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PROCEEDS OF CRIME (AMENDMENT No. 6) (JERSEY) LAW 2022 will recast Schedule 2 of the POCL

30/06/2022
  • A LAW to amend the Proceeds of Crime (Jersey) Law 1999 Adopted by the States on 31st March 2022
  • Sanctioned by Order of Her Majesty in Council 8th June 2022 - Registered by the Royal Court - 17th June 2022
  • LAW Coming into force per Article 2 on a day specified by the Minister for External Relations and Financial Services by Order.
  • https://www.jerseylaw.je/laws/enacted/Pages/L-25-2022.aspx

WHAT IS THIS ABOUT

  • The Proceeds of Crime (Amendment No. 6) (Jersey) Law 2022 will recast Schedule 2 of the POCL to ensure consistency with definitions used in the FATF Recommendations.
  • The changes will ultimately enable the Island to demonstrate that any future scope exemptions from AML/CFT obligations are fully aligned to the criteria for exemptions within the FATF Recommendations,
  • However, this could mean a significant number of previously exempt businesses become subject to JFSC oversight.

UP TO NOW

  1. There are several scope exemptions set out in Schedule 2 which remain directly linked to Jersey's conduct and prudential regime.
  2. Certain exempted activities are now expected to be subject to AML/CFT obligations in line with the FATF Recommendations but are not currently specified in Schedule 2.

Whilst the intention is to clarify certain businesses, particularly in the finance industry, the effect of the proposed change is particularly far-reaching.

  • When implemented, the change will affect every company undertaking the specified activities by way of business.
  • All businesses undertaking the activities listed within the recast Schedule 2 will be required to notify the JFSC, even if a relevant scope exemption is listed in the revised POCL.
  • Where it can be demonstrated, based on an assessment of risk, that specific activities meet the FATF criteria for exemptions, then the intention is for scope exemptions for these activities to be specified.
  • Reliance upon such an exemption will only be available when there is a low risk of money laundering.

All activities within the recast Schedule 2

  • Will, at minimum, be subject to appropriate notification obligations even where there is a scope exemption.
  • The information collected by the JFSC will also allow them to periodically review the use of scope exemptions to ensure these are only being applied in line with FATF Recommendations and in circumstances where there is a low risk of money laundering and terrorist financing.
  • This suggests affected businesses will also be subject to ongoing reporting obligations.

The changes to POCL approved,

  • The removal of the scope exemptions will be followed by a data collection exercise to be undertaken by the JFSC,
  • THIS WILL enable the JFSC to maintain an understanding of all activities that the FATF Recommendations require to be subject to AML/CFT obligations and ensure that scope exemptions are, as mentioned above, and
  • Periodically reviewed based on up to date information about their use.

Further consultation is then envisaged to

  • Consider amendments to secondary legislation that will implement the changes in full, including appropriate transitional provisions for businesses that will become subject to AML/CFT obligations for the first time or for whom a registration/notification will apply for the first time.
  • There are also likely to be various consequential amendments made to the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008 and the Money Laundering (Jersey) Order 2008 as a result of the changes.

Action

  • Those businesses relying on an exemption should now review the consultation paper to identify the proposed future treatment of that particular exemption.
  • Where the exemption is to remain, businesses should consider re-assessing the risk of money laundering associated with their business activities, documenting the rationale for applying for the relevant exemption and keeping records to demonstrate the assessment undertaken.

The changes to POCL are adopted,

  • The changes will ultimately enable the Island to demonstrate that any future scope exemptions from AML/CFT obligations are fully aligned to the criteria for exemptions within the FATF Recommendations,
  • This could mean a significant number of previously exempt businesses become subject to JFSC oversight.

JERSEY