Today, the island of Jersey, A UK Crown dependency, together with FATF’s Moneyval published the AML/CTF Country Assessment for the Country. The report running to 350 plus pages is one of the last in this fourth round of evaluations and follows the last report published over 8 years ago.
The report presents a positive assessment with some improvements still needed, in line with some better in class peer international financial centres and FATF member countries. Actions have been taken, improvements have been made, and with only one sub standard rating (1 PC rating out of 40) and mostly positive effectiveness ratings, Jersey has achieved a lot and has avoided being considered for the damaging grey list by a country mile. Instead it is a standard bearer for many International Financial Centres that will want to emulate the findings in this report. See below.
Jersey performed best in terms of effectiveness on understanding the ML/TF/PF risks it faces. being rated as highly effective for Immediate Outcome 1.
The main ML threats are posed by “foreign predicate offences” rated “medium–high”, by “cross-border activities” rated “medium”, & from “domestic crime” at “medium-low”, with the overall “ML Threat” at “medium high”, according to 2020 ML NRA as updated by 2023 ML NRA. Main foreign predicate offences of concern are from corruption, fraud, tax crimes & professional money laundering. Main countries of concern introducing foreign predicate offences risks are from so called higher risk countries, which were identified as: Belarus Cayman Islands, Egypt, Gibraltar, Hong Kong, Ireland, Jordan, Kenya, Lebanon, Nigeria, Pakistan, Philippines, Russia, South Africa, Switzerland, Turkey, UAE, UK, USA & Zimbabwe. Domestic crime threat rated at “medium low”. As far as terror finance is concerned, the Jersey TF RA 2023, stated that, “overall, there is a “medium low” risk of Jersey being used as a conduit for terrorist financing”.
According to the 2023 ML NRA, inherent vulnerability ratings are highest for, Trusts & Company Service Providers (TCSP), The Securities Sector (incl Funds), Banking (Retail International <5 million) at “medium high”, with Banking (Private, Corporate Large/Global & Corporate TCSP), Lawyers, rated “medium”. Other areas where vulnerabilities are under consideration include, Jersey HQ Mineral Extraction (Overseas) Companies, Security Issuance Vehicles, Shipping Registry, VASP’s & High Value Residency.
Jersey also performed well on IO2 – National & International co operation, IO5 – Transparency and Beneficial Ownership of Entities etc, IO8 ML Confiscations, IO9 TF Investigations & Prosecutions, IO10 Prevention of Terrorism & TF & IO11 Prevention of WMD Proliferation/PF.
IO3 & 4: improvements are still required and actions committed to on IO 3 Supervision and IO4 Preventative Measures as well as IO6 Financial Intelligence and IO7 ML Investigations & Prosecutions. To put this into context only 3 countries have received positive IO3 & IO4 ratings to date which are Aruba, The Vatican and Spain so ratings for Jersey on these are not a surprise as these are possibly the hardest of ratings for countries to meet ever exacting expectations. Editors note: The editor was invited to join a session with the Jersey Regulator (the Jersey Financial Services Commission) and the Jersey Company Registrar and their leadership teams to discuss their work, showcasing their commitment to achieving more in the months and years ahead.
IO6: Just like FIU’s in the UK and Germany, the Jersey FIU was rated with more to do to improve at “moderately effective”. With new leadership & increased resources, Jersey appears committed to make this happen. Staffing is already up from 11 in 2018 to 29 in 2023 with increases to follow. SAR dissemination rate is at a credible 9% from 1,393 SARs reported in 2022 up from 1,266 in 2021, with feedback provided to reporting entities. Editors note: The editor was invited to join a session with the FIU leadership team to discuss the work of the FIU, their plans to reach the next level and the editor engaged in a very interactive productive discussion on relevant matters including discussing the Jersey PPP (the JFIN),
IO7 ML: For ML Investigations and Prosecutions, the numbers do need to increase, but for a jurisdiction like Jersey which is much more likely to see layered funds and not placed funds and funds from third jurisdictions, investigations, prosecutions and convictions for ML are challenging, and more likely to be viable on the more complex side which by their nature take longer and are more expensive to investigate and prosecute.
IO8: The standout outcome together with the results for IO1 Risk Understanding was for IO8 Confiscations which reported outsize results with asset recoveries over the reporting period of the assessment of Euro 310 million which is significant for Jersey. Based on FCN’s comparative analysis and monitoring of asset recoveries for most countries at under 1% of estimated proceeds of crime, Jersey outperforms these substantially and finds itself likely in the top 10 jurisdictions globally and should be commended. See the FCN Country Dashboard for more details. This probably warranted a “Highly Effective” rating rather than the “Substantially Effective” rating on this basis.
Overall risk rating by FCN is “low to medium” threats at 33/100 and “medium to high” response at 37/100 resulting in a low to moderate overall risk rating 70/200. This places Jersey in 12th spot of 45 best placed countries assessed which includes all 40 FATF Member Countries which represents over 85% of Global GDP, which is based on the threat and the response and the result being the net or residual risk.
For a PDF of the Jersey Financial Crime Country Dashboard, See HERE: FCN Jersey Dash July 24, 2024. Copy extract below.
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