The JFSC announces a 2023 review of systems and controls to prevent and detect Terrorism & Proliferation Financing.

The JFSC has announced it will undertake a series of Thematic examinations on the risk of Countering Financing of Terrorism/Countering Proliferation Financing.

The examination will

1. Look to establish how well-supervised persons have implemented effective measures to counter terrorist financing and proliferation financing.   
2. It will consist of two stages:
   • An industry questionnaire which has been issued and returned by a selection of entities
   • A sample of on-site examinations in Q3 2023.

SOURCE

• https://www.jerseyfsc.org/news-and-events/thematic-countering-financing-of-terrorismcountering-proliferation-financing/

ALSO, READ JFSC ANNOUNCEMENT BELOW

Thematic: Countering Financing of Terrorism/Countering Proliferation Financing

Terrorist Financing related National Risk Assessments and testing compliance with countering terrorist financing and countering proliferation financing requirements.

1. In April 2021, Jersey's National Risk Assessment of Terrorist Financing (2021 TF NRA) was published and concluded that the risk of either financial services or non-profit organisations (NPOs) being used to fund terrorism was considered medium-low.
2. In April 2022 Jersey also published its National Risk Assessment of NPOs, assessing the risk of terrorist financing abuse within the non-profit sector as medium-low.
3. In May 2023, an updated National Risk Assessment of Terrorist Financing (2023 TF NRA) was published which concludes that the risk of Jersey being used as a conduit for terrorist financing remains at medium-low.

Actions identified highlights that Jersey benefits from further developing terrorist financing understanding and capacity across the public and private sector, ensuring development of a more robust skills base to identify, investigate and supervise compliance with terrorist financing requirements.

Specifically, the JFSC should be able to provide information and data in relation to compliance with terrorist financing preventative measures.

We have enhanced our website content and continue to provide training and guidance concerning countering terrorist financing and proliferation financing, including sanctions breaches. We will now conduct testing to gain further understanding of supervised person arrangements.

The examination will look to establish how well effective measures have been implemented by supervised persons to counter terrorist financing and proliferation financing.  

It will consist of two stages;

1. An industry questionnaire which has been issued and returned by a selection of entities and a sample of on-site examinations in Q3 2023.

It will consist of two stages:

2. An industry questionnaire which has been issued and returned by a selection of entities
3. A sample of on-site examinations in Q3 2023.

What is Terrorist Financing?

• Terrorist financing is the provision or collection of funds/economic resources from legitimate or illegitimate sources with the intention of, or in the knowledge that them being intended to be used to carry out any act of terrorism, whether they are in fact used for that purpose.

What is Proliferation Financing?

• Proliferation financing can be described as providing financial services and products for the transfer and export of nuclear, chemical or biological weapons; their means of delivery and related materials. It involves the financing of trade in proliferation sensitive goods but could also include other financial support for legal or natural persons or arrangements engaged in proliferation.

Key areas of focus for this Thematic

The thematic examination will review and assess the adequacy of entity systems and controls for the management of terrorist financing and proliferation financing risk.

The key areas of focus in this thematic examination will include:

1. Corporate Governance: governance arrangements in place relating to the consideration of terrorist financing and proliferation financing risks, including the Business Risk Assessment and relevant Policies and Procedures
2. Internal Systems and Controls: monitoring activities to prevent and detect terrorist financing and proliferation financing, including compliance with Jersey's sanctions regime and testing that any steps in place remain effective
3. Ongoing Monitoring: risk-based measures to scrutinise customer activity, including transactions, against the supervised person's knowledge of a customer which may cause them to regard it as particularly likely to be related to the financing of terrorism or the financing of proliferation
4. Reporting of the Financing of Terrorism: procedures to ensure a report is made as soon as practicable where information or matters on which knowledge, suspicion or reasonable grounds for knowledge or suspicion that another person is engaged in the financing of terrorism comes to their attention
5. Reporting the Financing of Proliferation: procedures to ensure a report is made to the Minister for External Relations and Financial Services, where the supervised person knows or has reasonable cause to suspect that a person is a designated person or is involved in an offence under the Sanctions and Asset Freezing (Jersey) Law 2019
6. Training and Awareness: training and awareness in respect of terrorist financing and proliferation financing matters.

Further reading

• Terrorist Financing: Guidance Note https://www.jerseyfsc.org/industry/guidance-and-policy/terrorist-financing/
• Countering proliferation of weapons of mass destruction and its financing guidance https://www.jerseyfsc.org/media/6592/countering-proliferation-of-weapons-of-mass-destruction-and-its-financing.pdf
• Comparison: Terrorist Financing, Money Laundering, and Financing the Proliferation of Weapons of Mass Destruction guidance https://www.jerseyfsc.org/industry/guidance-and-policy/comparison-terrorist-financing-money-laundering-and-financing-the-proliferation-of-weapons-of-mass-destruction/
• Additional Information Sources- ML/TF/PF https://www.jerseyfsc.org/industry/financial-crime/additional-information-sources-ml-pf-tf/