DETAILS ABOUT JFSC CONSULTATION ON ENHANCEMENTS TO CRIMINAL BACKGROUND CHECKS

The JFSC has published [Issued 29 January 2025] a consultation paper on enhancing criminal background checks for principals and key persons.[SEE DETAILS BELOW]

• Consultation on improvements to criminal background checks

The JFSC would like your feedback on the proposals to:-

• Enhance the application process for individuals seeking to be a
• PRINCIPAL PERSON (PP) (which includes directors, beneficial owner[s] controllers and others) or
• KEY PERSON (KP) (including the MLRO), the MLCO and the compliance officer) of supervised persons
• By requiring the provision of
  • At first application,
  • On defined events and
  • A 3-year rolling period
• A certified copy of a current DBS check (or foreign equivalent)
• Require a supervised person to
• Regularly consider whether its PPs and KPs are fit and proper to hold the roles
• (together “the Proposed Regime”).

To understand the reasons and drivers of this consultation, please take a look at the following JFSC briefing.

•  https://www.jerseyfsc.org/industry/consultations/consultation-on-enhancements-to-criminal-background-checks/

OR read below (with some formatting and other non-material changes)

1.1 JFSC Executive Summary

1.1.1 The proposals in this consultation paper

• Seek to strengthen the current regulatory regime to prevent criminals and their associates from owning, controlling or being in a position of key influence in a Jersey-supervised person to meet international AML/CFT/CPF requirements.
• Aim to achieve this proportionately and cost-efficiently so that it does not adversely impact the competitiveness and attractiveness of Jersey as a place to do business.

1.1.2 To achieve this, there needs to be a consistent approach across all firms and sectors regarding the systems they each have in place to check the criminal history of those who will act or are acting in

• Principal person (PP) and
• Key person (KP) positions.

1.1.2a

• The JFSC is proposing more emphasis be placed on the controls that should already exist within firms in this regard.
• This mitigates risks to their reputation, customer losses, which they would need to compensate, or direct financial loss arising from the consequences of permitting their business to be used for the purposes of financial crime.

1.1.3 The JFSC proposals further seek to respond to the recommendations made by MONEYVAL in their fifth-round evaluation of Jersey.

• They are part of the nationally coordinated work programme led by the Government of Jersey in partnership with other island agencies to implement the FATF Recommendations.

1.1.4 The JFSC would like your feedback on the proposals to

• Enhance the application process for individuals seeking to be a
• PP (which includes directors, beneficial owners controllers and others) or
• KP (including the MLRO), the MLCO and compliance officer) of supervised persons
• By requiring the provision of
  • At first application,
  • On defined events and
  • A 3-year rolling period
• A certified copy of a current DBS check (or foreign equivalent)
• Require a supervised person to
• Regularly consider whether its PPs and KPs are fit and proper to hold the roles
• (together “the Proposed Regime”).

1.1.5 For the avoidance of doubt,

• Notwithstanding that an NPO must register with the JFSC according to Article 4 of the NPO Law, and if prescribed falls within the scope of the Supervisory Bodies Law, it is currently not intended that NPOs will be subject to the Proposed Regime.
• The JFSC has taken this approach to align with the FATF Recommendation 8 requirements that state countries should apply proportionate measures to oversight NPOs.
• Prescribed NPOs remain subject to the obligations in the NPO Order and Section 17 of the Handbook.

1.1.6 To maintain consistency in treating individuals with significant roles in equivalent businesses to supervised persons,

• The proposed Regime will also apply to a registered person of a general insurance mediation business and their PPs and KPs.

1.1.7 These proposals will allow

• The JFSC to better evidence compliance with FATF Recommendations, protect the public and establish Jersey’s reputation as a jurisdiction that will not tolerate bad actors being connected with Jersey-supervised persons.

1.2 FATF, MONEYVAL and the JFSC powers

1.2.1 Jersey must comply with international standards as a leading International Finance Centre (IFC).

• Any proposed change to an existing process to ensure this compliance should be approached proportionately.
• The JFSC will make any process improvements that will strengthen the integrity and transparency of Jersey’s financial services industry while ensuring that these changes don’t significantly disrupt Jersey’s ability to compete and grow.

1.2.2 While worded slightly differently across several FATF Recommendations, one such requirement is

• That “…Competent Authorities or Financial Supervisors should take the necessary legal or regulatory measures to prevent criminals or their associates from holding or being the beneficial owner of significant or controlling interest or holding a management function in a [supervised person].”
• (FATF Requirement)

1.2.3 The recent MONEYVAL report found

• “The JFSC’s practice of relying on a self-declaration to report criminal convictions followed by checks in specific databases instead of requesting criminal record certificates as a routine practice is a vulnerability.
• This is further exacerbated as Jersey’s legislation does not prescribe an all-crimes approach for reputational checks, albeit the JFSC suggests that all crimes are considered in practice.”
• (MONEYVAL Finding).

