Feedback Paper on Consultation Paper No. 3 2020: Revision to the AML/CFT Handbooks

Summary

This is a feedback paper summarising industry responses to Consultation Paper No. 3 2020, which proposed revisions to Jersey's AML/CFT Handbooks (covering regulated financial services businesses, accountancy, legal, and estate agents/high value dealers sectors) to implement the 2012 FATF Recommendations. It confirms which proposals the JFSC will adopt, in some cases with amended wording in response to feedback, and sets an effective date of 31 May 2021 for the changes.

• Business risk assessment: A new Code of Practice requires a relevant person to maintain policies and procedures enabling it to make its business risk assessment available to the JFSC on request.
• Customer due diligence: Guidance in Section 4 of the Main Handbook will be amended so that identifying and verifying a legal person or arrangement includes obtaining the powers that regulate and bind it and the names of persons in senior management positions.
• Reliance on third parties (timeframe): The five-working-day period for obtaining reliance/CDD evidence from obliged persons is shortened: evidence provided within two working days is treated as without delay, evidence after five working days is not, and evidence provided between two and five days requires the relevant person to justify why this still constitutes provision without delay based on its client base. Firms must also hold data on instances taking longer than two working days.
• Reliance risk factors: A new factor is added to Section 5.1.1 guidance: the risks posed by the country or territory in which the obliged person is based, referencing Section 3.3.4.1 of the Handbook.
• Equivalent jurisdictions: The Appendix B list of equivalent countries and territories will be removed and replaced with guidance and links, requiring relevant persons to conduct and be able to demonstrate their own equivalence assessment (Section 1.7.2/1.7.3).
• Handbook consolidation: As a longer-term measure, the JFSC will work toward merging the four sector AML/CFT Handbooks into the Main Handbook structure, with sector-specific requirements forming separate chapters, at a future date.

The amended wording is intended to be published by the JFSC around 1 April 2021, with the revised requirements becoming effective on 31 May 2021 to give industry time to update procedures.

Key obligations

• Relevant persons must maintain policies and procedures enabling them to make their business risk assessment available to the JFSC upon request.
• Relevant persons must identify and verify legal persons or arrangements by obtaining the powers that regulate and bind them and the names of persons holding senior management positions.
• Relevant persons must obtain reliance/CDD evidence from obliged persons within two working days to be treated as provided without delay, must treat evidence provided after five working days as not without delay, and if provided between two and five days must be able to justify this based on the nature of their client base.
• Relevant persons must hold data on the number of instances where evidence took longer than two working days (but no more than five working days) to obtain.
• Relevant persons and DNFBPs must conduct and be able to demonstrate their own assessment of whether a country or territory is compliant or largely compliant with relevant FATF Recommendations, rather than relying on the Appendix B list.

Applies to

relevant persons carrying on financial services business under Schedule 2 of the Proceeds of Crime (Jersey) Law 1999, Designated Non-Financial Businesses and Professions (DNFBPs), accountancy sector businesses, legal sector businesses, estate agents and high value dealers, banks, trust company businesses, investment/fund services businesses

Deadlines

• 31 May 2021: Amendments to the AML/CFT Handbooks (BRA availability, CDD guidance, reliance evidence timeframes, Appendix B changes) become effective.
• 1 April 2021: JFSC aims to publish the final wording of the revised AML/CFT Handbooks.
• 31 August 2020: Consultation period for Consultation Paper No. 3 2020 closed (informational, not a forward obligation).