A consultation was published by the Government of Jersey on 12 May 2023 proposing changes to the Money Laundering (Jersey) Order 2008 (MLO). The proposed amendments look to align, clarify or expand existing provisions in the MLO in line with international standards and best practices. Inter alia, it is proposed that the existing additional obligations imposed on financial groups regarding group-wide policies and procedures also apply to groups of designated non-financial businesses and professions.
Amongst the changes, there is also a welcome proposal to enable the declassification of Politically Exposed Persons (PEPs), after a certain period and subject to the application of a risk-based approach.
The proposals are the latest of a number of recent changes to the legal and regulatory anti-money laundering framework in Jersey and are part of the Jersey Government’s ongoing commitment to combat financial crime and to achieve closer alignment with the Recommendations of the Financial Action Task Force (FATF).
CHANGES TO THE MLO
The consultation paper lists a number of changes and adjustments to the terminology. For example, “customer due diligence measures” is proposed to be amended to clarify that a “digital identification system that complies with the FATF Guidance on Digital Identity published on 6th March 2020 as amended or replaced from time to time constitutes a reliable and independent source.”
Separately, the meaning of a “one off transaction” is proposed to be amended to update references to “a money service business” to the broader “money or value transfer services” (which includes a money service business) to align with the changes introduced by the recasting of Schedule 2 of the Proceeds of Crime (Jersey) Law 1999 (POCL).
If the changes are implemented, Designated Non-Financial Businesses and Professions (DNFBPs) may face additional obligations as a result of amendments made that apply to financial groups. FATF Recommendation 18 states that “Financial Groups” should be required to implement group-wide programmes against money laundering and terrorist financing. In October 2021, a number of actions were announced by FATF, which had the effect of extending the requirements on group-wide programmes against money laundering and terrorist financing to DNFBPs.
It is therefore proposed that the MLO is amended to align with this, providing that the additional obligations imposed on financial groups also apply to a group of DNFBPs falling within Part 3 of Schedule 2 to POCL if there is, in relation to the group, a parent company or other legal person that exercises control over every member of the group.
So whilst the impact of the proposed draft amendments on relevant persons is anticipated not to be significant, DNFBPs may face additional obligations under the MLO in order to ensure group wide programmes are in place where this is applicable.
DECLASSIFICATION OF PEPS
The consultation paper acknowledges that currently, most other jurisdictions provide the possibility for PEP declassification under certain circumstances and proposes declassification of PEPs in a measured way and subject to the application of a risk-based approach.
Article 15A of the MLO (enhanced customer due diligence measures in relation to politically exposed persons), is proposed to be amended to allow a relevant person to treat a domestic PEP as not being a politically exposed person 2 years after the person ceases to be entrusted with a prominent public function if, following a risk assessment, the person does not present a higher risk of money laundering and there is no reason to continue to treat the person as a PEP.
Similar provisions are proposed in relation to a foreign PEP and a prominent person after a period of 5 years.
A new definition of “prominent public function” in relation to an international organisation is proposed to be inserted to align with the FATF Glossary and to provide that the definition includes immediate family members or close associates.
These new provisions will align Jersey’s AML/CFT regime with international best practices and we believe will be welcomed by the financial services industry in Jersey, in an effort to maintain the reputation of Jersey as a competitive place to do business.
The consultation closes on 9 June 2023 and it is proposed that the changes come into force on 1 September 2023.
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