consultation paper - the Jersey Financial Services Commission

CONSULTATION PAPER NO. 1 2015

CIVIL PENALTIES: DRAFT TARIFF A consultation on draft secondary legislation that would set the civil financial penalties tariff for contraventions of Codes of Practice

ISSUED JANUARY 2015

Consultation Paper

CONSULTATION PAPER Please note that terms in italics are defined in the Glossary of Terms. The Commission invites comments on this consultation paper. William Byrne at Jersey Finance is co-ordinating an industry response that will incorporate any matters raised by local businesses. Comments should reach Jersey Finance by Monday 16 February 2015. Responses should be sent to: William Byrne Head of Technical Jersey Finance Limited 4th Floor, Sir Walter Raleigh House 48-50 Esplanade St Helier Jersey JE2 3QB

Telephone: +44 (0) 1534 836021 Facsimile: +44 (0) 1534 836001 Email: [email protected]

Alternatively, responses may be sent directly to Barry Faudemer or Stephen de Gruchy at the Commission by Monday 16 February 2015. If you require any assistance, clarification or wish to discuss any aspect of the proposal prior to formulating a response, it is of course appropriate to contact the Commission. The Commission contacts are: Barry Faudemer Director, Enforcement Jersey Financial Services Commission PO Box 267 14-18 Castle Street St Helier Jersey JE4 8TP Stephen de Gruchy Senior Manager, Policy & Strategy Jersey Financial Services Commission PO Box 267 14-18 Castle Street St Helier Jersey JE4 8TP

Telephone: +44 (0) 1534 822137 Email: [email protected]

Telephone: +44 (0) 1534 822110 Email: [email protected]

It is the policy of the Commission to make the content of all responses available for public inspection unless specifically requested otherwise.

CIVIL PENALTIES: DRAFT TARIFF

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Glossary of Terms

GLOSSARY OF TERMS AIF

means an alternative investment fund as defined in the AIF Regulations.

AIF Regulations

means the Alternative Investment Funds (Jersey) Regulations 2012.

Amendment Law

means the Financial Services Commission (Amendment No. 6) (Jersey) Law 201- adopted by the States of Jersey on 9 December 2014 and currently awaiting Privy Council approval.

ANLA

means adjusted net liquid assets.

BBJL

means the Banking Business (Jersey) Law 1991.

CIFJL

means the Collective Investment Funds (Jersey) Law 1988.

Code of Practice (or Code)

means the Codes of Practice for: • • • • • • • • •

deposit-taking business; fund services business; general insurance mediation business; insurance business; investment business; money service business; trust company business; alternative investment funds and AIF services business; and the Handbook for the prevention and detection of money laundering and the financing of terrorism for financial services business regulated under the regulatory laws.

Commission

means the Jersey Financial Services Commission.

Commission Law

means the Financial Services Commission (Jersey) Law 1998.

FSJL

means the Financial Services (Jersey) Law 1998.

IBJL

means the Insurance Business (Jersey) Law 1996.

Jersey Finance

means Jersey Finance Limited.

registered person

means • • • •

regulatory laws

means – • • • • •

1

a person registered under the BBJL; a person registered under the FSJL 1; a Category B permit holder under the IBJL; a service provider within the meaning of the AIF Regulations. the AIF Regulations; the BBJL; the FSJL; the IBJL; and the SBJL.

Other than a person registered to conduct Class R or Class S general insurance mediation business.

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Glossary of Terms SBJL

means the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008.

Tariff Order

means the draft Financial Services Commission (Financial Penalties) (Jersey) Order 201-.


