JFSC release Feedback from Transaction Monitoring Questionnaire

Executive summary

The sample of 25 relevant persons included regulated businesses from the following sectors: fund services business (FSB), investment business (IB) and trust company business (TCB). The sample also included the following Schedule 2 businesses: lawyers, estate agents, casinos, and lenders.

Manual vs automated approaches

No relevant persons used a fully automated approach to transaction monitoring with 17 (68%) confirming they use manual transaction monitoring methods both before and after a transaction has taken place. Eight (32%) of the relevant persons confirmed that they used a mix of manual and automated transaction monitoring processes.

When using automated monitoring methods, seven relevant persons confirmed their automated processes operated in real-time. The remaining relevant person’s automated monitoring solution scrutinised transactions post-event.

Highlighted deficiencies

A number of deficiencies were highlighted by relevant persons relating to existing systems and controls:

One respondent indicated that no routine transaction monitoring was undertaken

Four respondents highlighted that their systems and controls did not require them to record the findings from transaction monitoring reviews

Seven respondents confirmed that there were backlogs in reviewing transactions or related processes

Three respondents indicated that they had identified deficiencies in the oversight of their transaction monitoring processes

Four respondents indicated that they had identified matters in their transaction monitoring policies and procedures that required addressing

Four respondents confirmed that training in relation to transaction monitoring did not take account of Jersey requirements.

Highlighted good practice

There were two areas where a majority of relevant persons that received the questionnaire highlighted areas of best practice in their approaches to scrutinising transactions and monitoring activity:

68% of respondents confirmed that once a transaction monitoring review had been undertaken, they required a second reviewer to sign off its completion

53% indicated that transaction monitoring methods were tested before going live.

Enhancements to consider

Boards and senior management should consider the following actions, to enhance their systems and controls:

Routine monitoring must be undertaken

Systems and controls must record findings arising from transaction monitoring reviews

Where there are backlogs in reviews, deficiencies in oversight, or identified matters that need to be addressed, business should:

escalate to the appropriate level of management

put plans in place to resolve these matters

action these plans in a timely manner.

Training in relation to transaction monitoring must take account of Jersey requirements

A second reviewer’s sign off on transaction monitoring reviews should be considered

Transaction monitoring methods should be tested before going live.