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Jersey’s solution for confiscation of assets put into trusts by convicted persons.

21/06/2024

FATF Recommendation 4 (Confiscation and provisional measures) requires countries to have measures that enable the confiscation of all criminal assets.

These include the laundered property itself, proceeds or instrumentalities used or intended for use in money laundering, assets related to the financing of terrorism, or property of a corresponding value.

The FATF concern is where criminal assets are beyond reach, for example:-

  • Where a criminal has given assets to third parties as gifts, particularly those that were put into a discretionary trust, where the settlor retains a beneficial interest.

In 2015 the MONEYVAL Jersey Evaluation Team noted

  • Its concerns regarding circumstances where the proceeds of crime and laundered property (etc.) were no longer within the reach of the authorities and property of corresponding value had been given away to a third party as a gift prior to the offending. It was noted at paragraph 308 of the MONEYVAL report that:
    • “Nevertheless, assets contributed to a discretionary trust before the criminal conduct to which the external confiscation order relates, are not gifts within the definition in Article 2(9) of the Proceeds of Crime Law … and a saisie judiciaire can of course only be applied to "realisable property".
  • The report went on to criticise the inability of the authorities to attack property which the defendant had settled into a discretionary trust, of which he was one of the beneficiaries, prior to the offending. The report agreed that a beneficial interest in a discretionary trust should not, as such, automatically be considered realisable property but that nonetheless the Jersey authorities could consider that there might be circumstances where (e.g. by examination of the other evidence, such as the settlor’s letter of wishes) it may be appropriate to make inroads into the principles of trust law.

Jersey Discretionary Trust and the proceeds of crime

  • Jersey agreed that while a beneficial interest in a discretionary trust should not, as such, automatically be considered realisable property but it is accepted that there might be circumstances where it may be appropriate to make inroads into the principles of trust law.
  • This was done on the 8 October 2021 Jersey agreed

Amendments No. 2 inserted a "clawback" provision to prevent such assets being beyond reach, for example:-

  • Where a criminal has given assets to third parties as gifts, particularly those that were put into a discretionary trust, where the settlor retains a beneficial interest.

The clawback provision has the same period for transactions at an undervalue as in the Bankruptcy (Désastre) (Jersey) Law 1990 and the Companies (Jersey) Law 1991 (i.e. 5 years).

In force 8 October 2021.

Report: Draft Proceeds of Crime (Miscellaneous Amendments No. 2) (Jersey) Regulations 202- = https://statesassembly.gov.je/assemblypropositions/2021/p.50-2021.pdf

Also included in Amendments No. 2

JERSEY FATF YOUTUBE-IMAGE

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