Follow-on consultation on AML/CFT scope exemptions (2022-09-14)

Summary

This is a JFSC consultation paper (comments due 14 October 2022) that follows up on a December 2021 consultation on aligning Jersey's AML/CFT registration regime with the 2012 FATF Recommendations. It sets out draft legislative amendments, interpretive guidelines and new Codes of Practice needed to bring the already-adopted Proceeds of Crime (Amendment No. 6) (Jersey) Law 2022 into force, expected around January 2023.

• Legislative changes: Proposed consequential amendments to the POCL, the Supervisory Bodies Law (SBJL), the Money Laundering Order and the Financial Services (Jersey) Law 1998 to recast Schedule 2 so AML/CFT scope mirrors the FATF financial institution, DNFBP and VASP definitions, delinking AML/CFT scope from conduct of business/prudential regulation.
• New registrant category - PESPs: Previously Exempt Supervised Persons (individuals/organisations currently outside AML/CFT scope or scope-exempt from registration) will become subject to AML/CFT obligations for the first time and will need to register with the JFSC.
• New registrant category - DSPs: A new Designated Service Provider (DSP) class of FSJL business is proposed, covering regulated service providers who support PESPs (their 'DSP Direct Customers') in meeting AML/CFT obligations; new Codes of Practice would apply to DSPs under the Trust Company Business and Fund Services Business regimes and a new Handbook section 18.
• Guidelines and self-assessment: Draft Guidelines on interpretation under Article 36 POCL (Appendix A) are proposed to help businesses determine whether they fall within the recast Schedule 2, together with an expectation that firms document their scope conclusions.
• Registration process: Registration for PESPs and DSPs is proposed to run through the myJFSC portal, with different processes depending on whether a PESP receives services from a DSP.

The paper is a request for industry feedback, structured around 14 numbered questions, and does not itself create binding rules; the underlying Amending Law has already been adopted by the States Assembly but is not yet in force. It affects financial institutions, DNFBPs, VASPs, Schedule 2 businesses, trust company business and fund services business providers, and in particular currently-unregistered PESPs and prospective DSPs.

Key obligations

• Respond to the consultation questions in Section 7 by 14 October 2022 (to the JFSC directly, or via Jersey Finance Limited for a collated industry response)
• Once the Amending Law and related instruments come into force, previously exempt supervised persons (PESPs) will need to register with the JFSC during the six month transitional period expected to begin January 2023
• Businesses will be expected to determine and document whether their activities fall within the recast Schedule 2 using the proposed Guidelines on interpretation
• Prospective Designated Service Providers (DSPs) will need to register as such under the FSJL and comply with new Codes of Practice and Handbook section 18 obligations once the regime takes effect

Applies to

Previously Exempt Supervised Persons (PESPs), Designated Service Providers (DSPs), Schedule 2 businesses, Trust Company Business, Fund Services Business, Financial Institutions, Designated Non-Financial Businesses and Professions (DNFBPs), Virtual Asset Service Providers (VASPs), Jersey Private Funds

Deadlines

• 14 October 2022: Deadline for submitting consultation responses to the JFSC or, for a collated industry response, to Jersey Finance Limited
• six month period expected to commence in January 2023: Transitional period during which PESPs and DSPs will be required to register with the JFSC once the Amending Law and related instruments come into force
• anticipated January 2023: Expected commencement date of the Proceeds of Crime (Amendment No. 6) (Jersey) Law 2022 and related Amending Order and Regulations