Tom Hall on LinkedIn: Another powerful ruling delivered by President Salam from the… (2024)

On 17 May 2024, the Government of Jersey published its National Risk Assessment relating to risks of #moneylaundering, #terroristfinancing and #proliferationfinancing arising from the operation of Virtual Asset Service Providers (#VASPs) in or from within Jersey.My key takeaways:➡ There are currently only a small number of active VASPs on the island.This number is likely to grow, and with it so will the associated exposure of the island to risk.➡ Anyone undertaking VASP activity in or from within Jersey is subject to the full AML / CTF / CPF regulatory framework and must register with Jersey Financial Services Commission.➡ The main risks to Jersey are identified as:1️⃣ The #travelrule has only recently been introduced in Jersey, so its effectiveness will need to be monitored as this is not yet clear.The NRA notes that internationally, jurisdictions have made insufficient progress on implementing the travel rule. 2️⃣ A lack of awareness of the sector, including by law enforcement and industry, of the ML / CTF / CPF risks posed by virtual assets and VASPs.§With regard to law enforcement, given that (to my knowledge) there have been no investigations into virtual asset related offences in Jersey as yet, there may be limited "real world experience" of investigators in this jurisdiction.It is likely that cooperation with other jurisdictions will be highly instructive, as will enhanced use of #blockchainanalytics.§With regard to industry and the regulator, more can be done to enhance understanding of virtual assets and underlying technologies.3️⃣ There needs to be sufficient scope for legal and regulatory policy development, including the availability of suitable resources, to meet evolving future risks.This is particularly the case given that technological developments will often occur at pace.➡ Overall, the ML / CTF / CPF risk to Jersey from virtual assets and VASPs is medium-high, which is a composite risk rating (noting that the TF / PF risk is lower). The importance of identifying these risks sees alignment with the requirements of #FATF Recommendation 15, which applies to virtual assets and VASPs.➡ The ML risk and attraction to bad actors arises from, amongst other things, "the ability to exchange between fiat [currencies] and virtual assets, because illegally acquired virtual assets will probably be converted into fiat at some point (off ramps), and illegally obtained fiat currency can be converted into virtual assets (on ramps) as part of the placement, layering and integration stages of money laundering."➡ In 2023, 50 of the over 1,500 suspicious activity reports submitted to the Financial Intelligence Unit (FIU) Jersey had a #cryptocurrency or #virtualasset typology.➡ Residents of Jersey lost over £1.3m in 2023 from investing in online cryptocurrency scams.#crypto #cryptocurrency #economiccrime #financialcrime #moneylaundering #antimoneylaundering

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Whilst not new guidance, the Jersey Financial Services Commission's guidance note on #sanctions obligations and sanctions evasion techniques remains an important touchstone for #TCBs and #FSBs.The "red flags" and "examples of questions that may assist effective compliance" are particularly enlightening.It is important to remember that when it comes to sanctions:➡ Circumvention offences are committed where there is an intentional participation in activities knowing that the object or effect of them is to (directly or indirectly) circumvent or enable or facilitate the circumvention of sanctions provisions.➡ An entity may also commit additional, non-circumvention, sanctions offences that do not require intention. It need not even require wilful blindness as the offence is effectively "strict liability".➡ TCBs and FSBs are obliged to have in place effective governance and risk management systems under the applicable Codes of Practice. This will include having adequate sanctions screening systems, polices, processes, procedures and training for staff.➡ Evasion techniques and typologies are becoming more elaborate and creative. However, sometimes the typologies are "oldies but goodies", e.g. unexplained transactions, urgency, changes in CDD, complexity, evasiveness to questioning etc.➡ In addition to any reporting obligation to the Minister for External Relations for Jersey on sanctions breaches that might arise, there will also likely be reporting obligations under (1) the applicable Code of Practice to the Jersey Financial Services Commission; and/or (2) the AML/CPF/CTF Handbook, and the Proceeds of Crime (Jersey) Law 1999 and/or Money Laundering (Jersey) Order 2008 to the Financial Intelligence Unit (FIU) Jersey.➡ In guidance issued by the Minister for External Relations for Jersey, it is clear that a #licence can only be issued prospectively and not retrospectively. If an intended act / transaction might constitute an offence under the sanctions regime, it cannot be undertaken without a licence. ➡ The sanctions landscape remains in a constant state of flux as it adapts to developing evasion typologies. If you are in any doubt, legal advice should be sought at the earliest possible opportunity (and, as noted above, prior to undertaking an act / transaction, if a licence might be required; or as soon as practicable after a potential offence has been identified).#regulatory #regulatoryupdate #sanctions #sanctionsenforcement #sanctionscompliance #economiccrime

