Recent legislation adopted by the States in relation to financial crime.
Confiscation of assets put into trusts by convicted persons
Proceeds of Crime (Miscellaneous Amendments No. 2) (Jersey) Regulations 2021
FATF Recommendation 4 (Confiscation and provisional measures) requires countries to have measures that enable the confiscation of all criminal assets. These include the laundered property itself, proceeds or instrumentalities used or intended for use in money laundering, assets related to the financing of terrorism, or property of a corresponding value. This amendment inserted a "clawback" provision to prevent such assets being beyond reach, for example where a criminal has given assets to third parties as gifts, particularly those that were put into a discretionary trust, where the settlor retains a beneficial interest.
While a beneficial interest in a discretionary trust should not, as such, automatically be considered realisable property but it is accepted that there might be circumstances where it may be appropriate to make inroads into the principles of trust law. The clawback provision has the same period for transactions at an undervalue as in the Bankruptcy (Désastre) (Jersey) Law 1990 and the Companies (Jersey) Law 1991 (i.e. 5 years).
In force 8 October 2021.
Report: Draft Proceeds of Crime (Miscellaneous Amendments No. 2) (Jersey) Regulations 202-
Cannabis amendment
Proceeds of Crime (Amendment of Law) (No 2) (Jersey) Regulations 2021
Amends the definition of criminal conduct in the Misuse of Drugs Law to provide that the production, supply, use, export or import of cannabis or any of its derivatives is no longer considered criminal conduct provided that it is lawful where and when it occurs – a reaction to the legally permitted medical cultivation of cannabis.
In force 7 July 2021.
Report: Draft Proceeds of Crime (Amendment of Law) (No. 2) (Jersey) Regulations 202-
Sharing information relating to trusts with competent authorities
Proceeds of Crime (Amendment No 4) (Jersey) Law 2021
FATF Recommendation 25.4 states that: "Trustees should not be prevented by law or enforceable means from providing competent authorities with any information relating to the trusts, or from providing financial institutions and DNFBPs, upon request, with information on the beneficial ownership and the assets of the trust to be held or managed under the terms of the business relationship."
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Article 37 of the Proceeds of Crime (Jersey) Law 1999 previously applied to persons, acting as trustees who fall within the financial services business definition. FATF Recommendation 25.4 requires that trustees should not be prevented from providing information relating to trusts to competent authorities. The amendment allows the Minister to make an Order which would require all express trusts to provide those authorities with relevant information relating to the trusts.
In force 8 October 2021.
Report: Draft Proceeds of Crime (Amendment No. 4) (Jersey) Law 202-
Confiscation of assets in bank accounts controlled by convicted persons
Proceeds of Crime (Amendment No 5) (Jersey) Law 2021
The ability to confiscate property used or intended to be used in criminal conduct (referred to as 'instrumentalities') post conviction has previously been done under the Criminal Justice (Forfeiture Orders) (Jersey) Law 2001 (the "2001 Law"). This is effective in straightforward cases with common orders being for drugs, cash and mobile telephones found on those arrested for drugs offences, and will remain on the statute book for straightforward cases.
However, the 2001 Law does not contain the freezing or ancillary powers needed in more complex cases, and a major area of concern for Jersey money laundering prosecutions (the primary focus of FATF Recommendation 4) involves bank accounts.
The Proceeds of Crime Law already provides wide ranging powers of confiscation in relation to benefits that convicted defendants have obtained from their crimes. The Attorney General makes a statement assessing the criminal benefit, and then proposes the amount that is recoverable from the defendant. This can be a nominal sum as drug traffickers are often of slender means, but allows the seizure of any asset up to the benefit value.
Forfeiture of instrumentalities of crime is a different process, and is primarily concerned with making orders for the forfeiture of specific property (whether it is held by the defendant or someone else) which was used in or intended to be used in the relevant crime. This provision permits the forfeiture of a specific sum of money from the defendant equivalent to the instrumentality (again based on ability to pay).
The amendments also revise a number of the 'machinery' provisions of the Proceeds of Crime (Jersey) Law 1999 and associated statutes dealing with confiscation orders so that they can also be used where the Attorney General wishes to apply for an instrumentalities forfeiture order. These 'machinery' provisions provide for things like investigatory powers, freezing, default sentences, enforcement and revisiting orders (used when further information comes to light)
In force 21 April 2022.
Report: Draft Proceeds of Crime (Amendment No. 5) (Jersey) Law 202-
Review of scope exemptions, areas exempt from anti-money laundering measures due to low risk levels
Proceeds of Crime (Amendment No. 6) (Jersey) Law 2022
Jersey's MONEYVAL report of 2015 considered that certain scope exemptions from AML/CFT obligations were not in line with FATF Recommendations and should only be allowed where:
- there is a proven low risk of ML and TF in strictly limited and justified circumstances, and it relates to a particular type of financial institution or activity, or DNFBP; or
- a financial activity is carried out on an occasional or very limited basis such that there is low risk of ML and TF
The first stage of the process to review existing scope exemptions is now complete with the adoption of the PoC (Amendment No 6) Law 2022, which will come into force only after the consultation period is complete, currently estimated to be later in 2022.
