Ethics and governance in the European Financial centers

Jersey Evening Post has reported that both Jersey and Guernsey have opposed the move, saying that to sign up to the EUSD before their competitors could damage the finance industry.

Jersey’s current position is that it will do so when everyone else does – when there is a ‘level playing field’ – but the report states that Jersey should get on with it, and calls on the UK to put pressure on other countries to sign up too.

A "level playing field" ? This is the concept that seems to have been launched by Luxembourg, you know the jurisdiction where economic and financial crime does not exist according to officials and bankers but was ranked number 2 on the Financial Secrecy Index. "The smooth functioning of the internal market should not be forgotten and we must ensure there is a level playing field for the principal financial centres.” , Luc Frieden said late October.

In 2008 the Island’s framework to counter money laundering and terrorist financing is to be the subject of a review by the International Monetary Fund. Jersey will be assessed against the international standards set by the Financial Action Task Force on Money Laundering (“FATF”). The amendments to this draft Law have been formulated to achieve a number of the criteria set out in the 40 Recommendations and 9 Special Recommendations of the FATF, against which Jersey will be assessed and also to address inconsistencies in the current operation of the Proceeds of Crime (Jersey) Law, 1999, (“POCL”) the Drug Trafficking Offences (Jersey) Law, 1988 (“DTOL”) and the Terrorism (Jersey) Law, 2002 (“TL”).

Read Amendment

Bob Sherwood today published in the Financial Times an interesting article relating to Jersey.

Read article

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Marty Sullivan' s latest report on Jersey is worth reading.

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The Proceeds of Crime (Substitution of Schedule 2) (Jersey) Regulations 200- (the “Regulations”) amend Schedule 2 so that it defines the sectors to which measures will apply in a way that is consistent with the UK’s implementation of the Third Money Laundering Directive. This is because it will be important for the Island to be able to demonstrate to the European Commission and to Member States of the EU that Jersey has applied measures that are equivalent to those set out in the Directive – in order to facilitate the continued access of Jersey businesses to EU markets.

The Regulations will apply for the first time to: certain activities of independent legal professionals; accountants, auditors, tax advisors, and providers of insolvency services; estate agents; and dealers in high value goods. The Regulations will not extend to casinos (including internet casinos) – since such activities are not permitted in Jersey and the Jersey Financial Services Commission is not aware of any Jersey companies conducting such activities outside Jersey. However, in line with the FATF Recommendations, Schedule 2 will be extended at a later date to cover such activities.

In line with the FATF Recommendations, Schedule 2 will no longer cover general insurance business, proprietary trading in instruments and securities, or the activity of providing credit references.

Schedule 2 has also been revised so as to exclude from its application a limited number of “low-risk” persons. These are persons that are conducting deposit-taking business, insurance business, or financial service business, which are covered by exemptions or exclusions under applicable regulatory legislation – where it is clear that there is little risk of money laundering activity occurring.

The measures that are to be applied to the additional sectors will be established through the Money Laundering (Jersey) Order 1999. An adequate period of time will be allowed in order to allow businesses to introduce such measures as will be necessary to comply with the Money Laundering (Jersey) Order 1999.

The Island’s framework to counter money laundering and terrorist financing is to be the subject of a review by the International Monetary Fund in 2008.


See document Lodged au Greffe on 24th September 2007 by the Minister for Treasury and Resources

The Minister agreed to lodge the draft Proceeds of Crime (Substitution of Schedule 2) (Jersey) Regulations 200- and instructed officers to make the necessary arrangements :

- To address the risk - identified internationally - that additional sectors are vulnerable to use in money laundering and terrorist financing.

- To implement international standards in Jersey - in preparation for the IMF assessment in 2008.

- To implement standards in a way that is consistent with the EU - in order to facilitate continued access of Jersey businesses to EU markets.

- To remove a number of business activities from the scope of Schedule 2 – on the basis that there is a low risk of money laundering.

