JERSEY JFIU CONSENT AND TIPPING OFF RISKS

In Jersey, if a financial institution submits a SAR according to the Proceeds of Crime (Jersey) Law 1999 [ML] and the Terrorism (Jersey) Law 2002 [TF] and the JFCU grants consent to move funds, the financial institution has the comfort of knowing that it will not be prosecuted for ML/TF if it carries out the transaction and the funds later transpire to be associated to ML/TF.

NO CONSENT - NO DEFENCE

If the JFCU REFUSES CONSENT and the financial institution proceeds with the transaction, it will have no defence to ML/TF.

CONSENT & TIPPING-OFF OFFENCE

However, WITH CONSENT, there is a RISK OF “TIPPING OFF”.

In Jersey, a tipping-off offence occurs when someone discloses information that could prejudice an investigation into ML/TF.

Here are the key points:

1. Disclosure of Suspicious Activity Reports (SARs): It is an offence to inform someone that a SAR has been filed and/or that an investigation is underway. This includes any information related to the SAR.
2. Legal Framework: The offence is outlined under Article 35 of the Proceeds of Crime (Jersey) Law 1999 and the Terrorism (Jersey) Law 2002.
3. Penalties: Convictions for tipping off can result in imprisonment for up to five years and/or a fine.

EXCEPTIONS LAW

The good news is that the PROCEEDS OF CRIME AND TERRORISM (TIPPING OFF—EXCEPTIONS) (JERSEY) REGULATIONS 2014—https://www.jerseylaw.je/laws/current/PDFs/RO_101_2014.pdf [EXCEPTIONS LAW] has some exceptions that can be applied.

However, if the exemptions do not work, seeking explicit consent from the JFCU is crucial. The JFCU will then assess whether the disclosure can be made without compromising the investigation or breaching the tipping-off regulations.

Without consent to talk to others AND no exemption in the exceptions law, there is no safe harbour for the tipping-off offence.

TO HELP YOU FURTHER, THE FOLLOWING JFIU FAQ MAY ASSIST YOU

 Summary of the Financial Intelligence Unit (FIU) Consent Regime FAQs

• The Financial Intelligence Unit (FIU) of Jersey issued a Frequently Asked Questions (FAQ) document to clarify the consent process under the Proceeds of Crime (Jersey) Law 1999 (POCJL) and related legislation, including the Terrorism (Jersey) Law 2002 (TJL).
• The document, intended for general guidance and not as legal advice, outlines the procedures for submitting consent requests to the FIU when there is suspicion of money laundering or terrorist financing.
• It assumes familiarity with relevant laws, the JFSC AML/CFT Handbook, and JFSC guidance.

THE FAQS PRIMARILY ADDRESS CONSENT REQUESTS UNDER ARTICLE 32 OF THE POCJL, WITH SIMILAR PROVISIONS IN THE TJL.

Key Points from the FAQs

1. Legal Framework:

• Article 32(4) POCJL: Allows individuals to avoid liability for handling criminal property (under Articles 30 or 31) if they disclose suspicions to the FIU in good faith and either receive consent before acting or report promptly after acting.
• Other relevant POCJL provisions include Articles 29 (criminal property), 30 (dealing with criminal property), 31 (concealment), 34A and 34D (failure to disclose), 35 (tipping off), and 37 (procedures to prevent money laundering).

2. Consent Request Process:

• Submission: Consent requests must be made via the PolSAR Portal (initial SAR or Continuation Report). Email or phone submissions are only allowed for Schedule 2 businesses unable to access the portal.
• FIU Responses: Possible responses include:
  • Consent Provided: Based on available information, but does not mandate action or absolve other criminal liabilities (e.g., tipping off).
  • Consent Not Provided: No justification is required; the requester is notified.
  • Consent Not Provided (Inadequate Information): Additional details requested.
  • Not a Valid Consent Request: If insufficient information links to Articles 30 or 31.
  • Response Time: The FIU aims to respond within two working days, but complex cases (e.g., restructuring assets) may take longer.

