Implementation of Regulations to implement Financial Action Task Force (FATF) SRVII on wire transfers in Jersey.

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A decision made (21/05/2007) regarding: Implementation of Regulations to implement Financial Action Task Force (FATF) SRVII on wire transfers in Jersey.

Subject:	Implementation of Regulations to implement Financial Action Task Force (FATF) SRVII on wire transfers in Jersey
Decision Reference:	MD-TR-2007-0063	Exempt clause(s):		N/A
Type of Report: (oral or written)	Written	Person Giving Report (if oral):		N/A
Telephone or e-mail Meeting?	N/A	Report File ref:		ALB/1/18/05/07
Written Report – Title	Implementation of FATF SRVII on wire transfers	Written report - author		Andrew Le Brun
Decision(s): The Minister agreed to lodge the draft Regulations au Greffe to implement FATF SRVII on wire transfers in Jersey and instructed officers to make the necessary arrangements.
Reason(s) for decision: To implement international standards in Jersey and to allow individuals and businesses in Jersey to continue to use UK payment systems, in the same way that individuals and businesses in the UK are able to. Without legislation, the use of BACS for making transfers between Jersey and the UK will be limited. (Report attached.)
Action required: Liaison with Greffier of the States to arrange lodging ‘au Greffe’ of draft Regulations.
Signature: (Minister/ Assistant Minister)			Date of Decision: 21 May 2007

Implementation of Regulations to implement Financial Action Task Force (FATF) SRVII on wire transfers in Jersey.

REPORT ON IMPLEMENTATION OF FATF SPECIAL RECOMMENDATIONS VII ON WIRE TRANSFERS

The draft Regulations implement - in Jersey - Financial Action Task Force (“FATF”) Special Recommendation VII on wire transfers (“SR VII”), one of nine Recommendations issued by the FATF to provide a basic framework to detect, prevent and suppress the financing of terrorism and terrorist acts.

SR VII has been developed with the objective of preventing terrorists and other criminals from having unfettered access to payments that are made electronically (“wire transfers”) for moving their funds and for detecting such misuse when it occurs.

The draft Regulations establish requirements for information to accompany transfers. Obligations are placed on the payment service provider of the customer requesting that a transfer be made (referred to as the “payer”), the payment service provider of the person that is to receive the transfer (referred to as the “payee”) and on any intermediate payment service providers (such as correspondent banks).

As well as implementing international standards in Jersey, the draft Regulations will allow individuals and businesses in Jersey to continue to use United Kingdom (“UK”) payment systems, in the same way that individuals and businesses in the UK are able to. One of the conditions for such use is that Jersey implements the “same rules” on transfers that apply in the European Union (“EU”).

The EU has already issued a Regulation implementing SR VII - Regulation (EC) No 1781/2006 of the European Parliament and of the Council on information on the payer accompanying transfers of funds (“EU Payments Regulation”) - which has had direct effect in EU Member States since 1 January 2007. Whilst the EU Payments Regulation permits Member States to treat transfers both within and between Member States as domestic transfers, transfers made between a Member State and any other jurisdiction, including Jersey, must be treated as cross-border transfers. In the absence of any exemptions, such a requirement would impede the use in Jersey (and the UK) of UK payment systems for making payments between the two jurisdictions. Specifically, it would no longer be possible to transfer funds through standing orders or direct credits using the BACS payment system – as this system is not able to carry all of the information that is required for cross-border transfers.

As a result of this, Article 17(1) of the EU Payments Regulation permits a Member State to apply to the European Commission (“EC”) to be able to treat transfers to and from its dependent territories as if they were transfers within that Member State, i.e. domestic transfers. The UK has made an application in respect of each of the Crown Dependencies – so that transfers between the UK and Crown Dependencies may be treated as domestic transfers (but not transfers between other Member States and the Crown Dependencies – which will continue to be treated as cross-border).

The EC may approve the UK’s application in respect of Jersey (and the other Crown Dependencies) only if it is satisfied that Jersey payment service providers are required to apply the “same rules” as those established in the EU Payments Regulation.

The draft Regulations are intended to apply such rules, in order that transfers between Jersey and the UK may continue to be made cheaply and quickly using UK payment systems. Without such rules, the use of BACS for making transfers between Jersey and the UK will be limited.

The draft Regulations will also allow transfers between Jersey and the Bailiwick of Guernsey, and Jersey and the Isle of Man to be made using UK payment systems.