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Compliance and Economic Crime Symposium 2015

Ladies and gentlemen. I am pleased to be here with you today at the 11th annual compliance and economic crime symposium.

Jersey is a jurisdiction that has built a successful international finance centre over the past 50 years. 

That has not happened by accident. 

It has been the result of careful and consistent planning in a number of areas, one of which has been a commitment to adopting and implementing international standards in the area of financial crime and financial services regulation.

This has served the Island well, and it is for this reason I consider we have built up a significant body of compliance and regulatory professionals who are amongst the best in the world, and it is great to see more than two hundred of you here today.


I am pleased to see on today's agenda a mix of academics, local professionals and regulators and some particularly prominent financial crime enforcement professionals from overseas covering an agenda of topical matters across the field of financial crime.

I hope to be able to give you an overview of Jersey’s commitment, as a leading international finance centre, to countering financial crime and implementing leading regulatory standards.

The title of my talk is “Leading the way in Financial Services Regulation”, however, the past year or so in the area of financial crime has been particularly focussed on leading the way in financial services regulation through the implementation of, and assessment against, international standards. 

Both Guernsey and Jersey have been in the process of being fully evaluated for the first time during 2014 and 2015 by MONEYVAL, or to give it its full title, the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism. 

For those of you not aware, MONEYVAL is a body of the Council of Europe that assesses compliance with international Anti Money Laundering (AML) and Combating the Financing of Terrorism (CFT) standards set by the Financial Action Task Force (FATF).

On the instruction of the government, the island authorities invested a lot of effort in preparation for MONEYVAL. 

The Island will be rated on various criteria; in turn those ratings will be a key influence on others’ views of the effectiveness of our AML / CFT regime. 

The ratings we get now remain in place until the next assessment, which may not be until 2021.

These ratings are, therefore, key to Jersey’s reputation and may have far reaching consequences. 

I hope to give you an update about this process a bit later on, along with a few other key initiatives in the area of financial crime, but first I would like to say a few words about the current Jersey economy.

Economic outlook

The Council of Ministers is committed to continuing to put in place the fundamental building blocks that will enable Jersey’s future economic growth and productivity. 

The indicators of continuing economic recovery are there: the Island’s financial services sector grew by 9% last year; employment hit record levels in June this year. 

But we must continue to support the economy while global conditions remain fragile.

This is an approach that echoes the advice from our independent Fiscal Policy Panel, and one that has been clearly set out in the strategic plan, Medium Term Financial Plan (MTFP) and budget statement.

Of course, what has underwritten the relative buoyancy of Jersey’s economy during these past eight years of global turbulence has been the strength and resilience of our financial services industry. 

And in turn, the success of the industry is intrinsically linked to our high standards of regulation and prevention of financial crime.

The latest stats show that on an annual basis Jersey’s economy, as measured by total Gross Value Added (GVA), grew by 5% in real terms in 2014 to a level of £3.9 billion.

This increase in GVA (the first year, since 2008, that the Island’s economy has grown above inflation) was driven by real-term growth recorded by the finance sector.

Financial services businesses accounted for around 44% of total GVA, and for 51% of all economic activity, aside from private rental income. 

These figures are significant indicators of the current strength of the financial services industry.

However, while these facts and figures are undoubtedly important, the impact of the industry can also be measured in many other ways. 

Last year alone, finance sector businesses spent around £350 million on goods and services in Jersey.  

These same firms spent in the region of £720 million on employment during that same year.

These employees then spent a large chunk of their wages on goods and services here in Jersey, allowing for a ripple effect in the rest of the economy. 

The finance sector now employs 12,700 people, and the number of full-time local staff recruited directly from school and university last year was 390. 

This means that in 2014, there were 80 more new recruits than in the previous year, making it the highest number recorded since surveys began in the mid-1990s.

So, in terms of economic growth, current and future employment and the all-important tax income for public expenditure, it is clear that the finance sector remains, and will continue to be, a significant part of Jersey’s economy. 

This allows for investment and spending in health, education and infrastructure for the good of our Island's whole community.

It is a solid foundation, and one that has the Island’s high standards of financial regulation and compliance at its heart.


As an international finance centre, being able to deal with compliance requirements for clients from different jurisdictions, with complex backgrounds and often even more sophisticated and complex business circumstances, is our key asset. 

We have a regulated, highly skilled workforce of compliance professionals, and this is something to which I and my ministerial colleagues often refer during official visits abroad. 

It is a key selling point for us when we are promoting Jersey in the Middle East, Africa, in Asia where I was only last week along with Jersey Finance, and, of course to those in our key intermediary locations such as London.

So what are the major developments in the field of financial crime and financial regulation during 2015?


As I mentioned in my introduction, the Financial Crime Strategy Group, who advise ministers on matters concerning financial crime, have been busy for a large part of 2014 and most of 2015 with the ongoing MONEYVAL evaluation of Jersey.

The strategy group is chaired by my department and contains members of all insular authorities involved in financial crime matters in the Island; there is an important and close working relationship in this area which is important to ensure a cohesive approach from Jersey when we are being assessed by those who come from outside our shores.

As many of you will be aware, MONEYVAL arrived in Jersey in January 2015. 

I suspect a number of you met them during their stay in Jersey. 

However, it is important to explain that there has been significant work since the MONEYVAL team departed.

