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Money Laundering (Amendment No.6) (Jersey) Order 2013

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A decision made 11 December 2013:

Decision Reference:       MD-C-2013-0150

Decision Summary Title :

Draft Money Laundering (Amendment No.6) (Jersey) Order 2013

Date of Decision Summary:

6 December 2013

Decision Summary Author:

 

Officer, Finance Industry Development, Financial Services

Decision Summary:

Public or Exempt?

(If exempt, state clauses from Code of Practice booklet)

Public

Type of Report:

Oral or Written?

Written

Person Giving

Oral Report:

N/A

Written Report

Title :

Draft Money Laundering (Amendment No.6) (Jersey) Order 2013

Date of Written Report:

6 December 2013

Written Report Author:

Officer, Finance Industry Development, Financial Services

Written Report :

Public or Exempt?

(If exempt, state clauses from Code of Practice booklet)

Public

Subject: Making of the Draft Money Laundering (Amendment No.6) (Jersey) Order 2013

Decision(s): The Chief Minister made the Draft Money Laundering (Amendment No.6) (Jersey) Order 2013 (the “draft Order”).

Reason(s) for Decision: In 2009, the IMF published a report on Jersey’s compliance with the 40 + 9 Recommendations of the Financial Action Task Force (FATF). Whilst Jersey was assessed as “complying” or “largely complying” with 44 of the 49 Recommendations and 15 of the 16 “core” and “key” FATF Recommendations, a number of recommendations were made in the report about how Jersey’s framework for anti-money laundering and countering terrorist financing (“AML/CFT”) could be improved.

 

The IMF recommendations fell into a number of categories, including those that would require an amendment to the Money Laundering (Jersey) Order 2008.  The detailed changes made by the draft Order are set out in the written report attached.

 

The Financial Crime Strategy Group has indicated to the Chief Minister the desirability of the draft Order being made prior to MONEYVAL’s plenary hearing in relation to Jersey on 12 December 2013.

Action required: That the Minister sign and seal the Order and it be returned to the States Greffe for immediate publication and a request to the Greffier of the States to arrange for its notification to the States.

 

Signature:

  

 

 

Senator I.J. Gorst

Position:

 

 

 

Chief Minister of Jersey

Date Signed:

 

 

Date of Decision (If different from Date Signed):

 

 

Hide report
Money Laundering (Amendment No. 6) (Jersey) Order 2013

 

CHIEF MINISTER

WRITTEN REPORT

Draft Money Laundering (Amendment No.6) (Jersey) Order 201- (the “draft Order)

 

 

 

 

Introduction

1.             In 2009, the International Monetary Fund (the “IMF”) published a report on Jersey’s compliance with the 40+9 Recommendations of the Financial Action task Force (the “FATF”). 

2.             Whilst Jersey was assessed as “complying” or “largely complying” with 44 of the 49 Recommendations and 15 of the 16 “core” and “key” FATF Recommendations, a number of recommendations were made in the report about how Jersey’s framework for countering money laundering and terrorist financing (“AML/CFT”) could be improved.  These recommendations, and actions agreed at the time, are published on the website[1] of the Jersey Financial Services Commission (the “Commission”).

Moneyval

3.             In line with the FATF’s expectation that every jurisdiction that is not a member of the FATF should be subject to the mutual evaluation and follow-up process of a FATF-Style Regional Body, Jersey is now covered by MONEYVAL’s rules of procedure.  One effect of these rules is that a “progress report” will be presented to, and discussed at, a plenary meeting of MONEYVAL in December 2013 (along with a similar report for Guernsey). 

4.             The Chief Minister will be aware that Jersey’s “progress report” will be based on information provided in a Questionnaire by the insular authorities in November 2013. That Questionnaire will be supplemented by a written analysis prepared by MONEYVAL’s Secretariat.  This written analysis will consider whether sufficient action has been taken by Jersey’s authorities to address recommendations made by the IMF in respect of the “core” FATF Recommendations[2]. 

5.             During the plenary meeting, which for Jersey is due to be held on 12 December 2013, representatives from the insular authorities will be asked questions about action taken to address other recommendations made by the IMF[3].   The island will be represented at this hearing by the Attorney General and the Director General of the Commission.

6.             If satisfied with the information that has been presented and action taken by Jersey, the plenary will be invited to adopt the progress report and Secretariat’s written analysis, which will then both be published. 

