Warning – The JFSC proposals for AML “exempt” businesses may result in lots of hard work for TCSBs/FSBs

The JFSC has issued a further consultation/proposal for financial services businesses that offer services to AML “exempt” businesses that take Jersey industry [TCSBs/FSBs] on to the next step.

The next step is a transitional period, which is six months commencing January 2023; the following must register with the JFSC

1. Previously Exempt Supervised Person [possibly a TCSBs/FSBs customer[s] and
2. Designated Service Providers [possibly TCSBs/FSBs]

The consultation closes on 14 October 2022 is here:-

3. https://www.jerseyfsc.org/industry/consultations/cp-exemptions-september-2022/

What does this mean? Comsure has added a summary of matters below.

THE SCOPE OF THE PROPOSALS IS BROAD-RANGING AND SUMMARISED BELOW:-.

The consultation paper [if/when accepted] will materially impact individuals and organisations [e.g. TCSBs/FSBs and its customers] if they:-  

1. Conduct, as a business, activities or operations within the recast Schedule 2 [recast by the Proceeds of Crime (Amendment No. 6) (Jersey) Law 2022] and
2. ARE NOT currently subject to AML/CFT obligations OR are presently exempt from registration with the JFSC  - A new definition and acronym capture these scenarios
   • “Previously Exempt Supervised Person” – PESPs
3. By way of example
   • A TCSBs/FSBs customer who undertakes a recast schedule 2 activities, e.g. lending
   • The recast Sch 2 is here https://www.jerseylaw.je/laws/enacted/Pages/L-25-2022.aspx]

There are DRAFT GUIDELINES on the interpretation of recast schedule 2 activities [e.g. lending]; see here:-

4. https://www.jerseyfsc.org/media/5854/appendixa-guidelines-on-interpretation-of-schedule-2-business.pdf

For TCSBs/FSBs [and if it has PESPs], it will have the following choices:-

5. If the TCSBs/FSBs Intend to provide Designated Service Provider [DSP] services to their existing customers, the TCSBS/FSBS will need to register as a DSP.
   1. Please note is TCSBs/FSBs choose to be a DSP, there are new codes to follow – see the Draft Codes of Practice and Guidance for Designated Service Provide
      • https://www.jerseyfsc.org/media/5853/appendix-b-draft-codes-of-practice-and-guidance-for-dsps-and-their-customers.pdf
   2. If the TCSBs/FSBs Do not intend to provide DSP services –
   3. It will need to consider the scope of services it will provide to its existing PESP customers and
   4. Should make arrangements to support their current PESP customers in complying with their ongoing AML/CFT obligations.

THE JFSC MESSAGE SAYS:-

7. The JFSC has launched a follow-on consultation on its work to align Jersey’s anti-money laundering and counter-terrorist financing (AML/CFT) regime to International Standards.
8. THE JFSC is asking for feedback on its proposals which take forward earlier consultations in 2021/22
   • December 2021 =

                 https://www.jerseyfsc.org/industry/consultations/consultation-on-exemptions-no-12-december-2021/

7. • Feedback 2022

                  https://www.gov.je/SiteCollectionDocuments/Industry and finance/Feedback on AMLCFT scope exemptions.pdf

7. • The JFSC proposals will impact

                 Regulated financial services businesses that provide services to “exempt” businesses

                 Others, including businesses who currently utilise the AML/CFT exemptions, which are falling away and

                  Virtual Asset Service Providers.

7. • The JFSC is seeking feedback on the consultation from all interested parties by 14 October 2022.
   • Any immediate concerns in this regard, please contact
   • policy@jerseyfsc.org.
   • Follow-on consultation on AML/CFT scope exemptions
   • https://www.jerseyfsc.org/industry/consultations/cp-exemptions-september-2022/

JFSC source

• https://www.jerseyfsc.org/news-and-events/follow-on-consultation-on-anti-money-laundering-exemptions/