3. Key Clarifications:

• Multiple Transactions: Consent requests must specify transaction details. Recurring payments (e.g., mortgage payments) can be bundled, but different transaction types should not be grouped.
• Tipping Off (Article 35): Reporting entities can engage clients post-SAR submission (e.g., to verify adverse media) without disclosing the SAR or investigation, unless it risks tipping off. Release from tipping-off restrictions can be requested under the Tipping Off Regulations, but this is separate from consent requests.
• UKFIU Consent: Consent from the UK Financial Intelligence Unit does not automatically apply in Jersey; separate FIU Jersey consent is required for Jersey-based assets or transactions.

• New Suspicions: A new SAR must be filed before seeking consent if a new individual or entity is suspected.
• No Suspicion: If suspicions are resolved after inquiries, a Continuation Report should detail why suspicions are alleviated.
• Account Maintenance: Consent is not needed to maintain a Jersey account not suspected of containing criminal property, but reporting obligations persist for other suspicious property.

4. Client Management:

• Entities must manage client relationships carefully to avoid tipping off while awaiting consent. They can challenge clients (e.g., about adverse media) to meet regulatory requirements without disclosing SARs or investigations.

Key Risks

1. Non-Compliance with Consent Requirements:

• Failing to seek FIU consent before dealing with suspected criminal property (Articles 30 or 31 POCJL) could lead to criminal liability.
• Submitting inadequate information may result in consent denial, delaying transactions and increasing compliance risks.

2. Tipping Off (Article 35 POCJL):

• Improper client communication post-SAR could breach tipping-off laws, risking criminal penalties if it prejudices an investigation.
• Misunderstanding the scope of permissible client interaction could lead to unintentional violations.

3. Cross-Jurisdictional Issues:

• Assuming UKFIU consent applies in Jersey could expose entities to liability under Jersey law, as the regimes differ legally and operationally.

4. Delayed FIU Responses:

• Complex consent requests may extend response times, complicating client relationship management and potentially causing operational delays.

5. Ongoing Reporting Obligations:

• Failure to report new suspicions or changes in circumstances (e.g., significant transactions after initial consent) could result in non-compliance with Articles 34A and 34D.

6. Misinterpretation of Consent:

• Consent does not absolve entities from other regulatory or criminal obligations (e.g., tipping off, failure to implement AML procedures), increasing the risk of broader non-compliance.

Key Actions

1. Submit Clear and Detailed Consent Requests:

• Use the PolSAR Portal for all consent requests, providing precise transaction details to avoid delays or denials due to inadequate information.
• For recurring payments, bundle similar transactions in one request, but avoid grouping unrelated transaction types.

2. Manage Client Interactions Carefully:

• Engage clients to verify information (e.g., adverse media) without disclosing SARs or investigations to avoid tipping-off violations.

   Contact the FIU for case-specific guidance and request release from tipping-off restrictions via the Tipping Off Regulations when necessary.

3. Seek Legal Advice:

• Consult legal professionals to determine if prior consent covers new transactions or if Jersey-specific consent is needed despite UKFIU approval.

4. File Continuation Reports:

• If suspicions are resolved, submit a Continuation Report detailing inquiries and reasons for alleviated concerns.
• File a new SAR before seeking consent for new suspicions (e.g., new individuals/entities).

5. Understand Jurisdictional Differences:

• Recognise that UKFIU consent does not suffice for Jersey transactions; submit relevant details to FIU Jersey for separate consideration.

6. Monitor Ongoing Obligations:

• Continue reporting suspicions (Article 34A) and maintain AML/CFT procedures (Article 37) even after receiving consent, as consent does not cover other criminal offences.

7. Prepare for Variable Response Times:

• Anticipate potential delays for complex consent requests and manage client expectations accordingly.

Recommendations for Stakeholders

• Enhance Training: Ensure staff are trained on POCJL, TJL, and AML/CFT Handbook requirements, particularly around consent and tipping-off rules.
• Leverage PolSAR Portal: Use the portal for all submissions to streamline communication and ensure compliance with FIU expectations.
• Document Interactions: Maintain detailed client inquiries and FIU communications records to demonstrate compliance and mitigate tipping-off risks.
• Engage with FIU: For complex cases or tipping-off concerns, you can contact the FIU directly to clarify requirements.

SOURCE

• https://services.jersey.police.uk/PolSAR/assets/doc/consentregimefaqs.pdf

 This FAQ document underscores the importance of precise, timely consent requests and cautious client management to comply with Jersey’s AML/CFT framework while avoiding legal pitfalls.