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Contents

CONTENTS 1

2

EXECUTIVE SUMMARY ............................................................................................................ 7 1.1 Overview ................................................................................................................................7 1.2

What is proposed and why? ................................................................................................7

1.3

Who would be affected? .......................................................................................................8

CONSULTATION ......................................................................................................................... 9 2.1 Basis for consultation ............................................................................................................9 2.2

Responding to the consultation ...........................................................................................9

2.3

Next steps ...............................................................................................................................9 3 THE COMMISSION ................................................................................................................... 10 3.1 Overview ..............................................................................................................................10 3.2

Commission’s functions .....................................................................................................10

3.3

Guiding principles...............................................................................................................10 4 THE DRAFT LEGISLATION .................................................................................................... 11 4.1 Overview ..............................................................................................................................11 4.2

Article 1 of the Tariff Order .................................................................................................11

Article 2 of the Tariff Order .................................................................................................11 Article 3 and the Schedule of the Tariff Order ..................................................................13 5 COST BENEFIT ANALYSIS ..................................................................................................... 17 6 SUMMARY OF QUESTIONS................................................................................................... 18 APPENDIX A ........................................................................................................................................... 19 List of representative bodies who have been sent this consultation paper. ..........................19 APPENDIX B ............................................................................................................................................ 20 Financial Services Commission (Financial Penalties) (Jersey) Order 201- [Draft 5A] ..........20 4.3 4.4

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Executive Summary

1

EXECUTIVE SUMMARY

1.1

Overview

1.2

1.1.1

On 9 December 2014, the States of Jersey approved the Amendment Law. That law, which is now awaiting Privy Council approval, will amend the Commission Law to provide the Commission with the power to impose civil financial penalties on registered persons that commit serious contraventions of a Code of Practice (contraventions which the Commission Law will define as “significant and material”).

1.1.2

This consultation paper seeks views on a draft of the secondary legislation – the Tariff Order - that would set the tariff for civil financial penalties.

What is proposed and why? 1.2.1

The Tariff Order would provide for a tariff with three bands, with the amount of the civil financial penalty being graduated depending on the seriousness, and the circumstances, of the contravention of the Code of Practice.

1.2.2

The amount of the civil financial penalty would be calculated as a percentage of a registered person’s “relevant income” (very broadly speaking, turnover).

1.2.3

The three bands proposed are as follows:

Band

Nature of contravention

Penalty

1

A failure, on more than one occasion in any period of 2 years, to notify the Commission of a matter required by a Code of Practice (where either no notification is made or it is not made within the timeframe required by the Code), if the contravention does not fall into either band 2 or band 3 below.

Up to 4% of relevant income or £10,000, whichever is the lower amount.

2

A contravention not falling into band 3 below and not rectified to the satisfaction of the Commission within the timeframe determined by the Commission after discussion with the registered person concerned, which timeframe must be reasonable.

Up to 6% of relevant income.


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Executive Summary 3

A contravention committed either intentionally or recklessly that satisfied one or more of the following, namely that it –

Up to 8% of relevant income.

(a) caused or risked causing financial loss to the public; (b) damaged or risked damaging the reputation and integrity of Jersey in commercial and financial matters; (c) damaged or risked damaging the economic interests of Jersey; (d) jeopardized or risked jeopardizing the need to counter financial crime both in Jersey and elsewhere; (e) took place for commercial reasons.

1.3

Who would be affected? 1.3.1

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The Tariff Order would potentially affect any registered person that commits a serious contravention of a Code of Practice.

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Consultation

2

CONSULTATION

2.1

Basis for consultation 2.1.1

2.2

2.3

The Commission has issued this consultation paper in accordance with Article 8(3) of the Commission Law, under which the Commission “may, in connection with the carrying out of its functions - ….consult and seek the advice of such persons or bodies whether inside or outside Jersey as it considers appropriate”.

Responding to the consultation 2.2.1

The Commission invites comments in writing from interested parties on the proposals included in this consultation paper. Where comments are made by an industry body or association, that body or association should also provide a summary of the type of individuals and/or institutions that it represents.

2.2.2

To assist in analysing responses to the consultation paper, respondents are asked to: 2.2.2.1

prioritise comments and to indicate their relative importance; and

2.2.2.2

respond as specifically as possible and, where they refer to costs, to quantify those costs.

Next steps 2.3.1

Once any amendments deemed necessary to the Tariff Order as a result of this consultation have been made, it will be presented to the Chief Minister with a recommendation that he sign a Ministerial Decision bringing it into force.


