andrew le brun director policy & legal · jersey financial services commission jersey financial...
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Jersey Financial Services Commission
Jersey Financial ServicesCommission
Andrew Le Brun
Director
Policy & Legal
Jersey Financial Services Commission
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
Jersey Financial Services Commission
Possible counter-measures
• Decision expected 15 December
2002
• Measures?
• Caution on entering into business?
• Full scrutiny of transactions?
• Presumption of “suspicion”?
Jersey Financial Services Commission
Wire transfers
• Interpretative Note to address:
• Scope of SR VII
• Exemptions (e.g. domestic transfers)
• Originator information
• Increased due diligence
Jersey Financial Services Commission
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
Jersey Financial Services Commission
Revision to 40Recommendations
• Consultation paper issued May
2002
• Commission response with JFIA
• Agreement expected on revision
in June 2003
Jersey Financial Services Commission
Revision to 40Recommendations
• 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
Jersey Financial Services Commission
Revision to 40Recommendations
• 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
Jersey Financial Services Commission
Revision to 40Recommendations
• 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)
Jersey Financial Services Commission
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
Jersey Financial Services Commission
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
Jersey Financial Services Commission
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
Jersey Financial Services Commission
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
Jersey Financial Services Commission
IMF
• Addresses:
• Criminal justice measures and
international co-operation
• Preventative measures for financial
institutions
Jersey Financial Services Commission
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
Jersey Financial Services Commission
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
Jersey Financial Services Commission
EU Second ML Directive
• Member States to implement by
15 June 2003
Jersey Financial Services Commission
UK Treasury and DTI
• Consulting on disclosure of
beneficial ownership of unlisted
companies
• Considered as part of fight against
international organised crime
• Five options
Jersey Financial Services Commission
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
Jersey Financial Services Commission
Switzerland
• Existing requirement to identify
beneficial ownership, including
“collective accounts”
• IMF has now recommended that
identity of beneficial owners be
verified (June 2002)
Jersey Financial Services Commission
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
Jersey Financial Services Commission
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
Jersey Financial Services Commission
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
Jersey Financial Services Commission
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
Jersey Financial Services Commission
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
Jersey Financial Services Commission
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
Jersey Financial Services Commission
Revised Guidance Notes
• 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
Jersey Financial Services Commission
Revised Guidance Notes
• Introduction
• Understanding money laundering
• Understanding how terrorism is
financed
• Money laundering framework
• Vigilance, systems and controls
Jersey Financial Services Commission
Revised Guidance Notes
• Know your client requirements
• Verifying identity
• Recognising and reporting suspicions
• Awareness raising and training
• Record-keeping
• Appendices