Money Laundering: Jersey Business Warned Over Cayman Islands And Malta

Robert Lee, Tax-news.com, London

29 August 2000

Money laundering may be a secretive, underhand act, but Jersey has certainly made no secret of the fact that it is is getting tough on suspicious transactions on the island. There is a growing emphasis on the part of the island's authorities on combatting money laundering. Strong anti-money laundering laws regulating Jersey’s finance industry have doubled the number of suspicious transaction reports passed on to the Jersey police force, which is at the centre of the fight against financial crime.

Now the Jersey Financial Services Commission has issued new advice to its local finance industry in the form of an Anti-Money Laundering Guidance Update, which provides guidance to the industry on doing businesses with fellow offshore financial centres such as Russia (perhaps predictably) and Antigua and Barbuda. However, in this latest Update, Jersey is warning its financial institutions to also be wary of transactions with companies from the Cayman Islands and Malta because of concerns about money laundering.

The Jersey Financial Services Commission says that its warning on the Caymans and Malta follows the advice of the Financial Action Task Force (FATF), which in June published a list of 15 nations deemed to have inadequate counter-money laundering controls. The Commission says that Jersey's banks and financial businesses can no longer asssume that business introduced from the Cayman Islands and Malta has been subject to due diligence and "know your customer" procedures that are equivalent to those in Jersey and thus Jersey institutions should take it upon themselves to check that any business is legitimate before accepting it.

Jersey itself escaped inclusion on the FATF list of countries not complying with international efforts to stamp out money laundering and this latest move marks an attempt to distance itself from countries still not cooperating with the FATF. The Caymans appeared on the list and Malta is still under investigation. Jersey officials feared that inclusion on the list would have proved damaging to the island's economy.

Banks are increasingly wary about operating in jurisdictions which are thought to be soft on money laundering. The US treasury has already issued advisories to American financial institutions urging them to exercise caution when dealing with countries "named and shamed" by the FATF.

Commenting on the Update, Richard Pratt, Director General of the Commission, stated: 'Jersey is determined to protect itself from money laundering. This Update, the first of a series, represents further guidance to the industry. This determination has kept us off the FATF non co-operating jurisdiction list. This notice shows how damaging inclusion would have been. The international regulatory and law enforcement agencies remain interested in what Jersey does. To maintain our reputation and keep off the FATF non co-operative list, we must and will press on with our reform agenda, such as regulation of trust companies and company service providers. We will keep abreast of the latest thinking of our international colleagues about the fight against crime.'

A newsletter highlighting significant initiatives and changes to anti-money laundering practices in Jersey can be found on the Jersey Financial Services Commission's website at www.jerseyfsc.org.

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