THE 1% CLUB – TCSP DO YOU HOLD CDD ON 1% OWNERS IN A JERSEY DOMICILED LEGAL ENTITY?

The Jersey Financial Services Commission (JFSC) has provided detailed guidance regarding the need to AUTHENTICATE/VERIFY 1% ownership threshold under Article 8(3) of the Financial Services (Disclosure and Provision of Information) (Jersey) Law 2020 (DPI Law) and Article 5 of the Financial Services (Disclosure and Provision of Information) (Jersey) Order 2020.

On the 1% matter the JFSC has said in its Registrar of Companies report Registry Supervision Inspection Programme 2024 Feedback paper – 1 January to 31 December 2024

• [JFSC] Registry Supervision operates within its own framework which is distinct from Jersey’s financial crime laws
• During inspection visits there were difficulties associated with authenticating members who held shares of less than 10%, they were recorded correctly, however the TCSP did not hold CDD in relation to those members.
• One of the requirements under the DPI Law is that a relevant entity must verify within its annual confirmation statement the name and address of each member who holds 1% or more (in nominal value or in number, as applicable) of all the issued shares of a class,
• and it is within our remit to require the relevant entity to authenticate those details in any manner we reasonably determine. 

The above is extracted from here:- https://www.jerseyfsc.org/media/8148/registry-supervision-inspection-programme-q4-2024.pdf

The JFSC statement goes on to say:-

• It is generally accepted that individuals with 25% or less shareholding, voting or appointment rights are unlikely to have significant influence or control over an entity.
• To align the Law’s 1% or more membership authentication threshold with that set out in our AML/CFT/CPF Handbook, as well as global norms set by the Financial Action Task Force, Registry Supervision will not require authentication of information or documents provided to us for members of a relevant entity who hold 25% or less (in nominal value or in number, as applicable) of all the issued shares of a class.
• This exemption will not apply where the relevant entity is considered to carry an associated heightened risk. 
• Those risks may include (but are not limited to):
• The relevant entity being connected to a high-risk jurisdiction beneficial ownership and/or control, or
• Any of the relevant minority shareholders, is/are associated or connected to a high-risk jurisdiction any PEP or PEP connections as part of the structure
• The activity of the relevant entity is sensitive and captured in either table of our Sound Business Practice Policy credible
• Intelligence we [the JFSC] receive from a variety of sources indicates that the relevant entity is exposed to other high risks
• For the avoidance of doubt: › › › ›
• Whilst Registry Supervision may not require the relevant entity to authenticate the information of members who hold 25% or less (in nominal value or in number, as applicable) of all the issued shares of a class, the relevant entity must us with verified information in accordance with the Law 
• The authentication exemption does not apply to significant persons of the relevant entity notwithstanding that they may have a shareholding of 25% or less and the exemption otherwise applies to the relevant entity
• The exemption shall not affect the powers of Registry Supervision to require an entity or its nominated or significant person to provide any information we require pursuant to the Law or any other law
• Registry Supervision operates within its own framework which is distinct from Jersey’s financial crime laws

Sources

• https://www.jerseyfsc.org/media/8148/registry-supervision-inspection-programme-q4-2024.pdf

• JFSC and its 25%, 10% & 1% tests for verification of significant influence or control and HEIGHTENED RISK
• 11/03/2025 https://www.comsuregroup.com/news/jfsc-and-its-25-10-1-tests-for-verification-of-significant-influence-or-control-and-heightened-risk/
• ASK MAT: Do I verify ALL individuals in a legal entity or just those with a THRESHOLD of control (e.g. 25%)?
• 11/03/2025 https://www.comsuregroup.com/news/ask-mat-do-i-verify-all-individuals-in-a-legal-entity-or-just-those-with-a-threshold-of-control-eg-25/