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A very interesting publication from Financial Intelligence Unit (FIU) Jersey providing the statistics for Suspicious Activity Reports (SARs) externalised to the FIU in Q1 2024.My key takeaways:➡ 465 SARs were externalised to the FIU in Q1 2024. This is a 35% increase in the number of SARs externalised in the same period in 2023.➡ The banking sector gave rise to the greatest source of suspicion (60.7% of SARs, or 300 of the total) followed by the Trust and Corporate Services sector (18.8% of SARs, or 93 of the total).➡ Fraud was the most prevalent form of predicate criminality (45% of SARs).➡ The most prevalent origin of predicate criminality was the UK (39.7% of SARs), followed by Jersey (25.2% of SARs).➡ Disappointingly, 22% of SARs (100 of the total) were not deemed to be of a good standard of disclosure.On the latter point, the importance of the standard of the SAR cannot be overstated if it is to provide meaningful #intelligence to the #FIUJersey and other financial crime & law enforcement bodies: 💡 The duty to report exists under the Proceeds of Crime (Jersey) Law 1999 (as supplemented by the requirements of the Money Laundering (Jersey) Order 2008, and see also the Jersey Financial Services Commission's Codes of Practice and AML/CFT/CPF Handbook). 💡 The duty to report (internally, and to externalise if appropriate) is engaged by a very low threshold - suspicion is subjective and means that something is possible, i.e. more than merely fanciful or speculation, but falls short of proof or knowledge.💡 It does not fall solely to the #FIUJersey and similar bodies to tackle #financialcrime. Regulated persons form the first line of defence. With robust policies, procedures and training, an organisation can take significant steps to identify and prevent such predicate criminality. 💡 Where suspicion arises and the SAR is externalised, this should not be viewed as a "box ticking" exercise: externalise the SAR, and the duty is satisfied. To be of greatest utility, the most fulsome SAR possible should be prepared to provide the most meaningful intelligence. Otherwise, you risk the old adage "garbage in, garbage out".💡 Remember to be as accurate as possible when identifying the predicate criminality and country of origin. Just because it is reported in Jersey, does not mean that this is the origin of the predicate criminality.💡 If #consent is sought from the FIU, a lack of detail will either mean that consent is refused, or further information is required which delays the process. #financialcrime #economiccrime #fraud #whitecollarcrime #regulatory #sar

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Very much enjoyed speaking yesterday morning at Ogier’s Trust Advisory Group breakfast seminar on points to note for TCBs and FSBs on the draft #cybersecurity law for Jersey…an unorthodox way to start your birthday, admittedly, but nonetheless a good one!My colleagues Rebecca McNulty and Josephine Howe also delivered interesting talks on answering common questions about blessing applications and trustees’ considerations regarding letters of wishes. It’s a case of “watch this space” for now to see whether the draft #cybersecurity law is amended in response to consultation feedback, and the impact of any guidance issued by the Commissioner for Cyber Security (once the office is formed) in due course. If you have any questions on the draft law and its implications for your business, please do reach out. #cyber #cybersecurity #newlaw #draftlaw

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In a rare guidance note, the Minister for External Relations (the competent authority for #sanctions enforcement in Jersey) ("MER") has clarified reporting requirements in relation to designated persons in Jersey.(1) Regulation 16 of the Russia (Sanctions)(EU Exit) (Amendment) (No. 4) Regulations 2023, as reflected into Jersey law pursuant to the Sanctions and Asset-Freezing (Implementation of External Sanctions) (Jersey) Order 2021, requires Relevant Financial Institutionsto report to MER as soon as reasonably practicable if:a) it knows or has reasonable cause to suspect it holds funds or economic resources for a prohibited person (i.e. a person designated by Regulation 18A of the UK Russia Sanctions Regulations 2019); andb) the information or other matter on which the knowledge or cause for suspicion is based came to it in the course of carrying on business.A "Relevant Financial Institution" is a person [natural or legal] carrying on a financial services business in or from within Jersey, or a person [not being an individual] incorporated or constituted under the laws of Jersey and carrying on financial service business in any part of the world.(2) Regulation 17 requires a designated person to self-report to MER any funds or economic resources over the value of £10,000. This relates to Jersey situs assets, or worldwide assets (if they are ordinarily resident in Jersey [individual], or incorporated or constituted under the laws of Jersey).These supplement the existing duty on Relevant Financial Institutions under Article 32 of the Sanctions and Asset-Freezing (Jersey) Law 2019 to report to MER as soon as practicable if: a) it holds an account of a person, has entered into dealings or an agreement with a person or has been approached by or on behalf of a person;b) it knows, or has reasonable cause to suspect, that the person – i.is a designated person, orii.has committed, is committing or intends to commit an offence under this Law; andc) the information or other matter on which the knowledge or reasonable cause for suspicion is based came to it in the course of carrying on its business. There remains no obligation for a Jersey person to self-report to MER if they know or suspect that they have committed a breach of the Jersey sanctions regime. However, obliged persons would be required to report this to the Jersey Financial Services Commission ("JFSC") under its Principle 6 Duty of Candour, and the JFSC would then likely be obliged to report it to the States of Jersey Police and/or HM Attorney General for Jersey (my recent post discusses to the JFSC's referral guidance).A breach of the Jersey sanctions regime is not one for which a Deferred Prosecution Agreement would (presently, at least) be available.#sanctions #sanctionscompliance #sanctionsenforcement #sanctionsreporting #regulatory #regulatoryupdate