See full report

The Handbook for the prevention and detection of money laundering and the financing of terrorism has been issued in final draft form (2 July 2007) and will become effective from 1 January 2008, providing regulated financial services businesses with a 6 month period to implement the requirements of the AML/CFT Handbook. The Money Laundering (Jersey) Order 2007 has yet to be issued in final draft form. As a result, regulated financial services businesses should in this interim period refer to the paraphrased statutory requirements contained in the AML/CFT Handbook. Once available, the final draft form of the Money Laundering (Jersey) Order 2007 will be published on this webpage. Any necessary amendments to the AML/CFT Handbook will be made at this time. It is also intended that the Money Laundering (Jersey) Order 2007 will be effective from 1 January 2008.

Know more

The Commission has yesterday published a paper to update industry on progress in finalising the Money Laundering (Jersey) Order 200- (“Order”) and Handbook for the Prevention and Detection of Money Laundering and the Financing of Terrorism (“Handbook”).

The paper sets out:

- a timetable for finalising the Order and Handbook;
- areas where the Commission expects regulated businesses to begin preparations; and
- the Commission’s policy in a number of key areas raised during the consultation process in 2006.

-Ends-

For further information please contact: -

Andrew Le Brun
Director, International & Policy
Jersey Financial Services Commission

Tel: + 44 (0) 1534 822065
Fax: + 44 (0) 1534 822001
Email: a.lebrun@jerseyfsc.org

Notes to Editors.

1. Consultation Paper No. 4 (Handbook for the prevention and detection of money laundering and the financing of terrorism) was published by the Commission in May 2006.

2. The Commission published a feedback paper on Consultation Paper No. 4 in November 2006.

3. See: http://www.jerseyfsc.org/the_commission/anti-money_laundering.

4. Implementation of the Order and Handbook is part of a series of measures that are underway in order to implement the Financial Action Task Force’s 40+9 Recommendations – compliance with which will be assessed by the International Monetary Fund in 2008.


See original press release

"Small states that do not observe international norms in terms of the regulation of economic activity and the suppression of drug trafficking, money laundering and other serious economic crime (including tax evasion) must of course expect an adverse reaction from the community of civilised nations. There must be effective regulation.."

See keynote address of Sir Philip Bailhache, Bailff of Jersey, at the Liechtenstein Dialogue on the future of Financial Markets

See biography

THE STATES assembled on Tuesday,
1st November 2005 at 9.30 a.m
(abstract)

Deputy S.C. Ferguson of St. Brelade of the President of the Homes Affairs Committee:

“Would the President inform members whether the Committee is satisfied that there is sufficient reference to the Honorary Police in the recent States of Jersey Police Plan; what efforts are being made, if any, to improve efficiencies in the Financial Crimes Unit; and whether the Committee has compiled any statistical information relating to road accident fatalities from drink driving and pure speeding and, if so, what this data concludes?”

Senator W. Kinnard (President of the Home Affairs Committee):

“The answer to the first part of the question is yes. In answer to the second part, the International Monetary Fund (IMF) inspection report of 2003 commented on the Joint Financial Crimes Unit in positive terms. Feedback, written and verbal, from other jurisdictions has been universally positive. The IT systems have been upgraded and the unit is very successful in seizing monies and assets. At the end of 2004, seizures and confiscations totalled £10.3 million of suspected drug money and £28 million of suspected proceeds of crime. The Committee is not aware of any negative evidence concerning the unit, but, to the contrary, all evidence points to a well-run and efficient operation which is vital to the security and reputation of the Island. The third part of the question refers to fatalities caused by drink driving and speeding. Due to the low number of fatalities in Jersey, it would not be possible to draw any statistical inference from the figures available. For example, there were 5 in 2004 and 3 in 2005. However, research in the United Kingdom would suggest that for 2003 17% of all road deaths occurred when someone was driving whilst over the legal limit for alcohol; and this compares to an estimate of 28% of fatalities being recorded on statistical returns as caused by excessive speed. Statistics can be complex and very hard to interpret in this area. It also needs to be remembered that, as offences of speeding and drink driving often occur at the same time, a single cause cannot always be identified. While crashes can occur at any speed, there is a great deal of evidence which demonstrates that the severity and outcome of a crash can be greatly influenced by speed. Research indicates that if a pedestrian is hit by a vehicle travelling at 30mph, the pedestrian is most likely to survive. If the pedestrian is hit by a car travelling at 40mph, the probable outcome is death. Public surveys conducted by both the States of Jersey Police and the Home Affairs Department continue to show strong concerns by Islanders concerning speeding vehicles. The Committee and the force feel that such concerns need to be responded to in very positive ways, and these are set out in the Police Plan.”

