ASK MAT: I’m a Jersey VASP, but I have discovered that I cannot use the Apple Store to operate. Help.

ASK MAT: I’m a Jersey VASP, but I have discovered that I cannot use the Apple Store to operate. Can you offer any Help/advice?.

MAT SAYS: Thank you for your question. Yes, I’m aware of the problems Jersey VASPS are encountering.  Hopefully, the Jersey authorities will address this problem, and the following thoughts are only short-term.

My thoughts on helping you are as follows:-

APPLE INC.'S APP STORE PROBLEM WITH JERSEY   

• For a JERSEY VASP to operate and offer a Regulated Financial Services Application via Apple Inc.'s app store, the Jersey VASP providing this financial product must serve the products within a recognised App Store.
• However,
• Jersey is not a country/region/jurisdiction recognised by Apple Inc.’s App Store and
• Due to this trade restriction, a Jersey MLRO/MLCO is not acknowledged/approved/accredited to sign off on a JERSEY VASPs new client CDD/AML onboarding, monitoring, and other related risk matters.

A SOLUTION AND CASE STUDY

• In consideration of the above problem, I’m aware that this restriction has resulted in JERSEY VASPS moving their CDD/AML in-app services to the UK
• With the Jersey entity acknowledged as a “British Isles” trading VASP subsidiary and
• The MLRO is an FCA-certified MLRO (for client on-boarding and monitoring of all clients, etc.)
• This transition MUST be approved with the cooperation of Appl Inc.’s legal team.

MLRO OFFICERS AND PUBLIC REGISTERS

• To be a Money Laundering Reporting Officer (MLRO) in the UK, you must be approved by the Financial Conduct Authority (FCA).
• The role of MLRO is considered a controlled function under the FCA's regulations, specifically under the Senior Management Functions (SMF) framework
• Approved individuals, including MLROs, are listed on the FCA's Financial Services Register. This register includes details of individuals who hold controlled functions at regulated firms.

WHO CAN BE THE MLRO

• Interestingly, the Financial Conduct Authority (FCA) does not explicitly require UK residency for individuals to secure a certified UNIQUE REFERENCE NUMBER (URN) status.
• The result is that a Jersey VASPS that transfers to the UK can use their Jersey resident employees if the FSA registers them.

MLRO COMPETENCE

• It should be noted that the FCA has stringent requirements for assessing whether a person is fit and proper to perform a certification function.
• These requirements include obtaining relevant qualifications, training, and possessing the necessary competence and personal characteristics.
• Firms must ensure that their employees, including those performing key AML roles, meet these criteria.
• While UK residency is not a specified requirement, the individual must comply with all regulatory standards and be able to perform their duties effectively within the UK regulatory framework.

OUTSOURCING

• In applying any transfer of Jersey duties, you should review the Jersey JFSC outsourcing policy (OSP)
• In the OSP, OUTSOURCED ACTIVITY (OUTSOURCING) is defined and described as follows:-
• Is an activity that a SERVICE PROVIDER performs that “JERSEY VASP” itself would otherwise undertake
• A SERVICE PROVIDER is a Person (INDIVIDUAL/LEGAL) who performs an Outsourced Activity on behalf of a Business
• Is an arrangement between JERSEY VASP and a SERVICE PROVIDER by which the following two tests MUST be met:
• TEST 1 = a Service Provider performs an Outsourced Activity; and
• TEST 2 = where that Service Provider’s FAILURE TO PERFORM OR INADEQUATE PERFORMANCE of such Outsourced Activity would MATERIALLY:-
• Prevent, disrupt, or impact upon THE CONTINUING compliance
• Of JERSEY VASPs Regulated Activity with the applicable Regulatory Laws

