Jersey's position on Sustainable Finance & Environmental Crime & Financial Services Governance

INTRODUCTION ON SUSTAINABLE FINANCE & ENVIRONMENTAL CRIME AND JERSEY'S PLAN

• In Spring 2024, the Government of Jersey launched a public consultation on sustainable finance.
• The response was overwhelmingly positive, with 90% of respondents agreeing or strongly agreeing that Jersey needs a robust policy and regulatory framework.
  1. https://www.gov.je/SiteCollectionDocuments/Industry%20and%20finance/CR%20Response%20Paper%20on%20Sustainable%20Finance%20Consultation.pdf

• Here’s a summary of the Government of Jersey’s Consultation Response Paper on designing a policy and regulatory framework for sustainable finance, published in June 2024:

• • Purpose of the Consultation - The consultation aimed to gather views from:

• Financial services firms
• Employees
• The wider community

• • The consultation focused on how Jersey should shape its sustainable finance policy across four key areas:

• Corporate sustainability disclosures
• Risk and governance
• Anti-greenwashing and labelling
• Strategic enablers (e.g. skills, data, innovation)

• • The Consultation Key Findings

• 90% of respondents agreed or strongly agreed that Jersey needs a clear and robust policy and regulatory framework to remain competitive as an international finance centre (IFC).
• Respondents saw sustainable finance as both a risk and an opportunity.
• Preferences for the level of ambition in the framework were:
• 43% supported an Advanced approach
• 31% preferred a Combination of approaches
• 19% supported a Moderate approach
• Very few supported a minimal or “Compliant-only” approach.

• • The Consultation Themes from Written Responses

• Strong support for aligning with international standards (e.g. EU, UK, ISSB).
• Calls for regulatory clarity and consistency to avoid greenwashing.
• Emphasis on skills development, data infrastructure, and public-private collaboration.
• Recognition of Jersey’s opportunity to lead in fiduciary services and private wealth with a sustainability lens.

GOVERNMENT OF JERSEY’S SUSTAINABLE FINANCE ACTION PLAN

• That feedback helped shape the Government of Jersey’s Sustainable Finance Action Plan. Published in November 2024,  the plan sets out 10 action points for protecting the industry and promoting its long-term success.

• These 10 action points are structured around three key pillars: risk and governance, incentives, and engagement 
  1. TO PROTECT THE FINANCE INDUSTRY:
     1. ENVIRONMENTAL CRIME – STRENGTHENING THE FINANCIAL CRIME RISK FRAMEWORK TO ADDRESS ENVIRONMENTAL CRIME.
     2. Corporate Sustainability Disclosures – Implementing a robust disclosure framework aligned with international standards.
     3. Sustainability Risk Management – Embedding sustainability risk obligations into the regulatory framework.
     4. ESG Business Integrity Risk – Expanding anti-greenwashing measures to ensure transparency and integrity.
     5. Market Access – Safeguarding access to key international markets through agreements and cooperation.
  2. TO PROMOTE THE INDUSTRY’S SUCCESS:
     1. International Engagement – Enhancing global cooperation and presence in sustainability forums.
     2. Fiduciary Duties – Supporting sustainable considerations in trust law and client services.
     3. Product Innovation – Encouraging the development of sustainable financial products.
     4. Skills and Talent – Building local expertise in sustainable finance.
     5. Data and Metrics – Improving data collection and analysis to support sustainable finance initiatives.
  3. References - Sustainable Finance Action Plan - Government of Jersey https://www.gov.je/Industry/Finance/Pages/SustainableFinancePlan.aspx

• One of the five protective measures being progressed in 2025 is environmental crime.

FATF

1. In support of the jerseys plan, the Financial Action Task Force (FATF) recognises environmental crime as one of the most profitable forms of transnational organised crime, generating an estimated USD 110 to 281 billion annually. FATF has emphasised the strong link between environmental crime and money laundering, and has issued guidance to help countries and financial institutions address this threat
2. Key FATF Positions on Environmental Crime:
   1. Follow the Money: FATF urges countries to trace financial flows linked to environmental crimes like illegal logging, wildlife trafficking, and waste dumping. This helps identify broader criminal networks and disrupt their operations.
   2. Money Laundering Typologies: FATF has published reports detailing how criminals launder proceeds from environmental crimes, including:
      1. Use of shell companies and trade-based money laundering.
      2. Integration of illicit funds into the legal economy through real estate, luxury goods, and financial institutions.
   3. National Risk Assessments: Countries are encouraged to assess their exposure to environmental crime-related money laundering and ensure their legal frameworks are robust enough to tackle it.
   4. Private Sector Role: Financial institutions are expected to detect and report suspicious transactions linked to environmental crime. FATF promotes collaboration between governments and the private sector to improve detection and enforcement.
   5. Policy Development: FATF’s work on environmental crime is ongoing and will inform future updates to its standards and recommendations.
3. References