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The Commission

3

THE COMMISSION

3.1

Overview 3.1.1

3.2

The Commission is a statutory body corporate established under the Commission Law. It is responsible for the supervision and development of financial services provided in or from within Jersey.

Commission’s functions 3.2.1

The Commission Law prescribes that the Commission shall be responsible for: 3.2.1.1

the supervision and development of financial services provided in or from within Jersey;

3.2.1.2

providing the States of Jersey, any Minister or any other public body with reports, advice, assistance and information in relation to any matter connected with financial services;

3.2.1.3

preparing and submitting to Ministers recommendations for the introduction, amendment or replacement of legislation appertaining to financial services, companies and other forms of business structure;

3.2.1.4

such functions in relation to financial services or such incidental or ancillary matters: • as are required or authorised by or under any enactment, or • as the States of Jersey may, by Regulations, transfer; and

3.2.1.5

3.3

Guiding principles 3.3.1

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such other functions as are conferred on the Commission by any other Law or enactment.

The Commission’s guiding principles require it to have particular regard to: 3.3.1.1

the reduction of risk to the public of financial loss due to dishonesty, incompetence, malpractice, or the financial unsoundness of persons carrying on the business of financial services in or from within Jersey;

3.3.1.2

the protection and enhancement of the reputation and integrity of Jersey in commercial and financial matters;

3.3.1.3

the best economic interests of Jersey; and

3.3.1.4

the need to counter financial crime in both Jersey and elsewhere.

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The Draft Legislation

4

THE DRAFT LEGISLATION

4.1

Overview

4.2

4.3

4.1.1

This section summarises the Tariff Order, and explains the rationale for a provision in it where it may not be obvious.

4.1.2

Necessarily, the information in this section sometimes paraphrases provisions in the Tariff Order, so readers are encouraged to consider the precise text of the legislation, which is shown in Appendix B.

Article 1 of the Tariff Order 4.2.1

Article 1 provides certain definitions that are required for the purposes of the Tariff Order.

4.2.2

Most of the definitions are self-explanatory. The one definition that may not be, is that for “total banking income”. This is used in Article 2 where it is the “relevant income” figure used to calculate the amount of a financial penalty that a bank would pay.

4.2.3

“Total banking income” is a narrative description of Line A.1.0 of the “Core Data” bank prudential reporting module provided by banks to the Commission.

Article 2 of the Tariff Order 4.3.1

Paragraph 1 of Article 2 sets out how “relevant income” would be calculated for different categories of registered person.

4.3.2

The significance of this is that the amount of a financial penalty would be calculated as a percentage of a registered person’s “relevant income” (see Article 3 and the Schedule of the Tariff Order).

4.3.3

Except for some minor clarificatory changes, the description of “relevant income” is the same as proposed in Appendix C of the Commission’s 2012 consultation paper and which found favour with respondents. 2

4.3.4

Sub-paragraphs (i) and (ii) of Article 2(1) provides for a registered person’s “relevant income” to be the higher of:4.3.4.1

2

the five year average “relevant income” figure (excluding from the calculation any financial year in which “relevant income” was negative);

See Consultation Paper No. 2 of 2012 “Civil Penalties” and the associated Feedback Paper, both at http://www.jerseyfsc.org/the_commission/general_information/consultation_papers/consultation _papers.asp


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The Draft Legislation and 4.3.4.2

the “relevant income” in the registered person’s last financial year.

4.3.5

This ‘smoothing mechanism’ has been inserted to address a particular issue that can arise with banks whereby, in some financial years, a bank’s “relevant income” can actually be negative. This can occur as a consequence of such factors as: the bank’s transfer pricing policy; losses taken when dealing in investments; and ‘paper’ losses taken when revaluing investments.

4.3.6

This smoothing mechanism has been applied across all classes of registered person to avoid the complexity of operation that could arise from adopting different methodologies for different classes.

