Jersey key person and senior management in scope for civil financial penalties – can they [you] trust the process?

Following the consultation on proposed amendments under the Financial Services Commission (Jersey) Law 1998 with regards to the civil financial penalties regime earlier this year, the Government of Jersey has published a Response Paper now which summarises the responses received and Government's policy considerations.

On a particular point Question 3: the question was:

• Do you agree with the proposed definition of a senior management function? If not, please provide details and an alternative definition.

A snapshot of commentary to this question follows:

1. The Amendments proposed to amend the FSC Law to include,
1. Key persons, and
2. Any person performing a “senior management function”.
2. Regarding the definition of key persons, the Amendments proposed that
1. Key person has the meaning given to that expression by the law which governs the registered person in any given contravention
2. Whereas money laundering compliance officer and money laundering reporting officer refer to a person appointed under the MLO.
3. Whilst the responses which expressed a direct view were almost equally split between support and rejection of the proposed extension of the civil financial penalties regime to key persons and senior management of financial institutions and DNFBPs,
1. Most responses requested further guidance regarding the definition of a senior management function.
4. As regards to supervisory implementation, it should be noted that the definition of “senior management function” to be inserted by the Amendments into the FSC Law requires the JFSC to designate such functions by means of a notice published on its website.
1. This will ensure that there is transparency over the senior managers that fall within the scope of the civil penalties’ regime.
2. The JFSC has committed to publicly consulting on its proposed notice in due course.
5. Concerning the above some industry responses considered that,
1. Whilst money laundering reporting officers have certain discretion in decision making, for example regarding the externalisation of suspicious activity reports,
2. The discretion in decision making is much more limited for compliance officers and money laundering compliance officers which would support their exclusion from the regime in principle, unless, for example, an individual would be captured by virtue of performing of a senior management function in addition to their compliance officer role.
6. Concerning comments the Jersey Government say, from a supervisory perspective, the JFSC already alluded to their general approach during the above-mentioned panel event, outlining:
1. “… that primary responsibility for regulatory compliance lies with the Board of a regulated business,
2. So, where contraventions require investigation, our primary focus will be on the actions of the Board as a collective and,
3. In appropriate cases, on the actions of individual directors (as principal persons), rather than on compliance personnel.”

Read the consultation response paper here:

https://www.gov.je/SiteCollectionDocuments/Industry%20and%20finance/ID%20Response%20JFSC%20Civil%20Penaltie%20Consultation.pdf

Also see attached document

Following the consultation on proposed amendments under the Financial Services Commission (Jersey) Law 1998 with regards to the civil financial penalties regime earlier this year, the Government of Jersey has published a Response Paper now which summarises the responses received and Government's policy considerations.

On a particular point Question 3: the question was

• Do you agree with the proposed definition of a senior management function? If not, please provide details and an alternative definition.

A snapshot of commentary to this question follows:

1. The Amendments proposed to amend the FSC Law to include,
1. Key persons, and
2. Any person performing a “senior management function”.
2. Regarding the definition of key persons, the Amendments proposed that
1. Key person has the meaning given to that expression by the law which governs the registered person in any given contravention
2. Whereas money laundering compliance officer and money laundering reporting officer refer to a person appointed under the MLO.
3. Whilst the responses which expressed a direct view were almost equally split between support and rejection of the proposed extension of the civil financial penalties regime to key persons and senior management of financial institutions and DNFBPs,
1. Most responses requested further guidance regarding the definition of a senior management function.
4. As regards to supervisory implementation, it should be noted that the definition of “senior management function” to be inserted by the Amendments into the FSC Law requires the JFSC to designate such functions by means of a notice published on its website.
1. This will ensure that there is transparency over the senior managers that fall within the scope of the civil penalties’ regime.
2. The JFSC has committed to publicly consulting on its proposed notice in due course.
5. Concerning the above some industry responses considered that,
1. Whilst money laundering reporting officers have certain discretion in decision making, for example regarding the externalisation of suspicious activity reports,
2. The discretion in decision making is much more limited for compliance officers and money laundering compliance officers which would support their exclusion from the regime in principle, unless, for example, an individual would be captured by virtue of performing of a senior management function in addition to their compliance officer role.
6. Concerning comments the Jersey Government say, from a supervisory perspective, the JFSC already alluded to their general approach during the above-mentioned panel event, outlining:
1. “… that primary responsibility for regulatory compliance lies with the Board of a regulated business,
2. So, where contraventions require investigation, our primary focus will be on the actions of the Board as a collective and,
3. In appropriate cases, on the actions of individual directors (as principal persons), rather than on compliance personnel.”

Read the consultation response paper here:

https://www.gov.je/SiteCollectionDocuments/Industry%20and%20finance/ID%20Response%20JFSC%20Civil%20Penaltie%20Consultation.pdf