JERSEY Schedule 2 removal of "Level 2" and the unilateral application of “fit and proper" test to all sch2 businesses

On Friday 25 March, the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008 (Supervisory Bodies Law) was amended following its adoption by the States Assembly in January 2022.

• https://www.jerseylaw.je/laws/enacted/PDFs/L-06-2022.pdf

The changes to the Supervisory Bodies Law affect Schedule 2 businesses holding a "Level 2" registration. [see below to see who qualifies], but includes:-

• Lawyers, Accountants, Estate Agents, and High Value dealers [full list below].

What these changes mean for you and your business

In summary the changes are

1. The removal of "Level 2" registrations
2. The introduction of a "fit and proper test" for all current Schedule 2 businesses
3. The introduction of a requirement for all current Schedule 2 businesses to notify the JFSC of any changes to key and principal persons

Level 1 application (for example lenders) to apply to all

1. On a practical basis the amendment to the Supervisory Bodies Law brings little change.
2. Since 2008, the JFSC have been required to complete a “fit and proper test” on all key and principal persons associated with a Level 1 application (for example lenders).
3. Now that "Level 2" has been removed, the JFSC will apply the same "fit and proper" test to all businesses. The JFSC will employ the same, mature process, to all future applicants.

Strict requirement to inform the JFSC of changes

1. The majority of existing "Level 2" Schedule 2 businesses already update the JFSC about relevant changes that might affect their ongoing registration, for example, changes in principal persons.
2. However, moving forward this is now a STRICT REQUIREMENT rather than a voluntary notification.

Transition period

1. During the six-month transition period, which started on 25 March and runs to 24 September 2022,
2. a small number of current "Level 2" businesses will need to update the JFSC on any historic changes to their key and principal persons.
3. This is only necessary for businesses that have not voluntarily updated the JFSC on these changes since their original licence was granted.
4. Businesses should do this by contacting their supervisor.

JFSC Next steps

1. The JFSC are currently updating the Schedule 2 application forms to reflect these changes for future applicants.
2. The JFSC will also be updating its systems during 2022 so that future ongoing notifications can be made as smoothly as possible. Further detail on these developments will be provided in May 2022.
3. Schedule 2 businesses with questions or concerns about these changes should contact their supervisor. All current "Level 2" businesses must ensure that they have updated the JFSC with the details of their current key and principal persons no later than Monday 26 September 2022.

Read more:

• https://www.jerseyfsc.org/news-and-events/update-to-schedule-2-applications-and-registrations/

(LEVEL 1)  APPLIES TO:

1. Casinos (including internet casinos)
2. Acceptance of deposits and other repayable funds from the public
3. Lending, including consumer credit, mortgage credit, factoring (with or without recourse), financing of commercial transactions (including forfeiting)
4. Financial leasing
5. Issuing and administering means of payment (such as credit and debit cards, cheques, travellers’ cheques, money orders and bankers’ drafts, and electronic money)
6. Guarantees and commitments
7. Trading for the account of third parties in –

• Money market instruments (cheques, bills, certificates of deposit, derivatives etc.)
• Foreign exchange
• Futures and options (financial and commodity)
• Exchange, interest rate and index instruments
• Transferable securities

1. Participation in securities issues (and the provision of services related to such issues) 
2. Portfolio management and advice
3. Safekeeping and administration of securities
4. Otherwise investing, administering or managing funds or money on behalf of third parties
5. The business of forming and administering legal persons or arrangements
6. Virtual currency exchange

(Level 2) 

1. Lawyers
2. Accountants
3. Estate agency services
4. High value dealers
5. Advice to undertakings on capital structure, industrial strategy and related questions and advice as well as services relating to mergers and the purchase of undertakings
6. Money broking
7. Safe custody services