Anti-Money Laundering and Other Financial Crime (Miscellaneous Amendments) Act 2018
The Act addresses several recommendations made within the MONEYVAL Mutual Evaluation Report of the Isle of Man, as well as addressing other matters identified by various authorities in relation to anti-money laundering and the effective prosecution of financial crime.
The Act includes amendments to:
- The Anti-Terrorism and Crime Act 2003,
- The Proceeds of Crime Act 2008,
- The Terrorism and Other Crime (Financial Restrictions) Act 2014 and the Financial Intelligence Unit Act 2016,
- Certain record-keeping provisions of the Foundations Act 2011,
- The Companies Act 1931, the Companies Act 2006, the Foundations Act 2011, the Limited Liability Companies Act 1996 and the Partnership Act 1909, to provide powers to make enquiries in respect of information to be registered in accordance with recommendations specified in the Fifth Round Mutual Evaluation Report of the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism;
- The Criminal Justice Act 1991 to make provision for the jurisdiction of courts in the Island in relation to certain criminal offences;
- The Gambling (Amendment) Act 2006 to add to the decisions that may be appealed under Schedule 4 to that Act and to amend the matters in respect of which there may be a stay pending an appeal;
- Schedule 1 to the Financial Services Act 2008 in relation to the persons in respect of which an AML/CFT investigation may be conducted;
- Schedule 5 to the Insurance Act 2008 so as to apply certain powers available under it to such investigations; and
- For other connected purposes.
The Act received Royal Assent on 19 June 2018, and in accordance with section 2 of the Act, the Act’s substantive provisions came into force by Appointed Day Order (SD 2018/0190) on 21 June 2018.
Insurance (Amendment) Act 2017 (Appointed Day) (No.2) Order 2018 (SD 2018/0147)
This Order provides the commencement dates for the majority of the provisions of the Insurance (Amendment) Act 2017 on 31 May 2018, 30 June 2018, 30 November 2018 and 1 January 2019 respectively. In particular, this Order provides for the commencement of the new capital requirements provisions only in respect of long-term business being carried on by an insurer. This Order does not commence the new capital requirements provisions in relation to other types of insurance business being carried on by an insurer. The Order also commences the new group supervision provisions in respect of insurers carrying on long-term business only. The Order does not commence the new group supervision provisions in respect of insurers carrying on:
(a) other types of insurance business; or
(b) other types of insurance business and long-term business.
The Order was laid before Tynwald on the 19 June 2018.
Insurance (Long Term Business Valuation and Solvency) Regulations 2018 (SD 2018/0193)
These Regulations apply to long-term [insurance] business and impose requirements for the calculation of the minimum capital requirement and solvency capital requirement under section 12 of the Insurance Act 2008. The Regulations also include corresponding requirements for the valuation of certain assets and liabilities. The Regulations came into operation on 30 June 2018.
Insurance Regulations 2018 (SD 2018/0192)
These Regulations replace the Insurance Regulations 1986.
Part I contains general provisions for authorised insurers including the categories and classes of insurance business, and the exemptions from being authorised under section 5 of the Insurance Act 2008.
Part II applies certain regulations and certain sections of the Insurance Act 2008 to foreign insurers that hold permits.
Part III sets out the reporting requirements for an authorised insurer in respect of any long-term business carried on by that insurer.
Part IV sets out the reporting requirements for an authorised insurer in respect of any non long-term business carried on by that insurer.
The Regulations came into operation on 30 June 2018.
Bills Of Exchange (Electronic Instruments) (Evidence of Payment and Compensation for Loss) Regulations 2018 (SD 2018/0155)
These Regulations support the presentment for payment of instruments by electronic means as provided for under Part 4A of the Bills of Exchange Act 1883. Regulations 4 and 5 provide for banks to supply copies of paid instruments as evidence of payment. Regulations 6 to 10 govern compensation for loss arising out of the presentment of instruments by electronic means. The Regulations came into operation on 1 July 2018.
Financial Intelligence Unit (Transfer of Property, Rights and Liabilities) Order 2018 (SD 2018/0170)
By virtue of 34(1) of the Financial Intelligence Unit Act 2016 the legal entity known as the Financial Crime Unit of the Isle of Man Constabulary ceased to exist when the Act came into operation. However, material it had acquired prior to that date remained with the Chief Constable. This Order provides for the transfer of the properties, rights and liabilities sent, received or created by the Financial Crime Unit of the Isle of Man Constabulary before it ceased to exist, to the Financial Intelligence Unit as detailed in the Schedule to the order during the period between 31 July 2012 and 21 April 2016. These Regulations came into operation on 1 August 2018.
