resource Implications: Based on initial projections an additional two staff will be required (2 fte) for the Joint Financial Crimes Unit (JFCU) at an annual cost of £115,000 (as at June 2007 pay rates). The projections will be reviewed post implementation and additional resources sought if required.
Action required: Officers to undertake the necessary arrangements for the lodging of draft Regulations.
Signature:		Position: Senator Terry Le Sueur, Treasury and Resources Minister
Date Signed: 20th September 2007		Date of Decision: 20th September 2007

Draft Proceeds of Crime (Substitution of Schedule 2) (Jersey) Regulations 200-

Proceeds of Crime (Substitution of Schedule 2) (Jersey) Regulations 200-

Report on substitution of Schedule 2 to the Proceeds of Crime (Jersey) Law 1999

In response to an improved understanding of the threat of money laundering and terrorist financing, the Financial Action Task Force (the “FATF”) – the body that sets international standards for combating money laundering and the financing of terrorism, has expanded the sectors that it expects to be subject to measures to combat money laundering and terrorist financing (“measures”) to include sectors previously considered to be outside of the traditional financial sector.

The additional sectors that are to be covered by measures - referred to by the FATF as “designated non-financial businesses and professions” - are: casinos (which also includes internet casinos); real estate agents; dealers in precious metals; dealers in precious stones; lawyers, notaries, other independent legal professionals and accountants; and trust and company service providers.

Other jurisdictions have already amended legislation in line with the FATF Recommendations, including Member States of the European Union (the “EU”). In the EU, in addition to the sectors set out in the FATF Recommendations, the Third Money Laundering Directive has extended obligations to: high value goods dealers when accepting payment in cash for €15,000 or more; and auditors and tax advisors.

The Proceeds of Crime (Substitution of Schedule 2) (Jersey) Regulations 200- (the “Regulations”) amend Schedule 2 so that it defines the sectors to which measures will apply in a way that is consistent with the UK’s implementation of the Third Money Laundering Directive. This is because it will be important for the Island to be able to demonstrate to the European Commission and to Member States of the EU that Jersey has applied measures that are equivalent to those set out in the Directive – in order to facilitate the continued access of Jersey businesses to EU markets.

The Regulations will apply for the first time to: certain activities of independent legal professionals; accountants, auditors, tax advisors, and providers of insolvency services; estate agents; and dealers in high value goods. The Regulations will not extend to casinos (including internet casinos) – since such activities are not permitted in Jersey and the Jersey Financial Services Commission is not aware of any Jersey companies conducting such activities outside Jersey. However, in line with the FATF Recommendations, Schedule 2 will be extended at a later date to cover such activities.

In line with the FATF Recommendations, Schedule 2 will no longer cover general insurance business, proprietary trading in instruments and securities, or the activity of providing credit references.

Schedule 2 has also been revised so as to exclude from its application a limited number of “low-risk” persons. These are persons that are conducting deposit-taking business, insurance business, or financial service business, which are covered by exemptions or exclusions under applicable regulatory legislation – where it is clear that there is little risk of money laundering activity occurring.

The measures that are to be applied to the additional sectors will be established through the Money Laundering (Jersey) Order 1999. An adequate period of time will be allowed in order to allow businesses to introduce such measures as will be necessary to comply with the Money Laundering (Jersey) Order 1999.

The Island’s framework to counter money laundering and terrorist financing is to be the subject of a review by the International Monetary Fund in 2008.