Sanctions & AML Compliance

Sanctions and AML investigations in Jersey can lead to civil penalties and reputational damage.

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Sanctions and AML Regulation in Jersey

The Jersey Financial Services Commission (JFSC) enforces strict anti-money laundering regulations.

Which Jersey laws govern sanctions and anti-money laundering?

Four Jersey instruments do most of the work. They are separate from the UK regime, even where they give effect to UK sanctions.

• Sanctions and Asset-Freezing (Jersey) Law 2019: implements UK sanctions in Jersey and sets out the asset-freeze prohibitions and licensing.
• Proceeds of Crime (Jersey) Law 1999: the money laundering offences and the duty to disclose suspicion.
• Money Laundering (Jersey) Order 2008: customer due diligence, record keeping and internal reporting rules for businesses.
• Financial Services Commission (Jersey) Law 1998: gives the Jersey Financial Services Commission (JFSC) its power to impose civil financial penalties.

How an asset freeze works in Jersey

A person must not deal with funds or economic resources owned, held or controlled by a designated person if they know, or have reasonable cause to suspect, that they are doing so. That prohibition sits in Article 10 of the Sanctions and Asset-Freezing Law, which sets a maximum of 7 years' imprisonment and a fine. Articles 11 to 14 apply the same test to making funds, financial services or economic resources available to, or for the benefit of, a designated person.

"Deal with" is drawn widely, covering using, moving or allowing access to funds, including in the course of portfolio management.

Licences

Activity that would otherwise breach a freeze can be authorised by a licence from the Minister for External Relations under Article 16. Applications go to the Jersey Sanctions Implementation Unit using the form on gov.je.

Challenging a designation or a decision

Part 7 of the Law gives a route to the Royal Court. Certain designation decisions carry a right of appeal under Article 40. Other ministerial decisions under the Law can be reviewed under Article 41 on judicial review principles. In both cases the decision stays in effect while the challenge runs, unless the Royal Court orders otherwise.

JFSC civil financial penalties: the process step by step

The JFSC can fine a registered person that has, to a significant and material extent, breached the Money Laundering Order or a JFSC Code of Practice. Article 21A of the Financial Services Commission Law also allows a penalty on a principal person, key person or senior manager where the breach was committed with their consent or connivance, or was attributable to their neglect.

• Notice of intent. Before imposing a penalty the JFSC must serve a notice setting out the alleged contravention, its grounds and how the proposed amount was calculated (Article 21C).
• Representations. The person served has one month from the date of service to make representations on whether a penalty should be imposed and on its amount.
• Final notice. The JFSC considers the representations and may then serve a final notice, with the penalty as proposed or modified.
• Appeal. Under Article 21F an appeal lies to the Royal Court, but only on the ground that the decision was unreasonable in all the circumstances. It must be lodged within a month of service of the final notice. The JFSC cannot enforce payment while the appeal is pending.

Under Article 21B the JFSC must weigh, among other things, seriousness, voluntary reporting and any steps taken to fix the breach.

Reporting suspicion: duties that fall on individuals

Anyone who knows or suspects money laundering, from information that reached them through their trade, profession, business or employment, must disclose it to the Financial Intelligence Unit as soon as practicable. Failing to do so is an offence under Article 34A of the Proceeds of Crime Law, with a maximum of 5 years' imprisonment. Privileged information received by a legal adviser is excluded.

Firms carry a separate risk. Article 35A makes it an offence for a financial services business when a person associated with it, including an employee, agent or customer, engages in money laundering. The defence is to show that adequate prevention procedures were maintained and applied.

Within a business, the Money Laundering Order requires a compliance officer and a reporting officer to be appointed (Articles 7 and 8). The JFSC must be told in writing within one month of a reporting officer's appointment or departure.

What to have ready before speaking to an advocate

• Any notice from the JFSC, the Minister or the Jersey Sanctions Implementation Unit, with the date it was served. Several deadlines above run from service.
• The customer due diligence file and transaction records for the relationship in question. Under Article 20 of the Order these must generally be kept for at least 5 years after the relationship ends or the transaction completes.
• Internal reports made to the reporting officer, and any disclosure made to the Financial Intelligence Unit.
• Your policies and procedures as they stood at the time, and a timeline of who knew what, and when.

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