I HOPE THE ABOVE ASSIST. I HAVE BELOW ADDED SOME FURTHER DETAILS

 KEY BREAKDOWN OF THE ISSUES ABOVE

1. Apple’s “High-Risk” Product Categorisation for VASPs
   1. Apple categorises Virtual Asset Service Providers (VASPs) as "High-Risk" due to potential misuse in money laundering and other illicit activities.
   2. This categorisation means trading firms involved in VASP activities must adhere to stringent regulatory requirements.
2. Certified Public Money Laundering Register
   1. Trading firms must have a certified Public Money Laundering Register for "high-risk" activities.
   2. This register typically includes details of Money Laundering Reporting Officers (MLROs) and other key persons involved in anti-money laundering (AML) activities.
3. Jersey’s Situation
   1. Jersey does not have a certified and public register of MLRO Key Persons with Unique Reference Numbers (URNs).
   2. This could pose a challenge for firms operating in Jersey, as they need to comply with Apple's requirements and broader regulatory standards.
4. THE UK Situation
   1. To be a Money Laundering Reporting Officer (MLRO) in the UK, you must be approved by the Financial Conduct Authority (FCA).
   2. The role of MLRO is considered a controlled function under the FCA's regulations, specifically under the Senior Management Functions (SMF) framework.
   3. Approval Process
      1. Application: Firms must apply to the FCA to approve individuals for the MLRO role. The FCA assesses the individual's qualifications, experience, and fitness for the role.
      2. Controlled Function: Acting as an MLRO is specified as a controlled function, meaning the FCA must approve the individual before performing the role.
   4. Listing on the FCA Website
      1. Public Register: Approved individuals, including MLROs, are listed on the FCA's Financial Services Register. This register includes details of individuals who hold controlled functions at regulated firms.
   5. Steps to Become an Approved MLRO
      1. Qualifications and Experience: Ensure you have the skills, knowledge, and experience required for the role.
      2. Firm Application: Your firm must submit an application to the FCA for approval.
      3. FCA Assessment: The FCA will assess your application based on various criteria, including your competence and personal characteristics.

What You Should Do

1. Consult with Regulatory Authorities:
• Engage with Jersey's financial regulatory authorities to understand the local requirements and any potential solutions for compliance.
2. Internal Compliance Measures:
• Ensure your firm has robust internal AML controls and that key personnel are well-documented and certified internally, even if a public register is unavailable.
3. Seek Legal and Compliance Advice:
• Consult with legal and compliance experts specialising in financial regulations and AML to navigate the specific requirements and find compliant solutions.
4. Stay Updated:
• Keep abreast of local and international regulations changes that might affect your firm's operations and compliance status.

By taking these steps, you can better navigate the regulatory landscape and ensure your firm complies with Apple's requirements and broader AML regulations.

References

• JERSEY OFFICIAL OUTSOURCING POLICY -OSP - https://www.jerseyfsc.org/industry/guidance-and-policy/outsourcing-policy/
• JERSEY OSP SLIDE PACK https://www.jerseyfsc.org/media/7216/outsourcing-policy-presentation-slides.pdf
• Integrating Toxicological Assessments in Material Selection for Apple ...https://www.apple.com/environment/pdf/Integrating_Toxicological_Assessments_in_Material_Selection_for_Apple_Products_07152022.pdf
• Heads of compliance and MLROs | FCA - Financial Conduct Authority https://www.fca.org.uk/firms/approved-persons/heads-compliance-mlros
• ML 7.1 The money laundering reporting officer - FCA Handbook https://www.handbook.fca.org.uk/handbook/ML/7/1.html?date=2005-04-02
• SYSC 27.2 Requirements of the certification regime - FCA Handbook https://www.handbook.fca.org.uk/handbook/SYSC/27/2.html
• Money Laundering Regulations | FCA - Financial Conduct Authority https://www.fca.org.uk/firms/financial-crime/money-laundering-regulations
• Who needs to register for money laundering supervision? https://www.gov.uk/guidance/money-laundering-regulations-who-needs-to-register
• Appoint a nominated officer and train staff for money laundering ...https://www.gov.uk/guidance/money-laundering-regulations-nominated-officers-and-employee-training