Jersey Financial Services Commission Launches Investigation Into Financial Institutions' Dealings With Public Figures

Amanda Banks, Tax-news.com, London

16 March 2001

Recent media reports of public figures attempting to conceal their assets in offshore accounts have led the Jersey Financial Services Commission (FSC) to launch an investigation into the Island's financial institutions and their dealings with all existing and future high profile customers. The investigation was particularly prompted by rumours that General Abacha, former president of Nigeria, could have been connected to some financial institutions in Jersey - although no accounts opened by Abacha himself have yet been identified on the island.

In a press release issued by the FSC, Director General Richard Pratt, said: 'The Commission has ordered an investigation into each of the Island institutions which are alleged to have handled Abacha money. These investigations continue. However, the Commission is now clear that we should develop and issue further general guidelines addressing issues that have already emerged. In respect of individual institutions, the Commission will ensure that any control weaknesses are rectified and will decide on what, if any, regulatory action to take in the light of its continuing investigation.'

The FSC says it has identified a clear need for Jersey's financial institutions to construct policies regarding the handling of accounts from public figures and their associates. The Commission stated: 'Where an institution establishes that it is dealing with a public figure or associates, it is vital that it should fully understand the validity and nature of the anticipated funds in the context of the position held by the public figure. Institutions should identify the source of wealth of public figures and the source of funds for large transactions. They should build a profile of expected account activity for public figures and monitor transactions so as to compare them with that profile in order to identify and report suspicious transactions.'

In addition the FSC intends to review its anti-money laundering guidance notes with the aim of accentuating the need to be aware of the source of funds and wealth of any high profile individual, public figure or high net worth client. The notes will also be amended to give further advice and guidance on the monitoring of transactions.

The FSC has also confirmed that it has worked closely with other regulatory bodies such as the UK's Financial Services Authority during its investigation and will continue to do so. To date, all the accounts known to have been opened by General Abacha were opened before the present "all serious crimes" anti money laundering legislation was in place.

Richard Pratt concluded: 'The Island's anti money laundering defences are sound but can never give a 100% guarantee against abuse. The Commission has taken action by ordering an investigation and identifying the issues that should be learned by the whole industry. We will continue the investigation (which may lead us to new financial institutions in Jersey) and then decide what further action to take. We already have powers of direction, powers to put conditions on licences of regulated institutions, powers to publish statements (name and shame) or powers to revoke licences. We will consider if any such action is justified when we have the full facts.'

The FSC is eager to maintain Jersey's international image as a reputable offshore finance centre and is concerned that reports regarding General Abacha's interest in the island could damage its reputation, stating: 'the use of the island's facilities by public figures carries a very real reputational risk to the Island and to any institution concerned. Some (although, of course, by no means all) such public figures may be seeking to use the island to conceal assets that have been acquired as a result of an abuse of the public position of the individual or individuals concerned.'

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