It cannot have gone unnoticed that the Jersey Financial Services Commission (JFSC) is taking an increasingly public stance with regard to regulated entities' compliance with AML/CFT (Anti-Money Laundering/Combating the Financing of Terrorism) obligations, including the imposition of financial penalties.
While the JFSC has had the power to impose civil financial penalties for breach of these obligations since March 2015, it is only in the past year that we have seen the first, and only, two cases where the JFSC has exercised such powers. The JFSC recently imposed a civil financial penalty on Equity Trust (Jersey) Limited in the amount of GBP115,575. The penalty imposed on Equity follows the civil financial penalty of GBP381,010 which the JFSC imposed on Sanne Fiduciary Services Limited in June 2019. In both cases, the penalties were imposed with regard to regulatory and AML/CFT obligations.
Given that the JFSC has stated that it is looking to build a track record of effective risk-based assessment ahead of Jersey's next MoneyVal evaluation in 2021/2022, we would not be surprised to see further enforcement action in the upcoming 18 months.
So rather than being outliers we consider these two cases to be indicative of a new normal to be expected from the JFSC. In any event, regularly reviewing and testing your AML/CFT processes and policies is the best way for a regulated entity to ensure that it complies with its obligations and avoid such penalties. Given the amendments made to the Money Laundering Order 2008 over the last 12 months, now would be a sensible time for businesses to review their compliance measures.
The increased use of the civil financial penalty regime should not be taken lightly by regulated entities or their principals, especially since the JFSC also has the power to impose similar civil penalties on 'principal persons' of a 'registered person' (i.e., a regulated entity). However, the threshold for imposing a civil financial penalty on a principal person is high - there must be a significant and material contravention by a registered person and such contravention was (i) committed with the consent or connivance of, or is attributable to neglect on the part of a principal person or (ii) aided, abetted, counselled or procured by a principal person.
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