Using the RACI Matrix to Demonstrate Compliance with JFSC Senior Management Function Rules

The RACI Matrix (Responsible, Accountable, Consulted, Informed) is a governance tool that clarifies roles and responsibilities by assigning one of four designations to individuals or teams for specific tasks or decisions:

• Responsible (R): Performs the task or work.
• Accountable (A): Owns the outcome, ensures completion, and is answerable (one "A" per task).
• Consulted (C): Provides input or expertise before decisions or actions.
• Informed (I): Kept updated on progress or outcomes without active participation.

Under the Jersey Financial Services Commission (JFSC) Notice on "senior management functions" (effective March 13, 2023), issued per Article 1(1) of the Financial Services Commission (Jersey) Law 1998, senior management functions are designated for roles managing aspects of a registered person’s affairs related to anti-money laundering (AML), countering the financing of terrorism (CFT), and countering proliferation financing (CPF) that risk serious consequences for the firm or Jersey’s interests.

These roles involve decision-making or participation in decisions and carry potential civil penalties under Article 21A for contraventions involving consent, connivance, neglect, or aiding. The RACI Matrix can demonstrate compliance by mapping these functions.

Application of the RACI Matrix

1. Identifying and Mapping Senior Management Functions

• List Key Processes: Identify tasks and decisions for the four categories in the Notice:
• Category 1: Managing local AML/CFT/CPF compliance/risk functions (below board, above key person roles, e.g., line managing a compliance officer).
• Category 2: Managing affairs below board level with direct board/principal person reporting, involving AML/CFT/CPF obligations and significant influence (e.g., decisions impacting risk exposure).
• Category 3: Performing duties under the Money Laundering (Jersey) Order 2008 or AML/CFT/CPF Codes of Practice (e.g., senior oversight in committees).
• Category 4: Duties of a senior officer under the Banking Business (Jersey) Order 2002.
• Break Down Tasks: Decompose categories into specific tasks (e.g., "Approve AML risk assessments," "Oversee CFT monitoring systems," "Participate in CPF policy decisions").
• Assign RACI Roles: Designate individuals, ensuring the "A" (Accountable) aligns with the senior manager responsible for the function, reflecting their liability.

2. Demonstrating Accountability and Responsibility

• Accountability ("A"): Assign the "A" role to the senior manager with decision-making authority or significant influence, ensuring compliance with the Notice’s emphasis on individual accountability. This avoids diffusion of responsibility and aligns with potential Article 21A penalties.
• Decision-Making Clarity: Use "C" for consulted parties (e.g., risk experts) and "R" for those executing tasks, supporting the Notice’s definition of “participating in decisions.”
• Risk Mitigation: The matrix ensures no task lacks an accountable owner, reducing risks of neglect.

3. Ensuring No Gaps or Overlaps

• Gap Analysis: Identify unassigned roles (e.g., no "A" for a Category 3 duty), which could signal compliance risks.
• Overlap Prevention: Limit one "A" per task to maintain clear accountability.
• Inclusivity: Include non-Jersey residents or outsourced roles as per the Notice’s notes.

4. Practical Implementation for Compliance

• Documentation: Embed the RACI Matrix in governance documents (e.g., Statements of Responsibilities, AML/CFT/CPF policies).
• Updates: Review annually or upon role changes to ensure ongoing compliance.
• Evidence for JFSC: Present the matrix during examinations to show clear allocation of senior management functions and decision-making structures.
• Adaptation: For Jersey branches or non-company structures, adjust hierarchy references (e.g., “board” as governing body).

Example RACI Matrix for AML/CFT/CPF Compliance

This matrix ensures accountable roles align with senior managers, demonstrating compliance with the Notice’s criteria (e.g., hierarchical position, significant influence).

Conclusion

The RACI Matrix provides a structured, transparent way to map senior management functions, ensuring clear accountability and decision-making as required by the JFSC Notice. It serves as auditable evidence of compliance, helping firms mitigate risks of serious consequences. Consult legal or compliance experts for firm-specific implementation, as this is not formal advice.

Source

https://www.jerseyfsc.org/news-and-events/notice-designating-senior-management-functions-published/

https://www.jerseyfsc.org/media/6333/notice-issued-under-article-1-1-of-the-financial-services-commission-jersey-law-1998-designating-senior-management-functions.pdf