Report: Draft Proceeds of Crime (Amendment No. 6) (Jersey) Law 202-
Amendment to Structure and Status of Jersey's Financial Intelligence Unit
Proceeds of Crime (Financial Intelligence) Regulations)
Any financial intelligence unit (FIU) is required to have operational independence, to be appropriately resourced and able to carry out its functions. This legislation defines the Jersey FIU, bringing it into line with those international standards. Funding has already been approved and recruitment is ongoing.
FIUs collect information on suspicious or unusual financial activity and are responsible for receiving, analysing and disseminating the information received to other authorities, both domestically and overseas.
Until now the Joint Financial Crime Unit ("JFCU") has acted as Jersey's Financial Intelligence Unit and contained two functions, an intelligence unit (broadly encompassing the functions of a FIU) and an operations unit. There Regulations cover areas to formally divide the two functions of the existing into an independent FIU and the JFCU which will remain and operational Police unit.
Report: Draft Proceeds of Crime (Financial Intelligence) (Amendment) (Jersey) Regulations 202-
Supervisory Bodies Risk Based Approach
Proceeds of Crime (Supervisory Bodies) (Amendment) 2021
FATF Recommendation 26 requires the formal integration of the "risk-based approach" into all aspects of the AML/CFT regime. This amendment embeds the concept and the definition within the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008.
In force 8 October 2021
Report: Draft Proceeds of Crime (Supervisory Bodies) (Amendment) (Jersey) Law 202-
Extension of the civil financial penalties regime
Financial Services Commission (Amendment No 8) 2022
The ability to enforce penalties on those who fail to comply with AML/CFT requirements is a key part of the FATF Recommendation. The definition is for there to be a range of 'effective, proportionate, and dissuasive criminal, civil or administrative penalties available to deal with natural or legal persons which fail to comply with those requirements.
These sanctions should apply to financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs), and should be applicable to directors as well as senior management of financial institutions and DNFBPs.
In force 29 April 2022.
Report: Draft Financial Services Commission (Amendment no. 8) Jersey Law 202-
Criminality checks for Designated Non-Financial Businesses and Professions
Proceeds of Crime (Supervisory Bodies) (Amendment No 2) 2022
FATF Recommendation 28 requires that the AML/CFT supervisor takes necessary measures to prevent criminals from holding or being the beneficial owner of a significant or controlling interest or holding a management function in Designated Non-Financial Businesses and Professions (DNFBPs). The Amendment allows the JFSC to perform criminality checks for individuals within DNFBPs where necessary. All businesses, including DNFBPs, will now have to complete a Level 1 registration which includes criminality checks. This is not expected to cause any significant change as the JFSC has been required to complete a 'fit and proper' (criminality) test for those associated with a Level 1 application since 2008.
In force 25 March 2022
Report: Draft Proceeds of Crime (Supervisory Bodies) (Amendment No. 2) (Jersey) Law 202-
Failure to prevent money laundering offence
Approved on a standing vote, this has created a new offence of failing to prevent money laundering, but balances that against a defence that the body corporate or individual had adequately maintained and applied prevention procedures.
This
Proceeds of Crime (Amendment No. 7) (Jersey) Law 2022 engages when it would otherwise be extremely difficult to attribute any criminal liability to a legal person.
Failure to prevent (FTP) offences have been put in place by other jurisdictions to allow a more appropriate attribution of criminal liability. In the UK there has been a failure to prevent bribery offence since 2010 and a failure to prevent tax evasion offence since 2017. The UK Law Commission is also reviewing the potential introduction of a failure to prevent economic crime offence.
This is 1 of 3 measures. The others are:
Non-profit organisations
As recent events have demonstrated in Ukraine, charities and other non-profit organisations can be targeted by criminals. A risk assessment has been carried out locally, and an amendment to the law adopted prior to the end of this Assembly in order to advance work aimed at protecting the work done by charities and other non-profit organisations (or NPOs). Following this review of the NPOs who operate in Jersey there will be ongoing engagement to assess the best ways to address any exposure they have to such risk. No changes will come into force until this has been done.
The ultimate aim, as reflected in international standards, is to protect the sector while minimising impact on the work they do.
Report: Draft Non-Profit Organisations (Miscellaneous Amendments) (Jersey) Law 202-
Sanctions, enabling Jersey to align with UK
Sanctions and Asset-Freezing (Amendment No. 2) (Jersey) Law 2022 (jerseylaw.je)
When the UK left the EU it introduced new legislation to be able to implement autonomous UK sanctions. As a result Jersey introduced legislation to ensure we were able to align with the UK (Sanctions and Asset-Freezing (Jersey) Law 2019 and the Sanctions and Asset-Freezing (Implementation of External Sanctions) (Jersey) Order 2021). This Amendment improves Jersey's compliance with the requirements of the FATF Recommendations. It updates various definitions currently listed in EC Regulations, clarifies other areas such as whether a legal person is owned, held or controlled by another person, and set out in legislation how the Island responds to requests to designate a person for the purposes of freezing terrorist assets. Another addition is protection from civil proceedings for those complying with sanction's obligations in good faith.
Other changes include expanding the scope of reporting obligations, which may also help the Island in demonstrating its effectiveness against the FATF Immediate Outcomes 10 and 11 by generating information that would provide evidence for effective sanctions implementation in Jersey. This Amendment was being worked on before the Russian invasion of Ukraine, rather than being a response to it.
Report: Draft Sanctions and Asset-Freezing (Amendment No. 2) (Jersey) Law 202-
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