4.3.7

In excluding from the calculation of average “relevant income” any financial year in which such income was negative, the assumption is that the business of the registered person remains a going concern (for example, by utilising reserves during periods of negative “relevant income”).

4.3.8

However, in the unlikely event that a 5-year smoothed calculation of “relevant income” were to produce a nominal positive figure to use to calculate the penalty amount, which was inconsistent with the current financial position of the registered person, the primary legislation contains safeguards:

4.3.9

4.3.8.1

when determining whether to impose a financial penalty and, if so, in what amount, the primary legislation will require the Commission to have particular regard to the financial consequences of the penalty to the registered person; 3

4.3.8.2

the Commission will be statutorily required to take into account representations that the registered person may make on the proposed amount of the penalty; 4 and

4.3.8.3

ultimately, the proposed imposition of a financial penalty may be appealed to the Royal Court. 5

Paragraph 2 of Article 2 further refines how “relevant income” would be calculated in three specific cases.

See Article 21B(3)(e) of the Commission Law (as to be inserted by the Amendment Law). See Article 21C(3) of the Commission Law (as to be inserted by the Amendment Law). 5 See Article 21F of the Commission Law (as to be inserted by the Amendment Law). 3 4

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4.4

4.3.10

The first sub-paragraph, (a), would mean that where a contravention is relevant for more than one regulated business line, “relevant income” would be calculated on a cumulative basis. For example, where a bank is registered under the BBJL for deposit-taking business and under the FSJL for investment business, and it contravened a provision in both the Codes of Practice for deposit-taking business and the Codes of Practice for investment business, “relevant income” would be calculated as the aggregate of that under paragraphs (a) [banking income] and (d) [investment business income] of Article 2(1).

4.3.11

The second sub-paragraph, (b), would mean that where a registered person operates in Jersey through a branch, “relevant income” would be that derived only from that Jersey branch’s relevant business activity (e.g. banking) that gave rise to the contravention of the Code of Practice.

4.3.12

The final sub-paragraph, (c), would result in the calculation of “relevant income” for a trust company business encompassing that across the entire affiliation.

4.3.13

Question: Do you have any observations or concerns on how “relevant income” is defined or how it would be calculated? If so, please state in detail what your observation or concern is and explain the reason for it.

Article 3 and the Schedule of the Tariff Order 4.4.1

This Article sets the maximum penalty that the Commission would be able to impose for three specified types of breaches.

4.4.2

Band 1 would cover the scenario where a registered person had failed, on more than one occasion in any two year period, to notify the Commission of a matter required by a Code of Practice (and the nature of the contravention meant that it did not fall into either of Bands 2 or 3, described below).

4.4.3

Examples of contraventions falling into Band 1 include: 4.4.3.1

a failure to notify the Commission if span of control requirements are not met;

4.4.3.2

a failure to notify the Commission if a complaint results in a claim on the registered person’s professional indemnity insurance;

4.4.3.3

a failure to notify the Commission if ANLA requirements are not being met.


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6

4.4.4

It is important to note that the primary legislation would only allow a financial penalty to be imposed when the contravention of the Code was “significant and material”. 6 Whilst it is arguable that significant means the same as material, it is intended that the use of both “significant” and “material” imposes a higher threshold and that only serious contraventions would result in a financial penalty being considered.

4.4.5

So, if a registered person fails to give a notification to the Commission on time as required by a Code provision that would be a contravention of the Code. But for the financial penalty regime to apply, the contravention would have to be “significant and material” as well.

4.4.6

Under Band 1 a financial penalty of up to 4% of a registered person’s “relevant income” could be imposed, subject to a cap of £10,000.

4.4.7

Band 2 would cover the scenario where the Commission had agreed with a registered person a plan to remediate an identified contravention of a Code but the plan had not been adhered to. (This is subject to the contravention not falling into Band 3 in the first place – see below.)

4.4.8

Under Band 2 a financial penalty of up to 6% of a registered person’s “relevant income” could be imposed.

