UK Laundering Law: Will Jersey Follow UK?

by Julien Morel, Jersey Evening Post

12 May 2004

This story is reproduced by kind permission of the Jersey Evening Post at http://www.thisisjersey.com

The UK has a new anti-money laundering law and Jersey must decide if it wants to follow suit.

Hoping to stimulate debate on this issue, law firm Carey Olsen recently held a seminar to brief finance industry representatives on latest developments in the UK - and the implications for Jersey.

The UK Proceeds of Crime Act became law on 1 March and although Jersey's 1998 law has the same name, there are significant differences

'In the past it's been fairly safe to assume that it is only a matter of time before Jersey replicates a UK law in full,' said Paul Sugden, a partner at the firm. 'But now we tend to look at the UK experience with a more critical eye and we don't necessarily adopt a one-stop shop approach.'

'The UK legislation, for instance, covers all crimes but the law in Jersey only applies to crimes that have a minimum sentence of a year or more in prison. But the result of removing that threshold in the UK has been an upsurge of suspicious transaction reports arriving at the National Criminal Intelligence Service, which has stretched their resources. We have to see what effect a similar quantum rise in reporting would have on the Joint Financial Crimes Unit should we extend our law.'

Another measure introduced in the UK act is the objective test for suspicious activity.

'At the moment the Jersey law is based on the subjective test - ie was anyone suspicious? This means that a valid defence for anyone charged with failing to report a suspicious financial activity is 'I was not suspicious so I didn't report it' but that is no longer acceptable in the UK.'

'The new objective test is based on whether a person had reasonable grounds to suspect that another was engaged in money laundering, so simply failing to be suspicious is no longer a defence. So that puts more emphasis on training and having the right systems in place to avoid any element of doubt. An important question for Jersey is do we want to take that step?'

The seminar was jointly held with London law firm Denton, Wilde and Sapte and partners from that firm outlined UK developments to the Jersey audience.

'There has been a huge increase in the amount of regulation and compliance around the globe and that has a direct effect on cost,' added Mr Sugden. 'A long running assumption has been that more legislation leads to more convictions which means less money laundering but there is a growing number of people questioning that approach.'

'Institutions are being asked to be unpaid policemen yet they also run the risk of prison if they get it wrong. There has to be an upside to society that outweighs the regulatory burden because you cannot push the cost of business above that of your competitors.'

'"Proportionally" and "risk-based assessment" are two phrases that reflect a new approach that is more focused and puts greater emphasis on quality rather than quantity. In holding this seminar we hope to stimulate debate on whether the Island adopts this approach or not.'

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