Further updates to the JFSC’s AML Handbook

Any financial services businesses undertaking regulated activity, in or from within Jersey, should be aware of the following key changes:

Section 1  – Introduction

With effect from 31 May 2021 the JFSC will no longer maintain a list of Equivalent Countries and Territories in Appendix B. Guidance to assist in determining equivalence will be set out in Section 1.7.3.

• • At 1.7.3.62, the onus has now been shifted onto the relevant person to have regard for certain factors in determining whether measures to be taken in a country or territory are consistent with the FATF Recommendations (previously, the AML Handbook listed such factors as those the JFSC would have regard to). In addition to those considerations already listed, a relevant person should now also have regard for the extent to which a country or territory is achieving FATF’s Immediate Outcomes that are directly relevant to the application of available concessions, namely whether Immediate Outcomes 3 (Supervision) and 4 (Preventive Measures) are assessed at a high or substantial level of effectiveness.
  • Whilst the JFSC has provided a list of helpful hyperlinks to further information in Section 1 of the AML Handbook, it is made clear that the relevant person will be expected to undertake independent research and exercise its own judgement in each case.

Section 2 – Corporate Governance

This is the only Code of Practice change that is being made at this time and as such, should be viewed as mandatory from a compliance perspective. The change inserted formalises the requirement of the relevant person to maintain appropriate policies and procedures to enable it, when requested by the JFSC, to make available to that authority a copy of its business risk assessment. We do not envisage this update having much of a practical impact for regulated financial services business.

Section 4 – Identification Measures – Finding out identity and obtaining evidence

There are limited changes to this section, which require a relevant person to expand the scope of the parties in respect of whom they collect evidence of identity:

• • In respect of a partnership, the relevant person should now also obtain the names of those limited partners that participate in management (if any) of the partnership in addition to the names of all general partners;
  • When dealing with a company, a relevant person now must obtain names of all persons having a senior management position (section 4.5.1.123). Previously, this was limited to the names of the directors of the company. A relevant person must now extend this to obtain evidence of identity of those people that exercise strategic decision taking powers or executive control.
  • The guidance of the JFSC with regard to a relevant person demonstrating compliance with Article 3(2)(b)(i) of the Money Laundering (Jersey) Order 2008 (MLO) has also been updated so that specific sources are expected to be obtained (for example, in respect of dealing with a partnership, in every case, the partnership agreement should be obtained – previously, obtaining the partnership agreement was listed as one of two sources of identification).

Section 5 – Identification Measures – Reliance on Obliged Persons

Unsurprisingly, given the JFSC’s previous published stance on reliance (which we previously commented upon here) and the looming Moneyval visit, attention has been given to the reliance regime in the AML Handbook. The main changes in this regard are:

• • Timing has been tightened up with regard to an obliged person providing evidence of identity to a relevant person without delay at paragraph 39. A relevant person will have demonstrated that an obliged person is providing evidence of identity without delay if it is provided within two working days. Anything provided later than five working days will not be considered to be provided “without delay”. If the information is provided between two and five working days, the entity must be able to show why this constitutes provision without delay based on the nature of its client base. The relevant person is expected to demonstrate the reasons for the delay by documenting the reasons that led to the delay, how many days evidence remained outstanding, how many times a delay has occurred previously across the relevant person’s practice, as well as the decision-makers’ considerations.
  • Wording has been inserted here so the relevant person considers the risks posed by the country or territory in which the obliged person is based, prior to placing reliance under Article 16 of the MLO.

Finally, for all relevant persons within scope of the AML legal and regulatory framework, (not just financial services businesses) it is worth noting that there will be a consolidation of the four AML/CFT Handbooks at a future date. Whilst there is no indication as to when this will be, the JFSC has confirmed that there will be an alignment of language and layout across the handbooks during the course of this year.

In the meantime, all regulated financial services businesses should be aware of the changes described above, although we do not envisage that the changes will have a substantive practical impact on the compliance procedures of relevant persons. Please do get in touch with our local team should you wish to discuss.