banking

Who is caught

The Banking Business (Jersey) Law 1991 is the principal statute for banking in Jersey. It prohibits carrying on deposit-taking business in or from Jersey without registration by the Jersey Financial Services Commission (JFSC), and it is supported by Orders and a five-part Code of Practice for Deposit-taking Business. The JFSC supervises deposit-takers, and the Financial Services Commission (Jersey) Law 1998 confirms that persons registered under the Banking Business Law fall within the Commission's remit.

• Trigger for registration: Carrying on deposit-taking business in or from Jersey brings a person within scope; registration under the Banking Business Law is required before doing so.
• Registered persons: Deposit-taking businesses registered under the Banking Business Law, together with their controllers, directors, auditors, compliance officers and money laundering officers.
• Jersey incorporated banks (JIBs): Banks incorporated in Jersey, subject to the full Code and prudential reporting framework.
• Overseas incorporated banks (OIBs): Overseas-incorporated banks operating through a Jersey branch, including managed banks.
• Code coverage: The Code of Practice applies to all persons registered under Article 9 of the Banking Law to carry on deposit-taking business.
• Banking names: The Banking Business Law also restricts the use of certain banking names and descriptions by companies and businesses without the required permission.

Sources: Banking Business (Jersey) Law 1991 · Banking Business (Accounts, Auditors and Reports) (Jersey) Order 2023 · Financial Services Commission (Jersey) Law 1998 · Deposit-taking Business Code of Practice · Deposit-taking Business Code of Practice - Appointment of Auditor · Deposit-taking Business Code of Practice - Declaration of Compliance · Deposit-taking Business Code of Practice - Financial Statements · Deposit-taking Business Code of Practice - Prudential Returns

Key duties

The central duty is registration, followed by continuing notification, accounting, audit, financial reporting and prudential obligations. Several of these carry fixed deadlines, and much of the detail sits in the Banking Business (Accounts, Auditors and Reports) (Jersey) Order 2023 (the BAO) and the Code of Practice.

Registration and notifications

• Registration and display: A person must not carry on deposit-taking business without registration, and registered persons must display their registration certificate and any conditions.
• Control and management changes: Registered persons must notify the Commission of new or increased control, of changes of director or similar officer, and of acquisition of significant shareholdings.
• OIB management: Overseas incorporated banks must appoint a Commission-approved senior officer outside Jersey and notify the Commission within 14 days of any change of their Jersey principal manager or deputy.
• JIB approvals: Jersey incorporated banks must obtain Commission approval before establishing or acquiring an overseas office, branch or subsidiary, entering certain overseas joint ventures, or taking on an exposure to one person or connected group exceeding 25% of agreed capital resources.

Accounts, auditors and reports

• Auditor appointment: JIBs and OIBs must appoint an auditor (OIBs appoint both an OIB Auditor and a Jersey Branch Auditor), assess the auditor's skills, resources and experience, and notify the Commission before appointment; the Commission may object.
• Auditor termination: The registered person must notify the Commission without delay of an auditor's termination, and the outgoing auditor must send a statement or report to the Commission within 7 days of termination taking effect.
• Accounting records: Records must show and explain all transactions, be secured and backed up, and be retained for at least 10 years.
• Declaration of Compliance: After each accounting period a Declaration of Compliance must be prepared (signed by a director for a JIB, or the Jersey Branch principal manager for an OIB), addressing compliance with the Law, Orders, codes, records adequacy and AML/CFT requirements, with material failures and remedial measures detailed.
• Financial statements filing: JIBs must submit financial statements, directors' reports and auditor reports to the JFSC within 3 months of the accounting period end; OIBs within 4 months. Parent and ultimate parent audited statements are generally due within 4 months.

Prudential reporting and capital

• Quarterly returns: JIBs and OIBs must submit Prudential Returns as at 31 March, 30 June, 30 September and 31 December, within 20 working days of each date, and must notify the JFSC immediately if likely to miss a deadline.
• Capital and liquidity monitoring: Registered persons must maintain minimum capital and liquidity ratios, monitor capital and liquidity ratios daily, and notify the JFSC if limits are breached or buffers not maintained.
• Large exposures: JFSC approval must be obtained for any Large Exposure exceeding 25% of Agreed Capital Resources (an LE25).
• ICAAP: JIBs are expected to prepare and maintain an ICAAP document, conduct stress and reverse stress testing, maintain recovery plans, and obtain prior JFSC approval before using any Advanced Approach for Pillar 1 calculations.
• Deposit advertising: Deposit advertisements issued in or targeted at Jersey must comply with the content conditions in Schedule 2 of the Banking Business (General Provisions) (Jersey) Order 2002.

Conduct and cooperation

• Codes of practice: Registered persons must comply with the Code of Practice for Deposit-taking Business, including governance, a compliance function (Compliance Officer, MLRO and MLCO), and open and cooperative dealing with the JFSC.
• Auditor reporting: Auditors and other reporting persons must report directly and immediately to the Commission where they become aware of circumstances that could prejudice depositors, including suspected fraud, misappropriation or reckless management, without first informing the registered person.