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In a recent article, my Ogier colleagues James W. Angus, Bruce MacNeil and I consider the implications of the England & Wales Court of Appeal's decision in the Adler case in terms of how Jersey's Royal Court might treat a #restructuring plan sanctioned by a foreign court.Whilst Schemes of Arrangement are well-known to the Royal Court, there is no process analogous to a corporate restructuring in Jersey, and indeed most insolvency options for companies in Jersey are liquiditive in nature. That said, our view is that a foreign law governed restructuring plan would likely be recognised in Jersey, albeit that it would no doubt be on a fact-specific, case-by-case, basis. Have a read of the article to find out why...#restructuring #restructuringplan #insolvency #corporaterescue

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The Jersey Financial Services Commission has published guidance on its approach to enforcement and when it will make a referral to States of Jersey Police and/or HM Attorney General for Jersey.My key takeaways:1. The JFSC adopts a risk-based approach to regulation. The greater the impact of the conduct on its guiding principles, the more likely the matter will be transferred to the Enforcement division and an investigation opened.2. The opening of an investigation does not mean a presumption of guilt: it is a fact-finding exercise to understand whether enforcement action is required, and if so, what sanction is appropriate.3. If it appears that serious misconduct by individual(s) has been a significant factor in the suspected serious misconduct of the firm, parallel investigations will usually be opened into the firm and individual(s).4. The JFSC is mindful that investigations are stressful for individuals and disruptive for firms. It will endeavour to conclude the investigaton as quickly as practicable. The investigation itself will be conducted having regard to the range of statutory powers available to the JFSC.5. The range of sanctions available to the JFSC include issuing a public statement censuring a firm or individual; imposing a civil financial penalty; restricting or preventing a firm or individual from working in the sector; revoking a firm's licence; and/or make a referral to the Police and/or HM Attorney General for Jersey in respect of criminal offences identified in the course of the investigation.6. A referral will be made by the JFSC to law enforcement if the criminal offence is sufficiently serious that it poses a threat to clients / potential clients, to the reputation of the island and/or to the integrity, competence or financial standing of the person concerned. Intention will likely be an aggravating factor, as will the knowing or reckless provision of false or misleading information. However, before making a referral, the JFSC may consider if the conduct can be adequately addressed by its regulatory powers / sanctions.7. The decision to prosecute remains with HM Attorney General for Jersey, who will assess whether (1) the evidential test (i.e. is there sufficient evidence to provide a realistic prospect of conviction on each charge?); and (2) the public interest test (i.e. is it in the public interest to pursue the prosecution?) are satisfied. All cases turn on their own facts: the presence of some factors (e.g. intention, being in a position of authority, the extent of financial loss caused, and if the offence is widespread) will tend to weigh in favour of prosecution; whereas the presence of other factors (e.g. only a nominal penalty is likely to be imposed by the Court, the conduct arose from genuine mistake, the loss or harm is minor and as a result of a single incident, and redress has been made for the loss or harm) will tend to weigh against a prosecution.#regulatory #regulatoryupdate

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Next week, Ogier's Trusts Advisory Group will host its next breakfast seminar, chaired by Nick Williams.During the session, I'll delve into the draft Cyber Security Law for Jersey, while Rebecca McNulty answers some of the common questions on blessing applications and momentous decisions, and Josephine Howe shares her insights on Letters of Wishes and what trustees should consider. See you there!For more information, visit: https://lnkd.in/e-_HtaUq #TrustsAdvisoryGroup #PrivateWealth #DisputeResolution #Jersey #Cyber #Cybersecurity

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The Government of Jersey has extended the consultation period for the draft Cyber Security Law from 19 March 2024 until 23 April 2024. The further period should provide prospective Operators of Essential Services (and other interested parties) with more opportunity to make their views known on the draft law.A revised version of the article prepared by my colleagues Matthew Shaxson, Andy Carpenter Int.Dip(AML) and I (reflective of the extended consultation period) can be found at the link below.Please do not hesitate to reach out if you would like to discuss.Ogier#cyberlaw #cybersecurity #cyberresilience #legalupdate

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