Case Study: Jersey TCSP Exposure to South African Cannabis (May 2023 – July 2026)

Illustrative Case Study: Jersey TCSP exposure arising from South African cannabis-related structures during the period South Africa was excluded from the approved list (May 2023 – 5 July 2026).

• A Jersey TCSP provides full administration, company secretarial, director, and registered office services to a Jersey-incorporated holding company. That holding company wholly owns a South African subsidiary that is a licensed medical cannabis cultivator, processor, and exporter.
• The SA entity holds valid licences from the South African Health Products Regulatory Authority (SAHPRA) and operates within the framework of South African law (medical cannabis regulated since 2017; private adult use and cultivation decriminalised by the Constitutional Court in 2018 and further framed by the Cannabis for Private Purposes Act 2024).
• The SA subsidiary generates lawful profits under South African rules and upstream dividends to the Jersey holding company.
• The TCSP receives standard administration fees from the holding company, some of which are funded by those dividends.
• The relationship began in 2022 (when South Africa was on the original 2021 approved list) and continued without material change through 2025 and into 2026.

Key timeline and the effect of the Jersey rules

• 7 July 2021 – 18 May 2023: South Africa is on the Schedule to the Proceeds of Crime (Cannabis Exemption – List of Jurisdictions) (Jersey) Order 2021. Lawful cannabis activities in SA fall within the exemption; they are not "criminal conduct" under Article 1(1) of the Proceeds of Crime (Jersey) Law 1999 (POCL). Proceeds are not criminal property in Jersey.
• 19 May 2023: South Africa is removed from the Schedule by the 2023 Amendment Order following its placement on the FATF list of jurisdictions under increased monitoring. From this date, even though the activities remain fully lawful in South Africa, they no longer benefit from the Jersey exemption. They constitute "criminal conduct" for POCL purposes. Dividends and fees derived from them are therefore "criminal property".
• October 2025: FATF removes South Africa from increased monitoring.
• November 2025 – 28 June 2026: The TCSP, monitoring FATF developments and updating its risk assessments, treats South African cannabis exposure as lower risk and continues (or even expands) the relationship. Further fees are received, and dividends are administered in this period.
• 29 June 2026: The Minister for External Relations makes the Proceeds of Crime (Cannabis Exemption – List of Jurisdictions) (Jersey) Amendment Order 2026, inserting "South Africa" into the Schedule after "Slovenia".
• 6 July 2026: The 2026 Amendment Order comes into force. South Africa is once again an approved jurisdiction for the exemption.

How the risk to the TCSP crystallises

• During the entire period 19 May 2023 to 5 July 2026, because South Africa was not on the approved list at the relevant time, the production, processing, and export of cannabis by the SA subsidiary (even though lawful there and under licence) is treated as criminal conduct under POCL.
• The resulting dividends received by the Jersey holding company and the administration fees received by the TCSP are proceeds of criminal conduct and therefore constitute criminal property.
• A TCSP that continues to administer the structure, provides directors or registered office services, and receives fees in this period risks committing principal money-laundering offences under POCL (acquiring, possessing, using, or transferring criminal property) if it has the requisite knowledge or suspicion.
• Even without actual knowledge, failure to identify and manage the exposure through adequate ongoing monitoring, failure to apply the correct temporal test ("at the relevant time"), or reliance on FATF delisting rather than Jersey's own Schedule constitutes a clear AML/CFT control failure.
• The Jersey-specific positive list and the documented eight-month lag between FATF delisting (October 2025) and the local Order coming into force (6 July 2026) are central to the risk.
• The exemption is not automatic on FATF action or on the foreign jurisdiction's own legality; it depends strictly on Jersey's Schedule status at the precise time the underlying conduct occurred, or the property is dealt with in Jersey.

Practical consequences for the TCSP

• Criminal/regulatory exposure: Potential POCL liability for handling criminal property; JFSC enforcement action for inadequate risk assessment, ongoing monitoring, and customer due diligence on cannabis-related relationships.
• Remediation burden: The TCSP must now urgently map all current, pipeline, and historical cannabis exposures against the exact dates the relevant jurisdiction was or was not on the Jersey Schedule. Fees or distributions received while South Africa was excluded may need to be identified, potentially ring-fenced, and the subject of legal advice or SAR consideration.
• Reputational and commercial risk: Discovery during a JFSC inspection, audit, or client due diligence exercise that the firm continued servicing a cannabis structure throughout the exclusion period without treating it as high-risk.
• Transition risk on 6 July 2026: Policies, procedures, training, and risk assessments must be updated by the in-force date. Any assumption that FATF alignment automatically equals Jersey approval creates exactly the gap the TCSP in this scenario fell into.

This scenario is purely illustrative but is constructed directly from the mechanics of the POCL exemption regime,

• The documented history of South Africa's removal and re-addition, and the explicit eight-month implementation lag highlighted in contemporaneous analysis.
• It demonstrates how the combination of a dynamic, Jersey-specific positive list, strict temporal application ("at the relevant time"), and lags between international signals and local Orders can create material, retrospective compliance and legal risk for TCSPs with any cannabis-related client or investment exposure.
• Robust mitigation requires TCSPs to maintain independent, real-time tracking of Jersey's own Schedule (not merely FATF lists), apply the approved-status test to the precise date of each underlying activity or receipt, and subject all cannabis-related relationships to enhanced scrutiny and senior management oversight whenever a jurisdiction is (or has recently been) off the list.

The position remains fact-specific; any actual TCSP in this position should obtain tailored legal and compliance advice.

Primary sources for verification  

• Comsure analysis of the 2026 Amendment Order and lag: https://www.comsuregroup.com/news/south-africa-re-added-to-jerseys-cannabis-exemption-list-but-with-an-8-month-lag/
• Official text of the 2026 Amendment Order: https://www.jerseylaw.je/laws/enacted/Pages/RO-080-2026.aspx
• Consolidated Proceeds of Crime (Cannabis Exemption – List of Jurisdictions) (Jersey) Order 2021 (as amended to 2023, pre-2026 addition of South Africa) and PDF: https://www.jerseylaw.je/laws/current/ro_87_2021 and https://www.jerseylaw.je/laws/current/PDFs/RO_87_2021.pdf
• FATF statement on South Africa's removal from increased monitoring (October 2025): https://www.fatf-gafi.org/en/publications/High-risk-and-other-monitored-jurisdictions/increased-monitoring-october-2025.html (referenced in the Comsure piece for context)