Feedback Paper on Consultation Paper No. 5 2023

Summary

This is a feedback paper issued by the JFSC summarising responses to Consultation Paper No. 5 of 2023, which proposed adding new and expanded guidance notes and one new Code of Practice to the AML/CFT/CPF Handbook. It reports on the 14 responses received, the JFSC's replies to specific points raised, and confirms that the resulting Handbook amendments took effect from 1 September 2023.

• DNFBPs: Addition of DNFBPs at Section 2.7 of the Handbook was not seen as negatively impacting respondents' businesses; existing statutory wording in paragraphs 115 to 117 was left unchanged.
• PEP declassification: New Code and guidance at Section 7.6 allow declassification of PEPs and prominent persons, but only on a case by case basis after completing a risk assessment, not automatically after a set period; additional guidance and links (Wolfsberg Group, FATF Recommendations 12 and 22) were added.
• Wire Transfer Regulations and VASPs: Guidance on terms and interpretation in Section 11 was confirmed as clear; further guidance on Wire Transfers and inclusion of VASPs is being developed and expected late Q3 or early Q4 2023.
• CDD source of origin guidance: Guidance at Sections 3.3.2, 3.3.3, 3.3.6 and 7.3 was refined; Section 3.3.2 moved into guidance, Section 3.3.3 clarified to apply where there is doubt or higher risk, and Supervised Persons are expected to assess the source of CDD obtained via third parties regardless of risk level, per Section 4.5.7.
• Life insurance and identification exemptions: Section 2.4 of the Handbook was clarified and amended to confirm the due diligence amendment is not limited to beneficiaries under a life policy.

The paper is primarily informational, reporting consultation outcomes and confirming Handbook wording changes rather than creating new standalone rules beyond those already reflected in the amended Handbook.

Key obligations

• Supervised Persons must complete a risk assessment and confirm no continuing ML/TF risk before declassifying a PEP or prominent person; declassification is discretionary, not automatic after expiry of the relevant period.
• Where CDD documentation is obtained from a third party rather than directly from the customer, Supervised Persons must assess the risks of not obtaining it directly, as required by Section 4.5.7 of the Handbook.
• Supervised Persons must apply the clarified wording at Section 3.3.3 requiring closer scrutiny where there is reason to doubt the accuracy or veracity of a statement or where higher risk factors are present.

Applies to

Trust Company Business (TCB) licence holders, Banking licence holders, Fund Services Business (FSB) licence holders, Designated Non-Financial Businesses and Professions (DNFBPs), Virtual Asset Service Providers (VASPs), Money Service Business (MSB) licence holders, General Insurance Mediation Business (GIMB) licence holders, Investment Business (IB) licence holders, Trust Company Service Providers (TCSPs), Supervised Persons generally

Deadlines

• 29 August 2023: Consultation period for Consultation Paper No. 5 2023 closed.
• 1 September 2023: Handbook amendments arising from the consultation take effect.
• late Q3/early Q4 2023: JFSC anticipates publishing additional guidance on Wire Transfers and the inclusion of VASPs.