Financial Services (Amendment) Rule Book 2018 (SD 2018/0151)
This Rule Book made changes to the Financial Services Rule Book 2016 which result from changes to, and harmonisation of, the Isle of Man Financial Services Authority’s process for the assessment of fitness and propriety, as well as addressing cross referencing and similar errors within the Rule Book. Most changes are linked to changing the fit and proper assessment process. In particular the regulations amend rule 7.9 to allow a simplified process for post notification (whereby the FSA does not need to be notified in advance of an appointment) for Controlled Functions which are ‘notified only’. The amendments reduce the burden on regulated entities in relation to some roles which will become subject to post notification only. The Regulations came into operation on 1 August 2018.
GDPR and LED Implementing Regulations 2018 (SD 2018/0145)
These Regulations make provisions for the purpose of implementing EU Instruments that have been applied to the Island as part of the law of the Island by orders under the Data Protection Act 2018. The Regulations address several matters including:
- Provisions relating to GDPR, (Regulation (EU) 2016/679) including: the differences between GDPR and applied GDPR in the Isle of Man, setting out clear rights, duties, and obligations on specified legal persons and natural persons as well as the legal requirements for controllers and processors;
- Provisions for special categories of personal data and special conditions which allow for the processing of such personal data;
- Safeguards relating to processing for archiving, research and statistical data requiring that it is carried out in a way that does not permit or no longer permits identification of data subject and is not for the purposes of measures or decisions relating to the data subject; and
- General provisions including limits on fees and accreditation/certification;
- Provisions relating to LED (Law Enforcement Directive (EU) 2016/680), including: Transposing the LED into the law of the Isle of Man and applying the LED to all law enforcement processing;
- Provisions relating to the application of LED including time limits for storage and review, the distinction between categories of data subject and quality of personal data which is required by the applied LED, lawful basis for processing under the applied LED, and specific processing with conditions for processing special categories of personal data, and the prohibition on automated decision-making unless the law permits it, with appropriate safeguards for the rights and freedoms of the data subject;
- Provisions regarding the rights of the data subject, including rights of access, when the controller does not need to comply with a request, and the applicable time periods for responses to requests;
- The obligations of controllers and processors, requirements to keep records of processing activity, dealings with the Information Commissioner, and notification of personal data breaches; and
- The conditions for special category processing
- Provisions for the designation of Data Protection Officers under GDPR and LED;
- Provisions for transfers of data to third countries or international organisations and the prohibition of sending data to countries or organisations without levels of adequate protection, how to determine if the protection is adequate, and exceptions to the general rule;
- Provisions relating to the continuance of the Information Commissioner, its general functions, its powers of audit and inspection of personal data, its international role in cooperation and mutual assistance, its discretion to provide guidance;
- Provisions relating to the enforcement regime under the Regulations including the notices that can be given by the Information Commissioner and information on offences, claims appeals and complaints. The notices allow for a variety of actions to be taken by the Information Commissioner, including obtaining information from a controller or processor, access to their premises or documents, enforcement notices for braches of GDPR, and penalty notices for failure to comply with notices issued by the Information Commissioner; and
- Supplementary and final provisions including ability to make further regulations, liability of directors and special provisions regarding health records and criminal records.
The Regulations came into operation on 1 August 2018.
It is notable that under Schedule 11 of the Regulations, any subject access request (SAR) that has been submitted and not fully complied with by midnight on 31 July 2018 will be treated as a SAR under Article 15 of Applied GDPR or regulation 42 of the Regulations as of 1 August 2018.
Financial Services Tribunal (Amendment) Rules 2018 (SD 2018/0146)
Following the coming into operation of section 55D of the Insurance (Amendment) Act 2017 and the transfer of functions from the Collective Investments Schemes Tribunal, Retirement Benefits Schemes Tribunal and the Insurance Tribunal to the Financial Services Tribunal, these Rules amend the Financial Services Tribunal Rules 2015 by amending the definition of an appeal to include appeals made under:
- Section 21 of the Collective Investment Schemes Act 2008;
- Section 38 of the Retirement Benefits Schemes Act 2000; and
- Section 45 of the Insurance Act 2008.
The Rules, subject to transitional provisions regarding any appeals that may be in progress, also revoke the Financial Services Review Regulations 2001 in respect of appeals made under the Retirement Benefits Schemes Act 2000, the Collective Investment Schemes Act 2008 and the Insurance Act 2008.
These Rules came into operation on 30 June 2018.