4.4.9

Band 3 would cover the most egregious examples of contraventions, which had been committed by a registered person either intentionally or recklessly and the contravention falls into one or more of the following categories: 4.4.9.1

it caused or risked causing financial loss to the public;

4.4.9.2

it damaged or risked damaging the reputation and integrity of Jersey in commercial and financial matters;

4.4.9.3

it damaged or risked damaging the economic interests of Jersey;

4.4.9.4

it jeopardized or risked jeopardizing the need to counter financial crime both in Jersey and elsewhere;

4.4.9.5

it took place for commercial reasons.

4.4.10

Under Band 3 a financial penalty of up to 8% of a registered person’s “relevant income” could be imposed.

4.4.11

Question: Do you have any observations or concerns about how the bands are constructed or the maximum level of penalty that would apply to each? If so, please state in detail what your observation or concern is and explain the reason for it.

See Article 21A(1) of the Commission Law (as to be inserted by the Amendment Law).

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The Draft Legislation 4.4.12

7

At present, no cap on the amount of a financial penalty is proposed for Bands 2 or 3. Internationally, there is no consistent practice as regards capping the amount of a financial penalty. Whilst some regulators may impose civil financial penalties only up to a set amount, others operate under regimes that do not impose any cap. For example: 4.4.12.1

in Hong Kong the maximum financial penalty is HK$10 million (c. £855,000) or 3 times the profit gained or loss avoided, whichever is the greater;

4.4.12.2

in Singapore the maximum financial penalty is S$2 million (c. £990,000) or 3 times the profit gained or loss avoided, whichever is the greater;

4.4.12.3

in Ireland the regulator may impose a financial penalty of up to €10 million (c. £7.8 million) or 10% of turnover, whichever is the greater;

4.4.12.4

in the United States regulators operate under regimes where there is no cap;

4.4.12.5

in the United Kingdom the amount of a financial penalty is discretionary and uncapped.

4.4.13

Nearer to home, the Guernsey Financial Services Commission can impose financial penalties of no more than £200,000 (although it is understood that this figure is currently being reviewed with a view to increasing it substantially). The Isle of Man’s Financial Supervision Commission is currently consulting (for the second time) on a draft tariff for its forthcoming civil financial penalties regime, which does not include a cap. Indeed, in its consultation documents the Financial Supervision Commission indicates that it considered whether a cap would be appropriate but concluded that one would not be because it would unfairly favour larger firms, which would effectively have to pay a lesser penalty (in proportion to “relevant income”, not in absolute terms) than smaller firms. 7

4.4.14

Domestically, both the Jersey Gambling Commission and the Jersey Competition Regulatory Commission can impose civil financial penalties: in neither case does the penalty regime include a financial cap

4.4.15

There are clearly pros and cons to putting a cap in place. Whilst a cap would give certainty to registered persons as to the maximum financial liability they could incur for contraventions of the Codes, if a cap were to be low in relation to a registered person’s “relevant income” it could result in the amount of a financial penalty being less than a meaningful deterrent against future wrongdoing.

See section 3.3.1 in the document at http://www.fsc.gov.im/lib/docs/fsc/consultations/responsesecondcivilpenaltiesconsulta.pdf


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The Draft Legislation 4.4.16

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Question: Do you consider that a cap should be set for Band 2 or Band 3 (or both)? If so, please state what figure(s) you consider would be appropriate and the reason for it.

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Cost Benefit Analysis

5

COST BENEFIT ANALYSIS Please see the cost benefit analysis set out in the Commission’s Consultation Paper No. 2 of 2012, which remains extant.


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Summary of Questions

6

SUMMARY OF QUESTIONS

REFERENCE

QUESTION

4.3.13

Question: Do you have any observations or concerns on how “relevant income” is defined or how it would be calculated? If so, please state in detail what your observation or concern is and explain the reason for it.

4.4.11

Question: Do you have any observations or concerns about how the bands are constructed or the maximum level of penalty that would apply to each? If so, please state in detail what your observation or concern is and explain the reason for it.

