JFSC issue a Zero [£] fine against Jersey Post Limited….but what about its directors.

The Jersey Financial Services Commission (JFSC) has recently issued a Zero Fine against Jersey Post Limited (JPL), which raises significant questions regarding the accountability of its directors.

As of now, the JFSC has not imposed any civil penalties on individuals in Jersey (see below for details on the JFSC penalty regime), with all seven fines issued thus far directed solely at firms (The body corporate).

The firms issued with fines to-date are:-.  

1. Sanne Fiduciary Services Limited - Fined £381,010 in July 2019.
2. Equity Trust (Jersey) Limited - Fined £115,575 in June 2020
3. SG Kleinwort Hambros - Three firms collectively fined £719,000 in February 2021
4. IQEQ (Jersey) Limited - Fined £803,661.17 in July 2022
5. Lloyds Bank Corporate Markets Plc, Jersey Branch (LBCM, Jersey Branch) - Fined £498,000 in August 2022,
6. Belasko Jersey Limited was fined £19,211.73 on September 20, 2024. 
7. Jersey Post Limited – ZERO fine, October 2024

Despite the serious regulatory contraventions identified in JPLs operations, particularly concerning its money service business activities, the JFSC opted for a Zero Fine on JPL as a body corporate..

The investigation, which spanned from January 2019 to December 2022, revealed that the JPL Board exhibited inadequate knowledge of regulatory requirements and overly relied on a compliance function that was not operating effectively. Specific failings included a lack of understanding of regulatory obligations, insufficient oversight of business activities, outdated risk management documentation, poor compliance procedures, and inadequate training processes.

The JFSC's decision not to impose a financial penalty was influenced by the potential financial impact on Jersey Post and its customers, the corrective actions already taken by JPL, and the full cooperation of JPL during the investigation. However, the absence of individual sanctions against the directors raises critical questions about accountability, especially given the significant failings highlighted in the public statement.

SOURCES

• https://www.jerseyfsc.org/news-and-events/jersey-post-limited/
• https://www.jerseyfsc.org/news-and-events/jfsc-issues-public-statement-regarding-jersey-post-limited-for-serious-regulatory-contraventions/

For more information on the JFSC PENALTY REGIME please read below

JFSC PENALTY REGIME

The Jersey Financial Services Commission (JFSC) has the authority to issue financial sanctions against individuals, including directors within a registered person.

The powers for significant and material contraventions of the Codes of Practice and the AML/CFT Handbook.

• Since 2015, the JFSC has had the power to impose civil financial penalties against REGISTERED ENTITIES.
• In 2018, the JFSC was given the power to impose similar civil penalties on a registered person's PRINCIPAL PERSON [E.G. DIRECTORS]
• In 2022, the pool of individuals who can be fined was widened to include SENIOR MANAGEMENT FUNCTIONS. The JFSC’s statutory notice designating senior management functions came into effect on March 13, 2023. Registered persons are expected to identify which employees fall into these categories and notify them accordingly.

PENALTIES IMPOSED ON PRINCIPAL PERSONS

The Jersey Financial Services Commission (JFSC) has a detailed methodology for determining the amount of civil financial penalties imposed on principal persons. Here are the key points:

1. Grounds for Penalty: The JFSC can impose a penalty if a principal person has significantly and materially contravened a Code of Practice, either through consent, connivance, neglect, or by aiding and abetting the contravention
2. Penalty Bands: The penalties are categorised into four bands based on the severity of the contravention:
• Band 1: Failure to notify the JFSC of certain matters (up to £10,000).
• Band 2: General contraventions not rectified within the specified timeframe (up to £200,000).
• Band 2A: Negligent contraventions (up to £300,000).
• Band 3: Intentional or reckless contraventions (up to £400,000)¹.
3. Factors Considered: When determining the amount of the penalty, the JFSC considers several factors, including:
• The seriousness of the contravention.
• Aggravating or mitigating factors.
• Ensuring that principal persons do not profit from contraventions.
• Penalties imposed in similar cases.
• Potential financial consequences to the principal person and third parties¹.
4. Methodology Steps:
• Step 1: Assess the seriousness of the contravention on a scale of 1 to 5, based on its impact on the JFSC’s guiding principles: reducing risk to the public, protecting Jersey’s reputation, and countering financial crime
• Step 2: Consider any aggravating or mitigating factors that might increase or decrease the penalty.
• Step 3: Ensure that the penalty is proportionate and that the principal person does not profit from the contravention.
• Step 4: Compare with penalties in similar cases to ensure consistency.
• Step 5: Consider the financial impact on the principal person and any third parties
5. Appeals: Principal persons can appeal to the Royal Court against the imposition or amount of a financial penalty if they believe the JFSC’s decision was unreasonable

SOURCES

• JFSC Civil Financial Penalties Guidelines https://www.jerseyfsc.org/industry/guidance-and-policy/civil-financial-penalties-on-natural-persons/

“SENIOR MANAGEMENT FUNCTION”

The Jersey Financial Services Commission (JFSC) can indeed issue financial sanctions against individuals performing a “senior management function” within a registered person. Here are the key points:

1. Definition of Senior Management Function: According to the JFSC, a senior management function is one that requires the individual to be responsible for managing one or more aspects of the registered person’s affairs, which involve or might involve a risk of serious consequences for the registered person or for business or other interests in Jersey.
2. Grounds for Penalty: The JFSC can impose a civil financial penalty on a senior management function if it is satisfied that a contravention by the registered person was:
• Committed with the consent or connivance of the senior management function.
• Attributable to neglect on the part of the senior management function.
• Aided, abetted, counselled, or procured by the senior management function.
3. Categories of Senior Management Functions: The JFSC has designated specific categories of senior management functions, including:
• Managing aspects of AML/CFT/CPF compliance/risk functions.
• Managing aspects of the registered person’s affairs that involve significant influence over statutory and regulatory obligations².
4. Penalties: The penalties for senior management functions can be substantial, with fines reaching up to GBP 400,000, depending on the severity and nature of the contravention³.
5. Implementation: The JFSC’s statutory notice designating senior management functions came into effect on March 13, 2023. Registered persons are expected to identify which of their employees fall into these categories and notify them accordingly

SOURCES

• JFSC Notice Designating Senior Management Functions : https://www.jerseyfsc.org/news-and-events/notice-designating-senior-management-functions-published/
• JFSC Consultation on Senior Management Functions : https://www.jerseyfsc.org/industry/consultations/consultation-on-senior-management-functions/