7.             This is in advance of a full follow up assessment of the island by Moneyval in the summer of 2014.

Recommendations

8.             Recommendations made by the IMF may be described as falling into a number of categories, including those that would requirement an amendment to:

                 The Proceeds of Crime (Jersey) Law 1999 (the “Proceeds of Crime Law”), Drug Trafficking Offences (Jersey) Law 1988 (the “Drug Trafficking Offences Law”) or Terrorism (Jersey) Law 2002 (the “Terrorism Law”); and

                 The Money Laundering (Jersey) Order 2008 (the “Money Laundering Order”).

9.             Legislation to deal with the first point in the form of the draft Proceeds of Crime and Terrorism (Miscellaneous Provisions) (Jersey) Law 201-  is currently anticipated to be lodged au greffe for debate by the States Assembly in early 2014 .

10.         This Order deals with those recommendations which fall into the second category listed.

 

 

 

 

Consultation

11.         In response to recommendations falling under paragraph 6 above, Consultation Paper No. 7 (2013)[4] was published on 19 July 2013 and changes are proposed to a number of important elements of Jersey’s customer due diligence (“CDD”) regime.

12.         In addition to the Consultation Paper, a Consultation seminar was held on 21 August 2013 by the Jersey Financial Services Commission which was attended by more than 100 members of industry.

13.         The consultation period closed on 23 August 2013 and a feedback paper[5] was published on 18 September 2013 summarising responses received. In total 18 responses were received to the consultation.

Change made by the Order

14.         The draft Order makes a number of changes to existing provisions in the Money Laundering Order and relevant AML/CFT Handbook, the Handbook for the Accountancy Sector and the Handbook for the Legal Sector (the “Three Handbooks”) that allow a relevant person to: (i) place reliance on identification measures already applied by a third party; and (ii) apply simplified identification measures in certain limited cases.

15.         Other changes are made to better enable the senior management of a relevant person to monitor AML/CFT risk. In particular:

 

  • Provision is be made for specific cases where verification of identity may be delayed; and
  • Information will be provided to senior management in order that it may be satisfied that there are appropriate policies and procedures in place to address the risk that is involved in delaying completion of identification measures.

 

  1. There are also proposals to:

 

i)        Set an end-date for the collection of missing information on customer relationships established before February 2008 (in most cases by December 2014).

ii)      Ensure that evidence of a customer’s identity that is held by a relevant person might be passed without legal impediment to another party, where reliance is placed by that other party on the evidence that is held by the relevant person.

 

iii)     Require policies and procedures to be applied to any financial services business carried on by a subsidiary of a relevant person that are consistent with those applied directly by its parent.

 

iv)    Require policies and procedures to identify and assess risks that may arise in relation to the development of new products, services, business practices and technology.

 

  1. The draft Order also included provisions to bring the treatment of secondary market trades of shares or units in a Jersey Collective Investment Scheme (“CIS”) more into line with other jurisdictions, including Guernsey. It proposed that identification measures in the Money Laundering Order should apply to a Jersey CIS only when creating shares or units, so long as any subsequent transfer in the ownership of those shares or units is effected through a stockbroker (or similar) that applies identification measures in line with, or equivalent to, the Money Laundering Order.

 

Financial and Manpower Considerations

 

  1. There are no financial or manpower implications for the States of Jersey arising from the making of the draft Order.

Recommendation

  1. It is recommended that the Chief Minister make the draft Order so that the recommendations of the IMF may be addressed in advance of the Moneyval plenary hearing.

Officer, Finance Industry Development, Financial Services

6 December 2013

 

 

 

 

 

 

 

 

1

 

[1]  www.jerseyfsc.org/pdf/Action_Plan_FATF_40+9_Recommendations_2011%2010%2031.pdf

[2]  Former Recommendations 1, 5, 10, 13 and Special Recommendations II and IV.

[3]  In particular, action required to comply with former “key” FATF Recommendations 3, 4, 23, 26, 35, 36, 40 and Special Recommendations I, III and V and to address partially compliant ratings (Former Recommendations 5, 9, 12, 14 and 16).

[4]  www.jerseyfsc.org/the_commission/general_information/press_releases/release302.asp

[5]  http://www.jerseyfsc.org/pdf/Feedback_to_CP_No_7_2013_ML_Order.pdf

 

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