1.2.4 MONEYVAL recommend that:

• “a) Jersey should enhance criminal background checks for beneficial owners, controllers and key function holders applied at the market entry stage and in the course of subsequent changes.”
• (MONEYVAL Recommendation)

1.2.5 The MONEYVAL Finding and the MONEYVAL Recommendation are related but are two distinct parts:

• The need to enhance criminal background checks
• There is a need to legislate an ‘all-crimes’ approach.

This consultation paper focuses on the MONEYVAL Recommendation.

1.2.6 About point (i):

• The JFSC currently deploys a suite of background checks based around an unverified self-declaration process to identify whether an individual applying to operate or currently operating in a position of key influence of a supervised person has a criminal history.
• This process can be further enhanced, especially where a person has been a resident or worked in a jurisdiction outside of Jersey.
• It is a feature of an offshore jurisdiction, such as Jersey, that individuals from many countries may be involved in the ownership and control of supervised persons, and it is these participants, in particular, for whom a confirmed criminal history is often difficult to obtain outside of those background checks already undertaken.

1.2.7 On point (ii):

• The JFSC's power to conduct checks and to require supervised persons to supply information emanates from the Supervisory Bodies Law.
• That same law also provides the scope for the JFSC to determine whether an individual involved in the financial services industry is a ‘fit and proper person’.
• As identified in the MONEYVAL Finding, the ‘fit and proper person’ test could be wider than it currently includes ‘all crimes’. Broadening the test would require a change to the Supervisory Bodies Law.
• Amending the Supervisory Bodies Law is not the subject of this consultation paper; however, it is important to understand the potential future context in which these proposals may operate.

1.3 What is proposed and why?

1.3.1 When formulating the Proposed Regime, the JFSC reflected on local industry practice and the approach of other comparable regulators subject to the FATF Requirement to ensure that any implementation does not put the jurisdiction in a less competitive and attractive position.

1.3.2 While each regulator approached the FATF Requirement differently based on their respective regulatory landscape, a common thread was the production of a DBS check (or foreign equivalent) for holders of significant roles in supervised or regulated entities. The JFSC propose that Jersey adopt a similar practice.

1.3.3 An area of the Proposed Regime that will differ from comparable jurisdictions concerns the suggested 3-year rolling refresh requirement for criminal record checks.

• The JFSC feels that to maintain Jersey's integrity as a pre-eminent IFC, all individuals (including foreign owners and controllers) who are involved in a Jersey supervised person are, and always remain, of the highest integrity.

• The weakness in either the unverified self-declaration process or a one-off criminal record check regime is that an individual’s circumstances may change. Without the compulsion to regularly refresh criminal checks, Jersey could inadvertently facilitate a bad actor remaining in a significant role.

1.3.4 The 3-year rolling requirement aims to capture those that would otherwise fall outside of the ‘subsequent changes’ provision referenced in the MONEYVAL Recommendation and focuses on those who have and will remain in a position for a prolonged period.

• For PP/KPs who have either no criminal history or a criminal history which will not adversely affect an application or continuance in a role, the minor inconvenience of refreshing their criminal records check at least once every 3 years does not, in the JFSC view, outweigh the need to proactively identify bad actors associated with Jersey supervised persons who have the potential to tarnish the jurisdiction as a whole if left undetected.

1.3.5 The Money Laundering Order requires a relevant person to screen its employees.

• The Handbook (Section 9) includes guidance that this screening may be achieved by obtaining and confirming an employee's criminal convictions (or absence of such convictions).
• The JFSC understands that, while it is not compulsory to do so, the industry routinely uses this check to screen employees at the onboarding stage, including those who are intended to hold KP roles.
• The JFSC is also aware that sections of the industry complete an internal annual self-certification process, which includes requiring employees to disclose any material changes that may affect their fitness to continue to act in a role.

1.3.6 The JFSC recognises that the Rehabilitation of Offenders framework generally prevents employers from asking employees certain questions about spent convictions.

• The framework does, however, include exemptions, meaning that the JFSC and supervised persons CAN ask PPs (or prospective PPs) and KPs (or prospective KPs) for details about some spent convictions.

1.3.7 The Proposed Regime will be achieved by introducing

• Additional code requirements to the JFSC Handbook Codes of Practice and
• Corresponding amendments to the GIMB Code.