Deputy S.C. Ferguson:

“The Police Plan complains of needing extra officers. Given that at the recent Jersey Live there were 65 Honorary Police on duty compared with 40 States Police; given that data on suspicious transaction reporting is still submitted to the Financial Crimes Unit (FCU) on paper and then has to be re-input by 2 data-inputters; given that officers are seconded to the FCU with only normal policing experience and no specialised training; and given that a number of United Kingdom Police Authorities show ….. We have complaints of needing extra officers, but a very large tranche of manpower that is available to co-operate with the States Police is barely mentioned in a Police Plan. It is not realistic.”

Senator W. Kinnard:

“I am very happy to answer that, Sir. Both the Committee and the States of Jersey Police value very much the assistance and the input of the Honorary Police. In fact, the Police Plan, Sir, makes heavy reference to the rôle of the Honorary Police, particularly in the introduction by the Chief Officer. Just looking through it very quickly, there are 7 references to the Honorary Police either directly or inclusive of them just in that actual section of the report. But I think, Sir, one has to be mindful of the rôle of this particular report. It is actually a police plan for the States of Jersey Police. It sets the priorities for the States of Jersey Police, which have been set by the Committee. The subsequent sections from the introduction set out those targets. It is not within the remit of the Chief of Police, nor of the Home Affairs Committee, to set targets and objectives for the Honorary Police. Nor is there any indication, Sir, that such a course of action would be welcomed. Under the current arrangements ---”

The Deputy Bailiff:

“I think probably you have dealt then with the answer.”

Senator W. Kinnard:

“Okay, Sir, but basically there are strategic meetings going on between the Honorary Officers and the States of Jersey Police which set joint priorities, but this is not the place to set them down, Sir.”

The Deputy Bailiff:

“Now, Deputy, do you want to ask a question about the FCU?”

Deputy S.C. Ferguson:

“Yes. In the section on the Financial Crimes Unit, there is a statement that they require further manpower, but it is not available because of the overall limitations. Given that you have got certain things in the FCU like the data on suspicious transactions report comes in on paper and then has to be re-input by 2 data-inputters, which is not a way to run a database, and given that you do have officers seconded to the Financial Crimes Unit because, for instance, they are pregnant and things like this and they only have normal policing experience and there is no specialised training required, can the President really be satisfied with the degree of realism in the Police Plan?”

Senator W. Kinnard:

“As I mentioned earlier on, we have had no negative response to the rôle of the Financial Crimes Unit. I would say that the Deputy is mistaken. The officers involved in the Jersey Financial Crimes Unit are of a very broad range of experience, and some of them have experience as well from the finance industry. They all have proven investigative backgrounds and they have experience in taking complex cases through the judicial system and in handling intelligence. Sir, all of the staff in that unit are expected to undertake CID training, fraud training and the International Diploma in Anti-Money Laundering. Where other skills are required, Sir, of a particular specialist nature, and where a case is of such significance that it is felt that it should be led by the Attorney General, the Attorney General indeed heads that inquiry and engages any extra skills that may be required even from the private sector to work alongside the investigative officers. So, Sir, I do believe that the Unit works very well and very efficiently. I have mentioned that there is a new IT system and that Unit, like every other part of the States, Sir, is subject to the difficulties of having to operate a service with increasing demands upon it within limited resources.”

See source