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

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 - [SEE BELOW]
4. INVESTMENT BUSINESS,  

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.

Legal sector

1. The legal sector data covers law firms registered with us, which vary significantly in terms of size, geographic reach, client profiles and the services provided.
2. Some law firms are involved in large multi-national transactions, where they often play a discrete role, and others have a customer base which is predominately domestic.  
3. Given the one-off transactional nature of some legal services, year on year trends can be less stable than other sectors but provide useful insights regarding the risks within the sector.  
4. Data collected in respect of the residency of the law firm’s customers demonstrates that in 2023
1. Half of all customers are Jersey residents.
2. With a further 22% of customers residing in the United Kingdom.
5. Exposure to higher risk jurisdictions is stable and relatively low compared to some other financial services sectors in Jersey.
6. As with other sectors analysed, the higher risk jurisdiction with the greatest number of customer relationships is
1. South Africa,
2. Monaco and
3. Lebanon.  
7. PEP CONNECTIONS
1. 4.1% of the law firm’s customer relationships include a PEP connection.

                                          i. This is highest for Jersey vehicles such as

                                         ii. Limited partnerships (16.6%)

                                        iii. Trusts with a non-Jersey trustee (10.7%) and

                                        iv. Trusts with a Jersey trustee (9.2%).

2. PEP exposure is highest among larger law firms where the provision of services to trusts, companies and other legal arrangements is more common. 
7. The data shows a reduction in 2023 in the number of matters relating to the buying and selling of immovable property/business entities, which is consistent with data published by Statistics Jersey demonstrating a reduction in Jersey property sales in 2023. 

Read the JFSC data report for the legal sector.  https://www.jerseyfsc.org/media/7981/sector-data-legal-sector.pdf

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