1.3.8 The JFSC is preparing updates to the relevant myJFSC portal application forms and processes.

1.4 Who would be affected?

1.4.1 The proposals in this consultation paper will affect:

• Existing supervised persons
• Individuals who are currently PPs and/or KPs
• Applicants applying to become supervised persons, or their PPs and KPs, post the Commencement Date

Read the full consultation paper. = https://www.jerseyfsc.org/media/8066/consultation-on-enhancements-to-criminal-background-checks-no1-2025.pdf

JFSC 2025 TRACK CHANGES TO AML/CFT/CPF handbook + GIMB Code of Practice [29/01/25]

The JFSC has published a consultation paper on enhancing criminal background checks for principals and key persons.[SEE DETAILS BELOW]

The consequence of these changes is shown in the following change documents

• AML/CFT/CPF handbook
• GIMB Code of Practice

See tracked changes version of

• The Glossary of the AML/CFT/CPF handbook
• http://www.jerseyfsc.org/media/8059/appendix-b-handbook-amended-glossary-highlighted-changes.pdf
• Section 9 of the AML/CFT/CPF handbook
• http://www.jerseyfsc.org/media/8060/appendix-c-section-9-amends-tracked-changes-included.pdf
• Section 10 of the AML/CFT/CPF handbook
• http://www.jerseyfsc.org/media/8056/appendix-d-section-10-track-changes.pdf
• GIMB Code of Practice
• http://www.jerseyfsc.org/media/8057/appendix-e-general-insurance-mediation-business-code-of-practice-track-changes.pdf

READ MORE

JFSC Consult on enhancements to criminal background checks for principal and key persons [29/01/25]

The JFSC has published a consultation paper on enhancing criminal background checks for principals and key persons.

• Submit your feedback by 11:59pm on Wednesday, 26 March 2025, through:
• A feedback paper for this consultation will be published on Wednesday, 7 May 2025.

The proposals in this consultation paper

• Seek to strengthen the current regulatory regime to prevent criminals and their associates from owning, controlling or being in a position of key influence in a Jersey-supervised person to meet international AML/CFT/CPF requirements.
• Aim to achieve this proportionately and cost-efficiently so that it does not adversely impact the competitiveness and attractiveness of Jersey as a place to do business.

Please note

• It is not currently intended that non-profit organisations (NPO) will be subject to the proposals in the consultation paper.
• The JFSC has taken this approach to align with the Financial Action Task Force Recommendation 8 requirements that state countries should apply proportionate measures to oversee NPOs.  

The JFSC consultation paper outlines: 

• Why the JFSC are consulting 
• The introduction of the requirement to provide criminal record certificates  
• What level of criminal record checks will be required 
• How to obtain a criminal record checks 
• When a principal or key person would have to submit criminal record checks  
• Related amendments to supervised persons' obligations in the AML/CFT/CPF handbook and the General Insurance Mediation Business Codes of Practice 
• Requisite changes to myProfile and myJFSC and relevant forms 
• The proposed timeframe for the introduction of the proposed regime 
• Ancillary changes to the annual supervisory risk data collection 

Read the full consultation paper: consultation on enhancements to criminal background checks. 

• https://www.jerseyfsc.org/industry/consultations/consultation-on-enhancements-to-criminal-background-checks/

Next steps 

Submit your feedback by 11:59pm on Wednesday, 26 March 2025 through: 

• Your trade body or association 
• Jersey Finance Limited (JFL) 
• the online form = https://www.smartsurvey.co.uk/s/No-1-2025/

All responses to this consultation through the form, JFL or industry bodies and associations will be considered.  

A feedback paper for this consultation will be published on Wednesday, 7 May 2025.

Join the JFSC drop-in sessions. 

• To support you during the consultation process, the JFSC is hosting drop-in sessions. During these sessions, you can meet with the JFSC team and discuss any queries after reading the consultation paper. No booking is required. 
• See the JFSC  available drop-in sessions: drop-in sessions for the JFSC  consultation on enhanced criminal background checks 
• https://www.jerseyfsc.org/news-and-events/drop-in-sessions-for-our-consultation-on-enhanced-criminal-background-checks/

Meetings with industry bodies and associations

• The JFSC have also offered each of the relevant industry bodies and associations the opportunity for members of the JFSC team to attend one of their meetings during the consultation period to enable discussions and answer any questions on the consultation paper. 

SOURCE

• https://www.jerseyfsc.org/news-and-events/consultation-on-enhancements-to-criminal-background-checks-for-principal-and-key-persons/