WHAT SYSC CHOICE DID YOUR AMLSP CUSTOMER CHOOSE?

All Jersey-supervised firms must have systems and controls [SYSCs] to prevent and detect money laundering, terrorist financing, and proliferation financing[ AML/CFT/CPF]. A supervised person's AML/CFT/CPF SYSCs will include, as a minimum, a strategy and appetite statement, Business Risk Assessment [BRA], Client Risk Assessment [CRA], and Policies and Procedures.

BACKGROUND/REMINDER

With effect from 30 January 2023, the Jersey Proceeds of Crime Law was updated to include a recast Schedule 2 to include the following activities in the definition of a 'financial services business' (and thus within the scope of the Jersey AML Regime):

• Financial Institutions: This includes lending, investing, fund services, security services, portfolio management, and investing, administering, or managing funds/money.
• Designated Non-Financial Businesses and Professions: This includes lawyers, accountants, real estate agents, and trust and company service providers [that provides for such activities as acting as a director for a 3^rd party client].
• Virtual Assets Service Providers: This includes token exchanges and other entities providing custodial, administrative, or other services regarding virtual assets.
• Express Trusts.

In recasting Schedule 2, the rules allow a Schedule 2 business, if they so wish, to appoint an ANTI-MONEY LAUNDERING SERVICE PROVIDER [AMLSP], provided that the AMLSP meets the eligibility criteria and has obtained a prior no objection from the JFSC about its key persons.

The eligibility criteria are set out in Article 9A Notice: Article 9A (4) Notice (April 2023). https://www.jerseyfsc.org/media/7197/article-9a-4-notice-april-2023-301123.pdf

Furthermore,

• The AMLSP should, however, only provide services to a Schedule 2 business if they can comply with Section 18 of the JFSC AML/CFT/CPF Handbook requirements. https://www.jerseyfsc.org/media/7192/section-18-clean-271123.pdf

In section 18, the Schedule 2 business is reminded in Section 18 that the responsibility to comply with the Jersey AML Regime [Money Laundering Jersey Order, JFSC CODES, etc.] will ultimately lie with the Schedule 2 business entity itself.

AML/CFT/CPF SYSCs

One critical decision for the Schedule 2 business was the sources and make-up of its systems and controls, namely the AML/CFT/CPF strategy, appetite, Business Risk Assessment [BRA], Client Risk Assessment [CRA], and policies and procedures.

The choices are outlined in section 18 and are headlined with two choices [methods] (lines 55-56 pg. 379] albeit the result is there is a choice of four, as follows

1. Method 1 = ADOPTION = the Schedule 2 business ADOPTS the AMLSP systems and controls as its own –
1. AMLSP provides a form of BRA, CRA, and policies and procedures (in a similar form to its own), which can be ADOPTED by the Schedule 2 business [AMLSP Direct Customer] as its own.
2. Method 2 = RELIANCE = the Schedule 2 business adopts RELIES on the AMLSPs systems and controls subject to confirmation of adequacy
1. The AMLSP confirms and can demonstrate to the Governing body of the AMLSP Direct Customer that the BRA, CRA, and policies and procedures of the AMLSP address the risks associated with the AMLSP Direct Customer’s business and customers (which includes AMLSP Indirect Customers and third parties for whom the AMLSP Indirect Customers act) as appropriate.
2. For example, the AMLSP CRA of the AMLSP Direct Customer could be used as their BRA.
3. In such instances, the Governing body of the AMLSP Direct Customer would not need to adopt a separate BRA, CRA or policies and procedures.
3. Method 3 = HYBRID OF THE ABOVE 1+2 = The Schedule 2 business has a hybrid of AMLSP adoption, reliance and its systems and controls
1. The JFSC recognises that it may be appropriate in some cases for an AMLSP Direct Customer to:-
• ADOPT only in part the AMLSP systems and controls and
• Suggests a more bespoke approach may be required for the remainder,
4. Method 4 = neither 1 nor 2 = the Schedule 2 business takes a FULL BESPOKE route and designs its systems and controls
1. The JFSC also recognises that:-
• It may only be appropriate in some cases for an AMLSP Direct Customer to adopt any of the above and
• A more bespoke approach may be required, for example, in complex, high-risk scenarios.

Against the above and as shown in section 18 codified rules and or guidance, the following [not exhaustive] must be adopted:-

• 51. The JFSC would expect to see, upon request, board minutes (or equivalent) of the Governing body of the AMLSP Direct Customer evidencing that it had carefully considered the appointments of its AMLSP, AMLSP Direct Customer MLRO and AMLSP Direct Customer MLCO before such appointments taking effect.
• 52. Demonstrating that the AMLSP is providing the services it has contracted to and they are fulfilling the AMLSP Direct Customer’s AML/CFT/ CPF obligations may be achieved through:
• › The ongoing oversight of the AMLSP Direct Customer’s Governing body of the AMLSP services. For example, if there is scheduled compliance reporting that this is complied with and
• › The governing body of an AMLSP Direct Customer, having participated in all relevant training provided by their AMLSP to its equivalent employees, may support the AMLSP Direct Customer in demonstrating compliance with its AML/CFT/CPF obligations.
• 53. The JFSC would expect to see, upon request, board minutes (or equivalent) of the Governing body of the AMLSP Direct Customer evidencing the ongoing monitoring of services provided by the AMLSP
• 57 The appointment of an AMLSP, including the AML/CFT/CPF services to be provided by the AMLSP, must be approved by the Governing body of the AMLSP Direct Customer.
• 58 The governing body of an AMLSP Direct Customer must approve any new business relationship (and continuation thereof) or one-off transaction connected to an enhanced risk- state].

SOURCE

• https://www.jerseyfsc.org/media/7192/section-18-clean-271123.pdf
• https://www.jerseyfsc.org/media/7197/article-9a-4-notice-april-2023-301123.pdf