1. Environmental Crime - Financial Action Task Force https://www.fatf-gafi.org/en/publications/Environmentalcrime/Environmental-crime.html
2. Money Laundering from Environmental Crime - Financial Action Task Force https://www.fatf-gafi.org/en/publications/Environmentalcrime/Money-laundering-from-environmental-crime.html

WHAT IS ENVIRONMENTAL CRIME?

• Environmental crime refers to illegal activities that cause significant harm to:
1. Ecosystems
2. Biodiversity 
3. Human health
• These include:
1. Illegal logging, mining and fishing
2. Waste trafficking and improper disposal of hazardous materials
3. Wildlife trafficking and destruction of protected habitats
4. Falsification of environmental documentation
• Crucially, these activities generate significant illicit profits laundered through the global financial system.

Scale and systemic impact

• Environmental crime is far from niche.
1. Globally, it is valued at US$70 bn to US$213 bn annually, with total economic losses reaching up to US$2 trillion.
• Organised criminal networks, and in some cases, terrorist groups, are increasingly moving into this space.
• Three of the world’s most profitable transnational crimes are environmentally linked:
1. Wildlife trafficking
2. Illegal timber trade
3. Unregulated fishing
• Common methods used by criminal networks are fraudulent documentation, smuggling routes and financial layering, mirroring tactics used in drugs, arms and human trafficking.

The role of financial institutions

• Financial institutions globally have a critical role in preventing exploitation of the financial system. This means recognising environmental crime as an economic risk and building it into existing frameworks. To combat environmental crime, finance firms must:
1. Integrate environmental risk indicators into client onboarding and monitoring
2. Identify red flags, including high-risk jurisdictions, unusual transaction flows, and co-mingling of legal and illegal activity
3. Stay alert to sectors of concern such as waste management, agriculture, and commodities
4. Report suspicious activity promptly and accurately
5. Environmental, social and climate implications
• Environmental crime not only degrades biodiversity, but it also drives:
1. Pollution – up to 20% of waste is illegally dumped
2. Climate change – through deforestation and habitat destruction
3. Human health risks, for example, via contaminated food chains
4. Instability (fuelled by resource scarcity and corruption)
• At the same time, the climate crisis creates new vulnerabilities that criminals can exploit, such as disrupted supply chains and growing demand for critical minerals.

The Jersey context: risk and opportunity

• As an IFC, firms in Jersey are potentially exposed to cross-border financial flows linked to environmental crime.
• The risks to firms in Jersey include reputational damage and regulatory exposure if due diligence and controls are inadequate.  Jersey’s Sustainable Finance Action Plan commits to addressing these risks by:
1. Reinforcing the financial crime framework to include environmental predicate offences
2. Enhancing engagement between the Financial Intelligence Unit (FIU), the regulator and the industry
3. Improving Suspicious Activity Reporting (SAR) on environmental risks
4. Providing new guidance and typologies to help firms detect and respond appropriately

Next steps for Jersey's finance industry

• To future-proof operations, financial and related professional services firms in Jersey should consider the following:
1. Embedding environmental risk in due diligence and KYC processes
2. Training staff on emerging red flags and criminal methodologies
3. Enhancing internal monitoring systems and reporting procedures
4. Creating a culture of transparency and shared accountability

The above is sourced from

• References - Sustainable Finance Action Plan - Government of Jersey https://www.gov.je/Industry/Finance/Pages/SustainableFinancePlan.aspx
• Behind a firewall the following

• https://www.jerseyfinance.com/insights/sustainable-finance-lunch-and-learn-environmental-crime-and-fiduciary-duties/?utm_source=industry_insight&utm_medium=email&utm_campaign=industry_insight&action=login
• 30 June 2025
• IN THE LINK ABOVE THERE IS ALSO a 1-hour webinar hosted by JF sustainable finance lead, Tom McKenna, expert guest speakers from Mourant Consulting – Tony Shiplee and Abby Syvret – explore this topic, considering the legal definitions of environmental crime, its impact around the world, the role of international finance centres (IFCs) in tackling this type of crime and the risks for Jersey’s IFC.