Jersey Issues New Money Laundering Regulation

by Robin Pilgrim, LawAndTax-News.com, London

12 May 2006

On Wednesday the Jersey Financial Services Commission published a consultation paper on a proposed new Money Laundering (Jersey) Order and accompanying Handbook for the Prevention and Detection of Money Laundering and Terrorist Financing, to replace the existing Guidance Notes for the Finance Sector.

The purpose of the consultation paper is to convey proposals to update Jersey’s measures to combat money laundering and terrorist financing so that these are consistent with certain key elements of the revised Financial Action Task Force (“FATF”) Recommendations on Money Laundering and Terrorist Financing.

The FSC says the proposals are consistent with Jersey’s commitment to the implementation of international standards to combat money laundering and terrorist financing.

The draft Money Laundering Order and Handbook propose a number of important changes. In particular:

• A risk-based approach to customer due diligence is set out, that permits reduced or simplified measures in the case of lower risk relationships, and requires enhanced customer due diligence in the case of higher risk relationships.
• Much more emphasis is placed on customer due diligence measures other than identification and verification of identity, and, in particular, on ongoing monitoring of unusual, complex, and higher risk activity and transactions.
• More customer friendly ways of verifying the identity of applicants for business or customers, including scope for greater reliance on a single document to verify identity in lower risk circumstances, for example, a passport.
• Measures to guard against the financial exclusion of Jersey residents have been clarified. In particular, in the case of a lower risk minor, whose parent or guardian is unable to provide standard documentation to verify the minor’s identity, identity may be verified through use of the minor’s birth certificate.
• The responsibilities of senior management in preventing and detecting money laundering are also emphasised as part of a section addressing corporate governance.

In addition, the consultation paper highlights that the FATF Recommendations require the extension of measures to combat money laundering and terrorist financing to non-financial businesses and professions, and to include certain activities conducted by lawyers, accountants and estate agents, and the sale of high value goods for cash. The paper considers how Jersey might address this requirement.

David Carse, Director General of the Commission, said: “These proposals are intended to enable Jersey to meet its international obligations, in line with the standards established by the Financial Action Task Force, to combat money laundering and terrorist financing. The proposals highlight the importance of a risk based approach to combating money laundering and terrorist financing, which is intended to focus resources on higher risk customers, whilst at the same time easing the burden on other customers.”

The full text of the Jersey Financial Services Commission's consultation on a proposed new Money Laundering Order can be found in the Tax News Resources section.

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