Feedback Paper to the Consultation on facilitating the adoption of Digital ID Systems (2022-11-30)

Summary

This is a joint JFSC and Government of Jersey feedback paper responding to a May 2022 consultation on facilitating adoption of Digital ID Systems by Jersey's financial services industry. It summarises the 34 responses received, reports strong support for clarifying the existing regime (Option 1) but significant concern about creating a new regulated category of Digital ID System Service Providers (Option 3), and sets out agreed next steps rather than imposing new binding rules itself.

• Option 1 (proceed): JFSC will make targeted clarifications to Section 4 of the AML/CFT Handbook and Government will amend the Money Laundering (Jersey) Order 2008 to confirm Digital ID Systems can satisfy CDD obligations, including enhancing the Article 1(2) definitions to cover Digital ID derived documents, information and records.
• Option 2 (partially proceed): Rather than creating a Jersey-specific accreditation framework now, Government will monitor emerging international technical standards (notably UK and other Crown Dependencies) before deciding whether to articulate formal technical standards for IDSPs.
• Option 3 (will not proceed at present): Creating a new supervised category of Digital ID System Service Provider is shelved for now due to polarised feedback, but remains under review as the sector evolves.
• Shared KYC Utility: No commitment to build a centralised Shared KYC Utility; the concept remains supported by some but hindered by interoperability, data protection and cyber security concerns.
• Collaboration: Digital Jersey and Jersey Finance, supported by JFSC and Government, will run educational outreach on Digital ID adoption under the Fintech.je banner from Q1 2023.

The paper itself does not create new legal requirements for firms; it commits the JFSC and Government to future Handbook guidance updates and an MLO amendment on a stated timeline, and firms should watch for those subsequent instruments rather than treat this feedback paper as directly binding.

Applies to

Supervised Persons, banks, trust company service providers, Digital ID System Service Providers (proposed category), identity service providers (IDSPs), virtual asset service providers, investment businesses

Deadlines

• Q4 2022: Quick, technical amendments to be made to guidance in Section 4 of the AML/CFT Handbook
• Q1 2023: Development of an outreach and engagement programme on Digital ID System adoption in Jersey (Jersey Finance/Digital Jersey)
• Q1 2023: Amendment to the Money Laundering (Jersey) Order 2008 by Government
• Q3 2023: Consideration of global standards relevant to IDSPs and preparation of a guidance note
• Q3 2023: Consideration of more substantial amendments to Section 4 of the AML/CFT Handbook