MONEYVAL Jersey Report Industry Briefing 08 June 2016
08 June 2016 Jersey in a leading position
Agenda Welcome & Introduction Senator Ian Gorst Chief Minister Overview of Report John Harris Director General, JFSC Legislation & Recommendations George Pearmain Lead Policy Adviser Financial Crime, Government of Jersey Hamish Armstrong Financial Crime Policy, JFSC Robert MacRae QC HM Attorney General
Agenda National Risk Assessment Beneficial Ownership Panel Discussion and Q&A Closing Remarks Joe Moynihan Chief Officer Competition, Digital and Financial Services Innovation Colin Powell CBE International Affairs Adviser, Government of Jersey John Harris Hamish Armstrong Robert MacRae QC George Pearmain Dave Burmingham Detective Inspector JFCU, States of Jersey Police Senator Philip Ozouf Assistant Chief Minister: Financial Business Services, Competition, Digital & Innovation
Senator Ian Gorst Chief Minister
Introduction and Welcome Publication of the MONEYVAL Report marks the conclusion of an approximate two year process of detailed, independent, peer evaluation by the international community A very positive report for Jersey that places the Island in the top tier of global compliance concerning AML/CFT: Jersey has a mature and sophisticated regime for tackling money laundering and the financing of terrorism, as well as an internationally-recognised mechanism to ensure transparency of beneficial ownership information. Agreed to take on board the recommendations of the report and consider implementing change carefully
Introduction and Welcome However, the international goalposts are always in motion there is more work to be done to maintain our important leading position: Implementation of the 2012 FATF Recommendations Implications of the 4th Money Laundering Directive of the EU National Risk Assessment for ML/TF More legislation, guidance and policies will be forthcoming industry must remain alert to this change the volume of international factors that impact on Jersey is consistently increasing
Introduction and Welcome The government is committed to the injection of further resource to enhance financial crime investigation, prosecution, conviction and confiscation-working with relevant authorities This area needs to be addressed in line with consideration of the overall structure and effectiveness of financial crime investigation and prosecution A proud moment for Jersey - the Island s authorities, and Industry, should be commended for their work in this process
John Harris Director General JFSC
MONEYVAL Overview
MONEYVAL MONEYVAL: Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism From 1 January 2011 MONEYVAL has been an independent monitoring mechanism within the Council of Europe answerable directly to the Committee of Ministers
Aims and Focus Aim To ensure that its Member States have in place effective systems to counter money laundering and terrorist financing and comply with the relevant international standards in this matter Primary Focus To conduct evaluations of the AML/CFT systems of European Member States and make recommendations for their improvement Responsible for evaluating 28 Member States plus: Gibraltar, Guernsey, Israel, the Isle of Man, Jersey and The Holy See Taken on the role previously completed for Jersey by the IMF (2003 and 2009)
MONEYVAL Jersey Report: A Mammoth Task 110 individuals 300 + 1200 Report pages & annex October 2012 809 days 28 Supervised Persons individual trips to Strasbourg 33 35 meetings 5 Trade Associations 290+ documents
MONEYVAL Jersey Report: A History 1998 Edwards Report Proceeds of Crime (Jersey) Law Money Laundering (Jersey) Order IMF Report 1998 2009 2016 2001 Financial Services (Jersey) Law TCB Regulation 1999 2003 Terrorism (Jersey) Law 2003 2008 Money Laundering (Jersey) Order Non-Profit Organization (Jersey) Law and Order IMF Report 2008 2009 2008 2013 MONEYVAL Progress Report 2012 Jersey joins MONEYVAL Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2016 MONEYVAL Mutual Evaluation Report 2014 Proceeds of Crime and Terrorism (Miscellaneous Provisions) (Jersey) Law
MONEYVAL Press Release Jersey has a mature and sophisticated regime for tackling money laundering and the financing of terrorism, as well as an internationally-recognised mechanism to ensure transparency of beneficial ownership information. However, the number of money laundering convictions and confiscations is relatively low given the size and characteristics of the Island s financial sector. These are among the main findings in the latest report on the UK s Crown Dependency of Jersey from the Council of Europe s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (or MONEYVAL), adopted in December 2015. 24 May 2016
International Assessments: MONEYVAL 2015 Ratings Compliant 16 Largely compliant 32 Partially compliant 1 Non-compliant 0 Total 49 The technical deficiencies are comparatively minor and the evaluators welcome the speed with which the authorities responded to some of the evaluators concerns.
