The Jersey Financial Services Commission now has the power to
impose civil financial penalties for significant and material
contraventions of the Codes of Practice and the AML/CFT Handbook.
The level of fines has been set and the JFSC has published a
statement on the principles and processes it will adopt under the
civil penalties regime.
Who is affected?
All entities registered under the Banking Business (Jersey) Law
1991, the Insurance Business (Jersey) Law 1996 and the Financial
Services (Jersey) Law 1998 must adhere to the relevant Codes of
Practice published by the JFSC. Entities registered under the
Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008 are
required to adhere to the AML/CFT Handbook.
What is the level of penalties?
There are three levels of penalty, depending on the seriousness
and circumstances of the breach of the Codes of Practice.
The highest level of financial penalty is up to 8% of
'relevant income'. Broadly, 'relevant income' is
income derived from licensed business activities. There is a cap of
Ł4,000,000 on the level of penalty that can be imposed for
more serious breaches.
The proceeds of penalties may be retained by the JFSC and
applied to reduce licence fees. The Chief Minister can order that
substantial penalties must be paid to the States of Jersey.
The JFSC will also be able to issue public statements when it
imposes a penalty. There is a right of appeal to the Royal Court
but only on the ground that the decision of the Commission was
unreasonable having regard to all the circumstances of the case (a
What are the JSFC's processes when imposing penalties?
The JFSC has published Regulatory Sanctions: Decision Making
Process setting out the process and principles that apply to JFSC
decisions in a number of areas, including on civil penalties.
It states that early acknowledgment of regulatory breaches will
always be considered favourably by the JFSC. It also includes a
statement of principles that the JFSC must take into account when
imposing civil penalties (such as the seriousness of the
contravention and whether it was voluntarily reported) as well as a
list of aggravating and mitigating factors (for instance a poor
compliance record on the one hand and co-operation with the JFSC on
What should I be checking?
While it may be difficult to obtain cover for civil penalties
imposed by the JFSC, registered persons may wish to check that
their insurance policies cover the costs associated with a JFSC
action to impose civil penalties. Licensees may also wish to
confirm that they comply with the Codes and AML/CFT Handbook now
that breaches may lead to civil penalties. In particular, the Codes
were amended with effect from 1 July 2014 and further requirements
imposed. The AML/CFT Handbook was amended with effect from 1
January 2015 and 24 March 2015. If they have not done so already,
registered persons will wish to conduct a thorough gapping analysis
to ensure that they comply to the higher standards. Specialist
teams at Ogier can help with that process.
The Financial Services Commission (Amendment No. 6) (Jersey)
Law 2015 - click here to view.
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