Feedback on consultation on AML/CFT scope exemptions (2022-02)

Summary

This is the JFSC and Government of Jersey's feedback paper responding to a December 2021 consultation on reforming Jersey's AML/CFT scope exemptions regime. It summarises the 13 responses received, explains how the proposals have been revised, and sets out next steps rather than imposing immediate binding requirements. The stated aim is to separate the scope of AML/CFT obligations from conduct-of-business and prudential regulation and to align Schedule 2 of the Proceeds of Crime (Jersey) Law 1999 with FATF definitions of Financial Institutions, DNFBPs and Virtual Asset Service Providers.

• Recast Schedule 2: Removes direct links between AML/CFT scope and conduct/prudential regimes, adopting FATF-based definitions for FI, DNFBP and VASP activities.
• Exemption criteria: Future AML/CFT scope exemptions will only be granted where a demonstrably low risk of money laundering or terrorist financing is established under FATF Recommendation 1 criteria, by Ministerial Order.
• Registration triggers: AML/CFT registration under the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008 will depend on whether an activity is within the recast Schedule 2, carried on as a business, and undertaken in or from Jersey.
• Virtual assets: The term virtual currency is replaced with virtual asset, aligned to the FATF definition, in the Amending Law.
• Phase 2 work: Government and JFSC will develop secondary legislation, guidelines, transitional provisions and further risk-based exemption assessments, in consultation with industry.
• Legislative process: The draft Proceeds of Crime (Amendment No. 6) (Jersey) Law 202- is to be lodged for Scrutiny and States Assembly debate, then Privy Council sanction, but will not come into force until phase 2 consequential and transitional Regulations are completed.

No new AML/CFT obligations take effect from this feedback paper itself. It confirms the direction of travel for a future amending law and secondary legislation, with full effect not expected until the end of Q2 2023, and invites continued industry engagement during phase 2.

Applies to

Financial Institutions (FI), Designated Non-Financial Businesses and Professions (DNFBP), Virtual Asset Service Providers (VASP), Fund Services Business (FSB) licence holders, Trust Company Business (TCB) licence holders, Private Trust Company Business, Investment Business (IB)

Deadlines

• February 2022: Amending Law to be lodged for Scrutiny consideration and States Assembly debate.
• first quarter of 2022: Amending Law expected to progress to the Privy Council, assuming it passes Scrutiny and the States Assembly.
• end of Q2 2023: Full effect of the AML/CFT scope exemption amendments expected to be felt, following completion of phase 2 work.