Main Findings/Action Points Various minor technical/scoping recommendations, such as: Definitions Capture of family trusts Review statutory exemptions Encouraging more prosecutions/convictions/ confiscations Restructuring/resourcing FIU Review regime and focus supervisory effort on key areas of risk
George Pearmain Lead Policy Adviser Financial Crime Government of Jersey
Government Policy & Legislative Recommendations Amendments to the Proceeds of Crime (Jersey) Law 1999 ( POCL ) Definition of criminal property Introduction of criminal lifestyle provisions Freezing and confiscation of assets held in a trust Introduction of non-conviction based confiscation regime Introduction of a regime where property under no consent regime can be confiscated Application made through an appropriate judicial procedure
Government Policy & Legislative Recommendations Beneficial Ownership Family Trusts All trustees, including those not regulated, should be brought under the POCL/MLO provisions Draft legislation lodged for debate in June 2016 P44/2016 - Draft Proceeds of Crime (Miscellaneous Amendments) (Jersey) Regulations 201- FIU structure, autonomy, resources A review of the current position and effectiveness of the FIU in Jersey will occur in conjunction with the LOD, the SOJP and with consultation with the JFSC Links between JFCU Operations and LOD to be examined as part of that review alongside the recommendation concerning investigations and prosecutions
Government Policy & Legislative Recommendations Typology reports The Financial Crime Strategy Group is encouraged to make additional efforts in order to ensure that reports identifying money laundering and terrorist financing trends and patterns are issued on a more frequent basis Effectiveness of the Jersey Regime The entire AML/CFT regime should be reviewed for effectiveness National Risk Assessment of Money Laundering and Terrorist Financing to be conducted in 2016/17 Jersey engaging the World Bank and its methodology to complete this risk assessment
Hamish Armstrong Financial Crime Policy JFSC
JFSC Recommendations Supervisory Regime Exemptions A small number of exempted activities where risk was not always proved to be low. Review the range of activities outside the scope of AML/CFT regime. CIS The MLO provides for discretion to refrain entirely from the application of certain CDD measures in defined circumstances particularly relevant in business relationships with collective investment schemes with a limited number of investors. Review application of simplified CDD measures where limited number of investors.
JFSC Recommendations Supervisory Regime MSBs Threshold for turnover of 300,000 is too high. Review threshold and associated supervision. Letter of wishes Financial institutions do not always request a copy of the trust deed / letter of wishes, or take any other appropriate measures. Ensure FIs request a copy of the trust deed / letter of wishes, or take any other appropriate measure.
JFSC Recommendations Supervisory Regime Focus supervision/ demonstrate effectiveness Real estate agents and auditors Awareness was generally low Increase awareness raising and/or guidance Control element of BO Some institutions limited the scope of beneficial ownership to controlling ownership interest Increase awareness raising/supervision Enhanced CDD measures Ensure that institutions effectively apply the recently amended ECDD measures
JFSC Recommendations Supervisory Regime Recommendation 9 Reliance Control element of BO Jurisdiction risk - too much reliance on Appendix B Uncertainty whether collection of evidence from third parties is Reliance Deliver evidence within two days (currently five) Exemptions used where Reliance may be more appropriate
Robert MacRae QC HM Attorney General Law Officers Department
Committed to Combatting Financial Crime Investigating and prosecuting Confiscating assets of convicted criminals Where appropriate: Sharing assets with third countries Using assets to benefit Jersey Recognise recommendations Increase number of court cases resulting in convictions and confiscations
Joe Moynihan Chief Officer Competition, Digital and Financial Services Innovation Government of Jersey
National Risk Assessment of Money Laundering and Terrorist Financing What is the NRA? Full and in-depth analysis as to the risks the jurisdiction faces from ML/TF involving Island authorities and industry Why conduct a NRA? Required by 2012 FATF R.1 Countries should identify, assess and understand the ML/TF risks for the country Others have recently conducted and published their NRA documents UK, USA, Spain, Italy, Isle of Man, Malta Who is involved in the NRA? Adopting the methodology of the World Bank they will come on-site with AML/CFT experts for two workshops NRA will require all Island agencies and specific industry involvement
National Risk Assessment of Money Laundering and Terrorist Financing When will the NRA occur? Due to occur mainly during 2017 but further information will be forthcoming over the coming months There will be a data collection exercise some through regulatory supervision, some separately and information will be given on what is required with suitable notice Why is the NRA important? The results of the NRA will set the risk based policies of the Island going forward when considering the AML/CFT regime Industry, on the front line, has the greatest understanding of the risks facing the Island
Colin Powell CBE International Affairs Adviser Government of Jersey
Beneficial Ownership The World Bank in their 2011 Report under the Stolen Assets Recovery Initiative (StAR) entitled The Puppet Masters How the Corrupt Use Legal Structures to Hide Stolen Assets and What to Do About It recognised at chapter 4.1 that the The Jersey Model should be upheld as an example of how access to beneficial ownership and control information can be implemented in a jurisdiction. MONEYVAL Report 24 May 2016
Beneficial Ownership Jersey s combination of a central register of the UBO with a high level of vetting/evaluation not found elsewhere and regulation of TCSPs of a standard found in few other jurisdictions has been widely recognised by international organisations and individual jurisdictions as placing Jersey in a leading position in meeting standard of beneficial ownership transparency. MONEYVAL Report 24 May 2016
Panel Discussion and Q&A Facilitator: John Harris Panel members: Hamish Armstrong Dave Burmingham Robert MacRae QC George Pearmain JFSC JFSC States of Jersey Police HM Attorney General Government of Jersey
Philip Ozouf Assistant Chief Minister Financial Business Services, Competition, Digital & Innovation Closing Remarks
Thank you MONEYVAL Jersey Report can be found at www.jerseyfsc.org