Sources: Banking Business (Jersey) Law 1991 · Banking Business (General Provisions) (Jersey) Order 2002 · Banking Business (Accounts, Auditors and Reports) (Jersey) Order 2023 · Deposit-taking Business Code of Practice · Guidance Note: Pillar 2 in Jersey · Guidance Note: Prudential Reporting of Capital Ratios (Last revised 1 January 2025) · Guidance Note: Prudential Reporting of Liquidity Ratios · Deposit-taking Business Code of Practice - Appointment of Auditor · Deposit-taking Business Code of Practice - Declaration of Compliance · Deposit-taking Business Code of Practice - Financial Statements · Deposit-taking Business Code of Practice - Prudential Returns

Exemptions and carve-outs

The Banking Business (General Provisions) (Jersey) Order 2002 defines the transactions and persons excluded from the deposit-taking prohibition, and the BAO and Code allow the Commission to grant waivers.

• Exempt transactions: Certain dealings by charities, industrial and provident societies, advocates and solicitors, investment dealers, and trustees are excluded from the deposit-taking prohibition.
• Exempt persons: The Channel Islands Co-operative Society Limited and Community Savings & Credit Limited are exempt persons, each subject to specific conditions in Schedule 1 (for example deposit limits, auditor statements, and annual accounts).
• Waivers and variations: The JFSC may waive or vary requirements under Article 17 of the BAO on request, provided no customer or client is likely to be prejudiced; variations or exemptions from Code requirements may also be requested in writing.
• Banking inducement exception: Under the Investors (Prevention of Fraud) (Jersey) Law 1967, the lending-inducement fraud offence does not apply to inducements made to a person whose ordinary business includes banking, or other prescribed classes of business.

Sources: Banking Business (General Provisions) (Jersey) Order 2002 · Banking Business (Accounts, Auditors and Reports) (Jersey) Order 2023 · Investors (Prevention of Fraud) (Jersey) Law 1967 · Deposit-taking Business Code of Practice - Appointment of Auditor · Deposit-taking Business Code of Practice - Financial Statements · Deposit-taking Business Code of Practice - Prudential Returns

Enforcement and penalties

Enforcement runs along two tracks: a civil financial penalty regime under the Financial Services Commission (Jersey) Law 1998, and criminal offences under the Banking Business (Jersey) Law 1991 and its Orders. The Commission also holds intervention and supervisory powers.

Civil financial penalties

Articles 21A to 21G of the Financial Services Commission (Jersey) Law 1998 allow the Commission to impose civil financial penalties on registered persons, principal persons and key persons for specified contraventions, with notification, restriction, late payment surcharge and appeal provisions. The maximum amounts are set by the Financial Services Commission (Financial Penalties) (Jersey) Order 2015.

• Band 1: Repeated failure (more than once in 2 years) to make a required notification after written warning: capped at the lower of 4% of average annual turnover or £100,000 for a registered person, £5,000 for a principal person, and nil for a key person.
• Band 2: A contravention not in band 2A or 3 and not rectified in a reasonable Commission-set timeframe: capped at the lower of 6% of average annual turnover or £4,000,000 for a registered person, £100,000 for a principal person, and nil for a key person.
• Band 2A: A negligent contravention causing or risking specified harms: capped at the lower of 7% of average annual turnover or £4,000,000 for a registered person, £150,000 for a principal person, and £100,000 for a key person.
• Band 3: An intentional or reckless contravention causing or risking the same harms: capped at 8% of average annual turnover for a registered person, £250,000 for a principal person, and £200,000 for a key person.

Criminal offences and intervention

• Banking Law offences: The Banking Business (Jersey) Law 1991 provides for criminal liability for contraventions, including for officers, aiders and abettors, and knowingly or recklessly providing false or misleading information is an offence under Article 22 of the Law.
• BAO offences: Contravention of key provisions of the Banking Business (Accounts, Auditors and Reports) (Jersey) Order 2023 (appointment, auditor access, accounting records, accounting period notifications, misleading statements to auditors, termination reporting) is an offence liable to a fine.
• Appointment of a manager: Under the Banking Business (Appointment of Manager) (Jersey) Order 2008, made under the Banking Law, the Commission may appoint a manager to take over a deposit-taker's affairs in defined circumstances, including inadequate management, unregistered business, or serious AML or terrorist financing breaches.
• Supervisory consequences: Non-compliance with the Code may lead to increased supervision, conditions of registration, higher capital requirements, directions, financial penalties, public statements or revocation of registration.

Sources: Banking Business (Jersey) Law 1991 · Banking Business (Appointment of Manager) (Jersey) Order 2008 · Banking Business (Accounts, Auditors and Reports) (Jersey) Order 2023 · Financial Services Commission (Jersey) Law 1998 · Financial Services Commission (Financial Penalties) (Jersey) Order 2015 · Deposit-taking Business Code of Practice · Deposit-taking Business Code of Practice - Declaration of Compliance · Deposit-taking Business Code of Practice - Prudential Returns