Ethics and governance in the European Financial centers

The Jersey Financial Services Commission recently added the Cayman Islands to its list of countries and territories considered to have an equivalent anti-money laundering framework.

The move is being seen by the Cayman Islands Monetary Authority as being of significant benefit to Cayman-based financial institutions and their clients which do business with financial institutions in Jersey.

The recognition allows Jersey's customer identification procedures to be satisfied if the client has met Cayman's customer identification requirements. This potentially saves time and resources that would otherwise have to be spent processing and supplying duplicate know-your-customer documentation to Jersey.

Jersey's anti-money laundering legislation and guidance provide in certain circumstances for a financial services business to place reliance on another institution to conduct customer identification procedures, where the institution is subject to obligations equivalent to those in Jersey, and where an overseas regulatory authority supervises the institution.

The listing of Cayman comes after months of discussion between the Cayman Islands Monetary Authority (CIMA) and its Jersey counterpart, as well as CIMA's lobbying at international forums such as the Overseas Group of Banking Supervisors for reciprocal recognition of equivalent anti-money laundering/counter terrorist financing (AML/CFT) frameworks among jurisdictions.

"We are pleased that Jersey has now added us to its list. The issue of equivalency listings relating to AML/CFT regimes is something CIMA has been concerned about for some time," commented CIMA Managing Director Cindy Scotland.

"We continue to engage in bilateral negotiations with regulators in countries where Cayman is not currently listed as having equivalent AML/CFT regimes," she added.

Mrs Scotland further explained that collaboration between CIMA and the Jersey Financial Services Commission was being further extended through a memorandum of understanding on information exchange and cooperation, which has been approved by the Cabinet and is now being finalised


Source : Amanda Banks, Tax-News.com, London 16 August 2006

As regards money-laundering, Article 218.1 of Monaco's Penal Code states that "any person who knowingly, in any manner whatsoever, for himself or for another person, acquires movable or real assets by directly or indirectly using assets or funds of unlawful origin or knowingly possesses or uses such assets", and "any person who knowingly assists any transaction to transfer, invest, conceal or convert assets or funds of unlawful origin" is liable to imprisonment for five to ten years.
Under Article 218.1, paragraphs 2 and 3, any person who attempts to commit the abovementioned offences or conspires with others with a view to doing so is liable to the same penalty.
The offences referred to at Article 218 of Monaco's Penal Code are constituted even if the offence from which the laundered funds derive was committed in another country, provided that it is a criminal offence there.
Attempt, conspiracy or complicity with a view to committing the abovementioned offences are also punishable under Article 218.1 of Monaco's Penal Code.
If the perpetrator of the money-laundering offence acts as a member of a criminal organisation, takes part in other international organised criminal activities, occupies a public office that helps him to commit the offence, takes part in other unlawful activities facilitated by perpetration of the offence, involves minors or has been convicted of a money-laundering offence by a foreign court, that is deemed to constitute an aggravating circumstance in Monegasque law and is punishable by a heavier sentence (Article 218.2).
Article 219 provides for the confiscation of assets and funds of unlawful origin and sets out the conditions of confiscation.

The word "Kowingly" is difficullt to prove for prosecuting authorities. Professionals may deliberately not ask questions as explained in a study from the United Nations that is still up to date in the issues that are addressed :
"Many lawyers, accountants and bankers are (often unselfconsciously) adept at not asking questions that would require them to refuse business or even to report their clients or potential clients to the authorities. But a major component of the motivation for crime is also the expected probability and scale of reward: the reverse side of this is the expectation (if contemplated) of prevention and/or salient punishment. Any form of crime for economic gain can have its relative attractiveness rating altered significantly by changes in detection and sanction levels both for it and for other crimes such as narcotics sales." (See study "Financial havens, banking secrecy and money laundering", Double issue 34 and 35 of the Crime Prevention and Criminal Justice Newsletter, Issue 8 of the UNDCP Technical Series)