The Gambling (Anti-Money Laundering and Countering the Financing of Terrorism) Civil Penalties Order 2018 (SD 2018/0135)
The Order concerns section 22 of the Gambling (Anti-Money Laundering and Countering the Financing of Terrorism) Act 2018 (the Act), which allows the Gambling Supervision Commission (GSC) to require an operator to pay a civil penalty for contraventions of the provisions of the Act, anti-money laundering and countering the financing of terrorism legislation, or in relation to false, inaccurate or misleading information provided to the GSC.
The Order sets out that the GSC must not impose a penalty under section 22 of the Act until the expiry of 28 days beginning on the day on which the operator is given notice under section 22(4) of the Act that the GSC are imposing a penalty.
It is worth noting that there is a typographical error within the Order at Articles 5(2) and 5(3). In those Articles, references to “submission under paragraph (2)” should be references to “submission under paragraph (1)”.
The Order also provides that an operator may respond to a notice by providing details of mitigating factors within 14 days in accordance with any relevant GSC Guidance.
The Order came into operation on 21 May 2018.
Value Added Tax Act 1996 (Fulfilment Business) Order 2018 (SD 2018/0111)
This Order amends the Value Added Tax Act 1996 (the Act) corresponding with legislation being introduced in the United Kingdom, in relation to VAT, by the Finance (No.2) Act 2017 (of Parliament). The new provisions implement the Fulfilment House Due Diligence Scheme (the Scheme). The Scheme requires third country goods fulfilment businesses to be registered by the Treasury where:
a) The goods are imported from a country outside the EU;
b) The goods are owned by, or stored on behalf of, someone established outside the EU; and
c) The goods are being offered for sale and have not been sold in the Island before.
Fulfilment businesses, which are defined within the new provisions and are located in the Island, will have to register with the Treasury, keep certain records and carry out robust due diligence checks on their overseas customers.
The Order also confers powers on the Treasury to make regulations in relation to the Scheme, as well as making it an offence to trade as a fulfilment business without registration resulting in penalties or forfeiture of goods.
The Order comes into operation in three stages. New sections concerning the powers to make secondary legislation came into operation on 26 March 2018; the section concerning appeals came into operation on 1 April 2018. The remaining provisions of the new Scheme will come into operation on 1 April 2019 when any person (including corporate bodies) carrying on a third party goods fulfilment business and not approved by the Treasury will commit an offence.
Value Added Tax Act 1996 (Online Marketplaces) Order 2018 (SD 2018/0119)
This Order amends the Value Added Tax Act 1996 (the Act), by inserting new sections as a consequence of amendments made in the United Kingdom by the Finance Act 2018 (of Parliament).
The new provisions are intended to encourage non-compliant Isle of Man and non-Isle of Man businesses that sell goods through online marketplaces to register for VAT, comply with their obligations under the Act and pay the VAT due on sales made in the Isle of Man. Businesses who are not established in the Island or UK, but sell goods into the Island or UK, are required to be VAT registered, regardless of their turnover.
a) Extends the scope of existing joint and several liability provisions so that an operator of an online marketplace can be held jointly and severally liable for VAT payable by any person selling goods through the online marketplace who fails to comply with any requirement imposed by the Act;
b) Introduces a new requirement on online marketplace operators to display valid VAT registration numbers on their online marketplaces and conduct due diligence checks in relation to VAT registration numbers; and
c) Introduces a penalty for a breach of the requirements in (b) above.
The Order came into operation on 1 April 2018.
Payment Services (Amendment) Regulations 2018 (SD 2018/0131)
The Regulations amend the Payment Services Regulations 2015 definitions of ‘relevant State’ and ‘branch’ to include the Bailiwicks of Guernsey and Jersey, correct the definition of ‘Regulated Activities Order’ and replace references to the ‘Financial Supervision Commission’ with the ‘Isle of Man Financial Services Authority’.
The Regulations came into operation on 1 June 2018.
Proceeds of Crime (Amendment of Schedule 4) Order 2018 (SD 2018/0113)
This Order Amends Schedule 4 of the Proceeds of Crime Act 2008 to include a new provision which inserts the business of a totalisators and the provision of betting facilities on a racecourse as being businesses that are businesses in the regulated sector.
The Order also amends Schedule 4 to remove the businesses of selling or supplying controlled machines within the meaning of the Gaming (Amendment) Act 1984 from the list of businesses that are businesses in the regulated sector (for gambling). This is at the request of the Gambling Supervision Commission, which considers the above activities to be low risk, and therefore no longer considered businesses in the regulated sector.
The Order came into operation on 1 June 2018.
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