Proposed new Proceeds of Crime (Supervisory Bodies) (Jersey) Law 200-.

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A decision made (15/02/2008) regarding: Proposed new Proceeds of Crime (Supervisory Bodies) (Jersey) Law 200-.

Decision Reference: MD-E-2008-0030
Decision Summary Title :	Proposed new Proceeds of Crime (Supervisory Bodies) (Jersey) Law 200-		Date of Decision Summary:	14 February 2008
Decision Summary Author:	James Mews Finance Industry Development Executive		Decision Summary: Public or Exempt? (State clauses from Code of Practice booklet)	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:
Written Report Title :	Proposed new Proceeds of Crime (Supervisory Bodies) (Jersey) Law 200-		Date of Written Report:	13 February 2008
Written Report Author:	James Mews Finance Industry Development Executive		Written Report : Public or Exempt? (State clauses from Code of Practice booklet)	Public
Subject: Approval of the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 200-.
Decision(s): The Minister approved the report and proposition entitled, ‘Draft Proceeds of Crime (Supervisory Bodies) (Jersey) Law 200- and signed the associated declaration of compatibility with the European Convention on Human Rights. He further agreed that the draft Law should be lodged ‘au Greffe’ on or before 19th February 2008, in order that a provisional date for debate of 1 April 2008 might be secured.
Reason(s) for Decision: The Law is necessary to comply with the recommendations of the Financial Action Task Force in relation to measures necessary to counter money laundering and the financing of terrorism. The proposed Law is recommended by the Island’s Anti-money Launder/Countering the Financing of Terrorism Strategy Group. The proposed Law has been through a consultation process and the comments of respondents have been adopted as appropriate. The Law Officers’ Department has indicated that the Law does not raise any human rights issues and that all tariffs for new offences created are commensurate with similar offences.
Resource Implications: The Law will have no implications for the financial or manpower resources of the States (on the presumption that no States department will be designated as a supervisory body). It has been agreed that the first year of oversight by the JFSC (on the assumption that the JFSC will be designated as the supervisory body for all persons under the Law) will be funded from the Criminal Offences Confiscation Fund. This is because until persons are required to register under the Law, the number of persons affected by the Law, and hence the appropriate fee level, cannot be accurately assessed. For year 2 onwards, the intention is that the funding of the oversight work of the JFSC under the Law will be covered by the generality of fee income raised by the JFSC (including fees levied under the Law).
Action required: To approve the Law and the report attached to it, sign the Decision Summary, and the declaration of compatibility with the European Convention on Human Rights and for the Finance Industry Development Executive take such steps as are necessary to lodge the Amendment and Regulations au Greffe so as to enable the States to debate the Law on 1 April 2008.
Signature: Senator T.A.Le Sueur on behalf of the Minister for Economic Development		Position: Acting Minister
Date Signed:		Date of Decision (If different from Date Signed):

Proposed new Proceeds of Crime (Supervisory Bodies) (Jersey) Law 200-.

MINISTER FOR ECONOMIC DEVELOPMENT

PROPOSED NEW PROCEEDS OF CRIME (SUPERVISORY BODIES) (JERSEY) LAW 200-

1 THE ISSUE AND RECOMMENDATION

It is proposed that the States should debate, and if they think fit, pass a new law to be called the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 200- (“the Law”).

It is recommended that the Minister for Economic Development approve the Law and the report attached to it, sign the Decision Summary and the statement of human rights compliance and that the Finance Industry Development Executive take the necessary steps to lodge the Law and report au Greffe so as to enable the States to debate the Law on 1 April 2008.

BACKGROUND

The Financial Action Task Force (“the FATF”) is the body charged with setting international standards for combating money laundering and the financing of terrorism (“AML/CFT”). To meet the recommendations made by the FATF, Jersey must implement a mechanism to enable one or more “supervisory bodies” to effectively monitor all persons subject to Schedule 2 of the Proceeds of Crime (Jersey) Law 1999 (“Schedule 2”). The purpose is to ensure that all such persons comply with Jersey’s AML/CFT legislation (the Money Laundering (Jersey) Order 2008 and the regulatory requirements set out in the Handbook for the Prevention and Detection of Money Laundering and the Financing of Terrorism issued by the JFSC or similar requirements and guidance issued by a designated supervisory body).
Currently, only those persons who are prudentially supervised by the Jersey Financial Services Commission (“the JFSC”) under one or more of the four regulatory laws are overseen for this purpose. These four regulatory laws are the Banking Business (Jersey) Law 1991, the Collective Investment Funds (Jersey) Law 1988, the Financial Services (Jersey) Law 1998 and the Insurance Business (Jersey) Law 1996. These cover banks, insurance companies, investment businesses, fund functionaries, trust companies, etc. The Law will extend oversight to other persons subject to Schedule 2.
Schedule 2 itself should be referred to for the details for such persons, but they include: estate agents, high value goods dealers, lawyers, accountants, auditors, tax advisors, insolvency practitioners, casino operators and functionaries of unregulated funds.

THE PROPOSED NEW LAW

The Law will provide for supervisory bodies to oversee compliance by persons conducting a Schedule 2 business or activity with their obligations under AML/CFT legislation (Part 2). For businesses that are prudentially supervised by the JFSC, this body will be the JFSC (Article 5). In other cases, the Minister for Economic Development shall nominate the supervisory bodies by Order (Article 6). (It is presently intended, in accordance with the general presumption of the Council of Ministers against establishing new statutory bodies, that the Minister shall designate the JFSC as the supervisory body for all persons subject to Schedule 2, for the time being. However, communications are ongoing, in particular with the legal sector, about the best method of achieving compliance and it may be that an alternative body from the JFSC is used.)
Persons proposing to conduct a Schedule 2 business or activity will be required to register with the designated supervisory authority (Part 3).
Applicants for certain categories of Schedule 2 business or activity will be subject to vetting by the designated supervisory authority before registration (Article 13).
A designated supervisory authority shall have the power to levy an annual fee on each person registered by it under the Law (Part 4). The level of such fees is to be established by negotiation with the relevant industry bodies or, failing agreement, to be subject to approval by a panel of Jurats of the Royal Court (Article 21).
Each designated supervisory authority shall have the power to issue Codes of Practice to establish sound principles for a person’s compliance with the Law and AML/CFT legislation (Article 22).
Each designated supervisory authority shall have powers to conduct off-site and on-site examinations, to take investigatory action and, in appropriate cases, to issue directions or make public statements (Part 5). These powers are similar to those currently granted to the JFSC under the four regulatory laws.
The Law contains transitional provisions to give persons already conducting a Schedule 2 business or activity at the time the Law comes into force three months in which to apply for registration (Article 43).
The Law Officers’ Department has confirmed that, having considered the human rights implications of the Law, they are satisfied that the Minister may properly sign the declaration of compatibility. They have also confirmed, subject to one change which has been duly made, that the penalties provided in the Law have been approved by the Attorney General.

SUMMARY

In summary, the new Law will assist in preventing the laundering of money or financing of terrorism through Jersey. It is a central element in Jersey’s ongoing commitment to AML/CFT.
In addition, it will make a significant contribution to Jersey being assessed favourably by the International Monetary Fund in relation to AML/CFT during the forthcoming visit in October 2008.

RECOMMENDATION

5.1 It is recommended that the Minister for Economic Development approve the Law and the report attached to it and sign the statement of human rights compliance and that the Finance Industry Development Executive take the necessary steps to lodge the Law and report au Greffe so as to enable the States to debate the Law on 1 April 2008.

JAMES MEWS

Finance Industry Development Executive

13 February 2008