JFSC Money laundering and terrorist financing risk data 2019 - 2023 analysis - INVESTMENT BUSINESS

In December 2024, the JFSC published some Money laundering and terrorist financing risk data [2019 – 2023], for the following sectors for the first time.

1. BANKING
2. TRUST COMPANY BUSINESS
3. LEGAL
4. INVESTMENT BUSINESS - [SEE BELOW]

https://www.jerseyfsc.org/industry/risk/supervisory-risk-data-collection-exercise/sector-based-aggregated-data/#Sector-based-aggregated-data

The data in the reports covers 2019 - 2023 and provides.

1. A general overview of each sector along with trends on inherent risk factors such as customers from higher risk jurisdictions and politically exposed persons (PEP) connections. 
2. An explanation has been provided to support the aggregated data presented through a combination of graphs and tables.

KEY AIMS AND OBJECTIVES

1. The aim of publishing these reports is to improve the understanding of money laundering and terrorist financing risk within each sector and enable a comparison across different sectors and activities.
2. Key risk indicators are included for each sector to provide useful benchmarking for supervised persons looking to assess their own money laundering and terrorist financing risks.
3. The JFSC will be engaging with industry through trade bodies and associations during Q1 2025 to gather feedback and inform future publications.

WARNINGS

1. The reports are not risk assessments.
2. Whilst some data quality and integrity checks are performed on receipt of the data, the JFSC rely on the accuracy and completeness of data provided by industry.

INVESTMENT BUSINESS SECTOR

1. The activity of investment business (IB) is undertaken by a diverse range of businesses, including:-
1. Local independent financial advisers (IFAs),
2. Niche wealth managers and
3. Banks with a global presence.  
2. IB is divided into 5 “classes” A, B, C, D and E:-
1. With this reporting focusing on classes A – D,
2. Class E being rarely used. [Persons registered to conduct Class E investment business are permitted to enjoy amended requirements in respect of certain sections of the Code, as set out in the Second Schedule]

3. These include:-
1. Dealing in investments (Class A),
2. Managing investments (Class B),
3. Giving investment advice when not prevented from holding client (Class C) and
4. Giving investment advice when prevented from holding client assets (Class D).  
4. Over the period 2019 to 2023 the value of total assets under administration (or equivalent measure) peaked in 2021 but has generally grown with the total assets under administration, in custody, managed or advised increasing from:-
1. £121bn in 2019 to
2. £137bn in 2023.
5. This includes significant growth in the value of assets advised by Class D entities, which have increased from:-
1. £3.9bn in 2019 to
2. £11.3bn in 2023.
6. Over the same period, the number of firms has declined due to a combination of banks ceasing to operate in Jersey as well as consolidation of non-bank IBs within the sector.  
7. Much of the data analysed has been split between banks which provide IB services and non-bank IBs. This demonstrates that, in general, banks have a greater proportion of customers from
1. Higher risk jurisdictions,
2. More connections to politically exposed persons and
3. Consider their customers to be higher risk for ML/TF.
8. This increased inherent risk may be partially mitigated by the heightened levels of enhanced CDD applied to banks’ IB customers in comparison to non-bank IBs.  

Read the JFSC data report for the investment business sector. https://www.jerseyfsc.org/media/7980/sector-data-ib.pdf

ALL SECTORS https://www.jerseyfsc.org/industry/risk/supervisory-risk-data-collection-exercise/sector-based-aggregated-data/#Sector-based-aggregated-data