Members of the Financial Crime Strategy Group received the first draft of our report in April and May and follow up meetings were held with the assessment team in June and July in Strasbourg.

Those meetings are intensive; the draft report exceeds some five hundred pages of material and it is important to Jersey that all parts of the report are considered so the insular authorities can  ensure the contents of the final report are accurate. 

In effect, the report will be publicly available and last for some five years after adoption until our next assessment so it has a significant representative value for Jersey.

The pre-meetings with the assessment team were broadly successful with significant amendments agreed to the draft report.

The strategy group now await arrival of the next draft of the report this month which will then be the subject of further meetings with the assessment team before finally being put to the MONEYVAL plenary meeting of thirty-three countries in the second week of December 2015.

The MONEYVAL peer review and assessment process is one that is new to both the Channel Islands and has been a resource intensive process. 

I would say that the relevant insular authorities in financial crime policy might look forward to a quieter year in 2016, however this is unlikely to be the case.

The industry should be aware that for each recommendation of the FATF standards, the MONEYVAL report will produce recommendations for the Island to carry out against that recommendation.  

2016 will be a year of taking stock and consolidation from the MONEYVAL assessment process where an action plan will have to be put in place to deal with each recommendation.

The insular authorities will also be taken up during 2016 and 2017 with two particularly important projects that will involve significant industry interaction: national risk assessment of money laundering and terrorism financing.

Risk assessment

Many of you will no doubt be aware of the new required process for each jurisdiction to conduct a national risk assessment in respect of money laundering and terrorist financing required under the 2012 FATF guidelines.

In recent weeks the UK government, under the banner of HM Treasury, have published their national risk assessment. 

Equally in recent months we have seen publications of risk assessments from Switzerland, the Cayman Islands, Singapore, Serbia, New Zealand and others.

The national risk assessment process is a full and frank look at a jurisdiction's risks and by its very nature requires a certain amount of honest self-evaluation by the industry along with the insular authorities.

This will require further development of the relationship between the industry and the insular authorities so that what is adopted as a national risk assessment is accepted by all in Jersey.  

We are not looking to tackle this significant project alone. 

Many jurisdictions have engaged the assistance of one of the International Financial Institutions (or IFI’s) who have developed a methodology for carrying out the national risk assessment process.

It is for this reason we are engaging professionals from the World Bank to help us throughout the process. 

This decision was made after discussions with our counterparts in the Isle of Man who have recently completed their risk assessment, with the assistance of the World Bank, and they will be publishing the outcome of their risk assessment in 2016.

We are also in regular correspondence with a number of the other small states within MONEYVAL, such as Andorra, Monaco, Liechtenstein and San Marino who are also in the process of engaging the World Bank to assist with their risk assessment exercise.

We will be assessed on the national risk assessment exercise when we are assessed by MONEYVAL under the next round of assessments in approximately five years’ time. 

It is, however, not a static document and will require ongoing monitoring and updating as new trends emerge in money laundering and terrorist financing and when Jersey’s business relationships evolve.


As financial services professionals, you will be key to this evolutionary process. 

It is intended that there will be introductory sessions hosted by the relevant insular authorities commencing early next year and I would encourage engagement with that process as far is possible for the best interests of Jersey.

Money laundering

Many of you will be conscious that the EU reached agreement in December 2014 on its renewed regime for AML / CFT in light of the revised FATF standards and the recent push in the G8 to improve access to information about beneficial ownership.  

This agreement resulted in the fourth Money Laundering Directive of the EU which came into force on 5 June this year. 

Member states now have until 26 June 2017 to transpose the directive into national legislation.

Jersey was involved throughout the negotiations of the directive by the Channel Islands Brussels Office and through both political and technical contact in Brussels. 

Equally, as transposition programmes are formed and delegated acts are developed, including one specifically relating to third countries, we will remain updated on this matter.

The directive does not directly apply to Jersey, but we will, in all likelihood, seek equivalence in relevant areas of the directive and this will require some legislative change in the island. 

This will only be done after consultation which will most likely occur in 2016.

The final text of the directive concluded that central registries of beneficial ownership were a key part of the European objective. 

This supports the Jersey position that has been in place since 1999.

We will watch with interest as member states develop their individual criteria in respect of who may have a 'legitimate interest' in accessing their central registers. 

However, the current Jersey position is clear; law enforcement and tax authorities should be able to obtain full, accurate and current beneficial ownership information, as has been the case in Jersey since 1999.

We have already entered into detailed technical discussions with HM Treasury who represent the United Kingdom in this area and they will be consulting on UK implementation in early 2016. 

Our officials will remain in close contact with the UK in this area in order to ensure Jersey’s interests are represented where required and that we look for equivalence in an appropriate and proportionate manner.


As I hope my brief address to you this morning has outlined, countering financial crime and implementing leading regulatory standards is an important focus for the government. 

During a year that is critical for Jersey in international assessments, this could not be more apparent.

Equally, and as I am sure will be evident from today’s conference, there is no sign that the international focus on countering financial crime will diminish and this area remains a key priority for the government of Jersey.

While we maintain and further develop our world leading population of regulatory and compliance professionals, I am confident that our broad base of financial services industries will continue to help us grow our own economy and insulate ourselves from the impact of global economic uncertainty.

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