Compliant, But Unmeasured: The Gap in Jersey's New MLCO Exception Article 7(1A) and Section 2.6 Effective: 30 June 2026

Article 7(1A) of the Money Laundering (Jersey) Order 2008 gives firms a genuine legal route to operate without a compliance officer (Money Laundering Compliance Officer (MLCO)) where size and money-laundering risk make that appropriate.

That much is straightforward, and lawful. What is less straightforward is what "satisfying JFSC's rules" actually means for a firm that takes this route.

• The Order requires any non-appointment decision to be made "by reference to a relevant Code of Practice”, the clear implication being that the Handbook supplies the standard against which that decision should be tested. In practice, it does not. Section 2.6 restates the statutory test in a single sentence and offers nothing further: no factors, no worked examples, no indication of what an adequate Board-level alternative to MLCO oversight looks like.
• The general obligations that survive non-appointment systems and controls, monitoring and testing, and Board accountability are real and enforceable, but they exist independently of this specific decision; none of them was drafted with the non-appointment scenario in mind.
• Notably, the Handbook already has a formal mechanism for departing from mandatory Code provisions in exceptional circumstances: a written variance application to the JFSC. No comparable structure exists for firms relying on the 7(1A) exception. The absence is more striking given that the Handbook's general philosophy treats deviation from "must" provisions as something requiring a formal, JFSC-sanctioned process.

The result is that:-

• A firm can be legally entitled not to appoint an MLCO, even when there is no codified JFSC benchmark to confirm that its decision or its alternative oversight arrangements would hold up under supervision.

• That is not the same as non-compliance. It is closer to compliance without a measuring stick.

This briefing addresses the practical question:

• What should a firm do, in the absence of that benchmark [measuring stick], to put itself in the strongest possible position before the Handbook catches up.

Key Obligations That Continue to Apply (Even Without an MLCO)

The following obligations remain in force regardless of whether an MLCO is appointed:

• Maintain adequate systems and controls to prevent and detect money laundering, the financing of terrorism, and the financing of proliferation.
• Maintain adequate procedures for monitoring compliance with, and testing the effectiveness of, policies and procedures.
• Conduct and maintain a business risk assessment.
• Ensure appropriate training and awareness.
• Keep adequate records.
• Ensure the Board has overall accountability and oversight for compliance.

Where no MLCO is appointed, these responsibilities sit directly with the Board.

• The principle that monitoring tasks can be fulfilled through delegation or support (recognised in paragraph 72) remains relevant in practice.

Note on Further Handbook Updates & relying on the Article 7(1A) exception

• The JFSC has indicated that further updates to the Handbook are planned for 31 October 2026.
• One of the items listed is a risk-based approach to MLCO appointments.
• It is not stated whether this update is required before firms can rely on the Article 7(1A) exception, or whether it addresses a separate aspect of the regime.
• Firms considering using the exception before that date may wish to seek clarification from the JFSC.

Recommended Actions

Firms that decide to rely on Article 7(1A) should take the following steps to strengthen their position:

1. Document the size and risk assessment and the decision not to appoint an MLCO in sufficient detail, with clear reference to the relevant Code of Practice.
2. Review and, where necessary, strengthen Board governance arrangements to ensure explicit allocation of compliance monitoring and oversight responsibilities.
3. Map the continuing obligations above against existing policies and procedures, and identify any gaps in Board-level reporting, management information, or oversight mechanisms.
4. Consider seeking clarification from the JFSC if planning to rely on the exception before the October 2026 Handbook update.
5. Retain clear, contemporaneous records of the assessment and the rationale for the arrangements put in place.

Sources

• Money Laundering (Jersey) Order 2008 (as amended), Article 7(1A) and 7(1B): https://www.jerseylaw.je/laws/current/ro_20_2008
• AML/CFT/CPF Handbook, Section 1 (Introduction), paragraph 25 (effective 31 May 2026): https://www.jerseyfsc.org/media/5fmhmlv4/handbook-section-01-introduction.pdf
• AML/CFT/CPF Handbook, Section 2.6, paragraphs 66 and 72 (effective 30 June 2026): https://www.jerseyfsc.org/media/v0rlubyj/section-26-tracked-changed-version-effective-30-june-2026.pdf
• JFSC announcement: Updated AML/CFT/CPF Handbook and upcoming changes (26 May 2026): https://www.jerseyfsc.org/news-and-events/updated-amlcftcpf-handbook-and-upcoming-changes