Draft Money Laundering (Amendment) (Jersey) Order 2008.

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A decision made (13/02/2008) regarding: Draft Money Laundering (Amendment) (Jersey) Order 2008.

Decision Reference: MD-TR-2008-0018
Decision Summary Title:	Draft Money Laundering (Amendment) (Jersey) Order 2008		Date of Decision Summary:	12 February 2008
Decision Summary Author:	Andrew Le Brun		Decision Summary: Public or Exempt?	Public
Type of Report: Oral or Written?	Written		Person Giving Oral Report:	N/A
Written Report Title:	Draft Money Laundering (Amendment) (Jersey) Order 200-		Date of Written Report:	12 February 2008
Written Report Author:	Andrew Le Brun		Written Report : Public or Exempt?	Public
Subject: Amendment to the Money Laundering (Jersey) Order 2008.
Decision(s): The Minister made the Money Laundering (Amendment) (Jersey) Order 2008 and agreed that it should come into force on 19 February 2008.
Reason(s) for Decision: To make changes that are consequential to the coming into force of the Proceeds of Crime (Substitution of Schedule 2) (Jersey) Regulations 2008. To modify the way that customer due diligence procedures will apply to business relationships established under the Money Laundering (Jersey) Order 1999 and to expressly provide for the application of record-keeping requirements to such relationships.
Resource Implications: There are no financial or manpower implications for the States.
Action required: To notify the Publications Editor, States Greffe, immediately the Order is made so as to facilitate notification of the Order to the States.
Signature:		Position: Senator Terry Le Sueur, Minister for Treasury and Resources
Date Signed: 13 February 2008		Date of Decision: 13 February 2008

Draft Money Laundering (Amendment) (Jersey) Order 2008.

Briefing for the Minister, Treasury & Resources

Draft Money Laundering (Amendment) (Jersey) Order 200-

Introduction

The purpose of this briefing note is to provide a basis for the Minister for Treasury & Resources to approve the Money Laundering (Amendment) (Jersey) Order 200- (the “amending Order”).

Proposals

The amending Order makes a number of changes to the Money Laundering (Jersey) Order 2008 (the “principal Order”) that are consequential to agreement by the States of the draft Proceeds of Crime (Substitution of Schedule 2) (Jersey) Regulations 200- (the “Regulations”). These Regulations are due to be considered by the States at its sitting on 12 February 2008.

The amending Order also modifies the way that customer due diligence procedures will apply to business relationships established under the Money Laundering (Jersey) Order 1999 (“1999 Order”) and expressly provides for the application of record-keeping requirements to such relationships. The 1999 Order was revoked by the principal Order.

Changes that are consequential to the Regulations

Article 3 of the amending Order introduces a definition for a “one-off” transaction that is conducted by a person operating a casino business. This is any transaction amounting to €3,000 or more carried out in the course of operating a casino1.

Article 4 of the amending Order modifies the application of customer due diligence procedures to business relationships in existence before 19 February 2008. Identification procedures (defined in Article 3 of the principal Order) are to be applied on the basis of an assessment of money laundering risk - so that procedures are applied first of all to “higher risk” relationships. Where documents, data, or information is collected under such procedures, then it will also be a requirement to keep such documents, data, or information up to date and relevant. In any event, identification procedures must be applied where there is suspicion of money laundering.

Article 5 of the amending Order clarifies which persons are not to be required to terminate a business relationship when it is not possible to carry out identification procedures. The special provisions will apply to lawyers (when providing a service in respect of certain financial or immovable property transactions) and accountants – but only where legal privilege applies.

Article 6 of the amending Order introduces a provision for simplified due diligence to be conducted by a lawyer (when providing a service in respect of immovable property transactions) or estate agent where a business relationship or one-off transaction is in respect of a housing contract to be passed before the Royal Court. This is because such a business relationship or one-off transaction is considered to present a lower risk of money laundering, and there will be no requirement to verify the information that is collected under identification procedures.

Article 10 of the amending Order provides that, where a person that is subject to the principal Order is a lawyer (when providing a service in respect of certain financial or immovable property transactions) or accountant, then the reporting procedures that it must apply under Article 21 of the principal Order need not require a report to be made to the Joint Financial Crimes Unit - but only where legal privilege applies.

Article 11 of the amending Order has the effect of delaying the application of the principal Order to lawyers (when providing a service in respect of certain financial or immovable property transactions) and tax advisers - until 1 May 2008. This is at the specific request of a sub-committee of the Law Society of Jersey, which has highlighted the significant changes that are proposed to the tax regime in the UK, in particular in relation to UK resident non-domiciliaries. Trust company business clients will be undergoing significant restructuring on a number of their clients, and they, and in turn the lawyers whose advise trust companies, will be extremely busy with that client work up to and including 5 April 2008. The Commission is anxious to ensure that new requirements are not introduced at such a critical time for the trust company business sector.

Changes to clarify the application of customer due diligence and record-keeping requirements to relationships established under the 1999 Order

Application of the principal Order to relationships existing before 4 February 2008 is also to be clarified.

Article 4 of the amending Order modifies the way in which customer due diligence procedures will apply to business relationships in existence before 4 February 2008. Article 13 of the principal Order is to be revised so that it is clear that:

the timing of identification procedures on business relationships will have regard to the risk of money laundering, and, in any event, must be conducted where there is a risk of money laundering; and

there is a requirement to ensure that documents, data or information obtained under identification procedures maintained under the Money Laundering (Jersey) Order 1999 (and which are held on 19 February 2008) are to be kept up to date and relevant.

Article 7 of the amending Order provides that the record-keeping requirements that are set out in Article 19 of the principal Order will continue to apply to a person that has conducted financial services business, but which no longer does so.

Articles 8 and 9 of the amending Order provide that records that were previously held under the Money Laundering (Jersey) Order 1999 must continue to be held under the principal Order (where those records are held on 19 February 2008).

Financial/ manpower implications

There are no financial or manpower implications for the States.

1 Whilst it is not legal to operate a casino in Jersey, it is necessary to provide for such a definition in order to cover the activities of any Jersey companies outside the Island and to anticipate the use of services providers in Jersey for disaster recovery and back-up purposes.