Deposit-taking Business Code of Practice - Declaration of Compliance

Summary

This is one of five parts of the JFSC Code of Practice for Deposit-taking Business, setting out statutory and code requirements for the annual Declaration of Compliance that registered banks must produce under the Banking Business (Accounts, Auditors and Reports) (Jersey) Order 2023 (BAO). It applies separately to Jersey Incorporated Banks (JIBs) and Overseas Incorporated Banks (OIBs), with largely parallel requirements for each.

• Declaration content: Each accounting period, a JIB (signed by a director) or OIB (signed by its Jersey Branch principal manager) must produce a Declaration of Compliance stating whether it complied with the Banking Law, related Orders and codes, maintained proper accounting records and systems, and complied with AML/CFT legislation and guidance.
• Failures: If a relevant requirement has not been met, the Declaration must detail all material failures and the measures taken or planned to prevent repetition.
• Auditor involvement: The Declaration must be given to the JIB Auditor (or Branch Auditor for OIBs), who must produce a signed report addressing whether anything indicates the declaration was incorrect or misleading, taking into account work on the year-end Prudential Return and, for JIBs, the financial statements audit.
• Submission to JFSC: The auditor's report on the Declaration of Compliance must be submitted to the JFSC together with related financial statements, directors' report and other auditor reports (Prudential Return, financial statements, directors' report).
• Governance and documentation: Registered Persons must have robust, documented processes for producing the Declaration, assign clear responsibility for sign off and oversight, provide full supporting documentation to their auditor, instruct the auditor on specific review areas, assign responsibility for addressing auditor findings, and retain records as business records.
• Offence: Knowingly or recklessly providing false or misleading information in purported compliance is an offence under Article 22 of the Banking Law.
• Waivers: The JFSC may waive or vary requirements on request under Article 17 of the BAO, provided no customer or client is likely to be prejudiced.

The Code also references Basel Committee guidance on external audits of banks as relevant guidance for JIBs, and allows a single combined Declaration of Compliance to be produced across multiple similar Orders to avoid duplication, subject to a variance request. This part of the Banking Code has been effective since 23 February 2024 for all Registered Persons.

Key obligations

• A JIB must prepare a Declaration of Compliance, signed by a director, for each accounting period, covering compliance with the Banking Law, Orders, codes, accounting records/systems adequacy and AML/CFT requirements.
• An OIB must prepare an equivalent Declaration of Compliance, signed by the principal manager of its Jersey Branch, for each accounting period.
• If material failures exist, the Declaration must detail them and specify remedial measures taken or planned.
• A JIB must provide its JIB Auditor (and an OIB its Branch Auditor) with a copy of the Declaration of Compliance to enable preparation of an auditor's report.
• The auditor's report on the Declaration of Compliance, together with financial statements, directors' report and related auditor reports, must be provided to the JFSC.
• Registered Persons must maintain robust, documented processes for producing the Declaration, with clear responsibility for sign off and oversight.
• Registered Persons must provide full documentation (working papers, procedures, changes, compliance issues) to enable the auditor's review.
• Registered Persons must instruct their auditor to review specific matters (control framework adequacy, staff competence, documentation completeness, compliance monitoring/internal audit findings).
• Registered Persons must establish responsibility for addressing issues arising from the auditor's report and retain related records as business records.

Applies to

Jersey Incorporated Banks (JIBs), Overseas Incorporated Banks (OIBs), Registered Persons under the Banking Business (Jersey) Law 1991, JIB Auditors, OIB/Branch Auditors

Deadlines

• 23 February 2024: Effective date of the Declaration of Compliance Code for all Registered Persons.
• each accounting period: A JIB or OIB must prepare its Declaration of Compliance in relation to each accounting period.

Related documents

• This document is made under Banking Business (Jersey) Law 1991