Andrew Le Brun Director Policy & Legal · Jersey Financial Services Commission Jersey Financial Services Commission Andrew Le Brun Director Policy & Legal

Jersey Financial Services Commission

Jersey Financial ServicesCommission

Andrew Le Brun

Director

Policy & Legal



International Initiatives


FATF

• Possible counter-measures against

Nigeria and Ukraine

• Interpretative Note on wire transfers

(SR VII)

• Regulation of money transmitters (SR

VI)

• Review of 40 Recommendations


Possible counter-measures

• Decision expected 15 December

2002

• Measures?

• Caution on entering into business?

• Full scrutiny of transactions?

• Presumption of “suspicion”?


Wire transfers

• Interpretative Note to address:

• Scope of SR VII

• Exemptions (e.g. domestic transfers)

• Originator information

• Increased due diligence


Money transmitters

• SR VI

• Proposal to regulate together with

bureaux de change and cheque cashing

under Financial Services (Jersey) Law

• Codes of Practice

• Impact on banks, Post Office, travel

agents, and hotels


Revision to 40Recommendations

• Consultation paper issued May

2002

• Commission response with JFIA

• Agreement expected on revision

in June 2003



• Consultation paper:

• Acknowledges that an entity may rely on a

third party to perform elements of CDD

process under certain circumstances

• Anticipates progressive programme

• Recognises limited circumstances in which

it will not be necessary to “drill down” to

intermediary’s customers



• Commission’s response:

• Extend definition of “financial institution”

to include trust and company service

providers

• Establish proper basis for determining

which countries follow FATF 40

• Provide guidance on basis for establishing

other parties’ CDD procedures



• JFIA position

• Extend concessions to those businesses

that are monitored or supervised for

compliance with AML obligations (but not

“regulated”)

• Permit certification as alternative to

requiring duplicate documentation to be

submitted (to accepting person)


Basel Committee

• CDD paper recognised as agreed

standard in September 2002 by close to

120 banking regulators

• Adoption of CDD standards essential

part of banks’ risk management, and

needed to safeguard confidence and

integrity of banking system


Basel Committee

• CDD paper to provide benchmark for

all supervisors to proceed with work of

designing or improving national

supervisory practice

• CDD acknowledged as prudential

responsibility

• Self assessment encouraged


Basel Committee• Requires “drill-down” to underlying

principals, including trust beneficiaries

• Acknowledges that an entity may rely on a

third party to perform elements of CDD

process under certain circumstances

• Anticipates progressive programme

• Recognises limited circumstances in which

it will not be necessary to “drill down” to

intermediary’s customers


IMF

• Anti-Money Laundering and

Combating the Financing of Terrorism

Methodology developed

• Based on FATF 40+8, UN Security

Council Resolutions, international

conventions, international supervisory

standards, and Egmont Statement


IMF

• Addresses:

• Criminal justice measures and

international co-operation

• Preventative measures for financial

institutions


IMF

• Sets standards for FIU:

• FIU to have access to financial information

held by reporting parties to assist in

analysis of financial transactions

• FIU to have access to financial and

administrative information


EU Second ML Directive

• Wider range of predicate offences (all

serious crimes)

• Obligations of Directive extended to

“vulnerable” activities and professions,

including lawyers, auditors, real estate

agents, and dealers in high value goods


EU Second ML Directive

• Member States to implement by

15 June 2003


UK Treasury and DTI

• Consulting on disclosure of

beneficial ownership of unlisted

companies

• Considered as part of fight against

international organised crime

• Five options


UK Treasury and DTI

• Regulatory Impact Assessment

favours:

• duty to report ownership (greater than 3

per cent) to Companies House;

• duty to report subsequent changes (at least

one percentage point) as they occur; and

• placing details on a public register


Switzerland

• Existing requirement to identify

beneficial ownership, including

“collective accounts”

• IMF has now recommended that

identity of beneficial owners be

verified (June 2002)


Switzerland

• SFBC Money Laundering Ordinance

from mid-2003

• Additional CDD on higher risk accounts

• Mandated used of electronic transaction

monitoring systems

• Global monitoring of reputational risks


International Initiatives


Legislative and regulatorychanges


Timetable

• Jan/ Feb 2003: accelerated changes to

legislation and regulatory Codes

• March 2003: publication of

consultation paper, draft Guidance

Notes, and draft Order

• 2003: consultation on amendments to

primary legislation


Accelerated changes

• Amendment to Second Schedule to

Proceeds of Crime (Jersey)

Law 1999

• Reference to Financial Services (Jersey)

Law 1998

• Deletion of references to trust and

company service activities


Accelerated changes

• Money Laundering (Jersey) Order 1999

• Additional internal controls to forestall

and prevent money laundering (Article

2(1)(a)(iv))

• Requirement to renew identification when

doubts arise as to identity of customer

• Consultation with industry Steering

Group


Accelerated changes

• Codes of Practice to include explicit

requirement to comply with:

• Anti-money laundering legislation

• Legislation to counter financing of

terrorism

• Anti-ML Guidance Notes


Revised Guidance Notes

• Overview

• Scope to be extended to counter financing

of terrorism

• Status to be clarified

• Three levels: statutory; regulatory; and

additional guidance

• Consultation with industry Steering

Group



• Key features

• Risk-based approach, considering

customer and product risk

• Appointment of MLPO

• Focus on “know your customer”

requirements (including verification of

identity)

• Incorporation of Position Paper



• Introduction

• Understanding money laundering

• Understanding how terrorism is

financed

• Money laundering framework

• Vigilance, systems and controls



• Know your client requirements

• Verifying identity

• Recognising and reporting suspicions

• Awareness raising and training

• Record-keeping

• Appendices


Legislative and regulatorychanges



Andrew Le Brun

Director

Policy & Legal

Documents

Andrew Le Brun Director Policy & Legal · Jersey Financial Services Commission Jersey Financial Services Commission Andrew Le Brun Director Policy & Legal