4.4.16

Question: Do you consider that a cap should be set for Band 2 or Band 3 (or both)? If so, please state what figure(s) you consider would be appropriate and the reason for it.

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Appendix A

APPENDIX A List of representative bodies who have been sent this consultation paper. •

Association of English Solicitors Practising in Jersey

•

Chartered Institute for Securities & Investment – Jersey branch

•

Institute of Directors – Jersey branch

•

Jersey Association of Trust Companies

•

Jersey Bankers’ Association

•

Jersey Chamber of Commerce and Industry Incorporated

•

Jersey Compliance Officers Association

•

Jersey Finance Limited

•

Jersey Funds Association

•

Jersey International Insurance Association

•

Jersey Society of Chartered and Certified Accountants

•

Law Society of Jersey

•

Personal Finance Society - Jersey branch

•

Society of Trust and Estate Practitioners (STEP), Jersey Branch


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Appendix B

APPENDIX B Financial Services Commission (Financial Penalties) (Jersey) Order 201- [Draft 5A]

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FINANCIAL SERVICES COMMISSION (FINANCIAL PENALTIES) (JERSEY) ORDER 201Explanatory Note This Order prescribes, by reference to a percentage of relevant income, the level of penalties that may be imposed by the Jersey Financial Services Commission on registered persons for a contravention of a code of practice made under the relevant regulatory legislation that applies to that registered person. The meaning of, and how to calculate, “relevant income” is set out in Article 2 and the percentages that may be imposed for different types of contraventions are set out in the Schedule.


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FINANCIAL SERVICES COMMISSION (FINANCIAL PENALTIES) (JERSEY) ORDER 201Arrangement Article 1 2 3 4

Interpretation .................................................................................................25 Meaning and calculation of relevant income ................................................26 Level of penalties ..........................................................................................27 Citation and commencement .........................................................................27

SCHEDULE

28

MAXIMUM LEVEL OF PENALTIES

28


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FINANCIAL SERVICES COMMISSION (FINANCIAL PENALTIES) (JERSEY) ORDER 201Made Coming into force

[date to be inserted] [date to be inserted]

THE CHIEF MINISTER, in pursuance of Articles 21B(1)(a) and 22 of the Financial Services Commission (Jersey) Law 1998 and after having consulted the Jersey Financial Services Commission, orders as follows –

1

Interpretation (1)

In this Order – “affiliation”, in respect of trust company business, means a group of persons carrying on or intending to carry on that business who have agreed that one member of the group will be the affiliation leader; “contravention” means a contravention of a Code of Practice to which Article 21A of the Financial Services Commission (Jersey) Law 1998 applies; “licensed”, in relation to a registered person, means registered or holding a permit (as the case may be) to carry on a business activity regulated by the Commission, “net interest income” means interest income received or accrued (including income accrued in respect of the amortisation of discounts and premiums on the purchase of fixed maturity investments not held for dealing) minus interest paid or payable; “total banking income” means the sum total of – (a)

net interest income;

(b)

the net income derived from revaluations of foreign exchange positions and, where identifiable, fees and commissions relating to foreign exchange business; the net income derived from investments not included in paragraph (e);

(c) (d)

net income from banking fees, charges and commissions; and

(e)

any net gains derived from the revaluation of investments other than those arising from the sale of investments in subsidiary or associated companies, trade investments or the amortisation of


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discounts or premiums on the purchase of fixed maturity investments not held for dealing. (2)

2

Unless the context otherwise requires words and phrases used in this Order that are defined in the Financial Services (Jersey) Law 1998 have the same meaning as in that Law.

Meaning and calculation of relevant income (1)

In this Order “relevant income” means the income derived from the business activities in respect of which the registered person is licensed, namely – (a)

in the case of a registered person regulated under the Banking Business (Jersey) Law 1991, total banking income;

(b)

in the case of a permit holder regulated under the Insurance Business (Jersey) Law 1996, the gross income premium earned in respect of any insurance business to which Article 5(1) of that Law applies, reduced by –

(c)

(d)

(i)

any rebates, refunds and reinsurance commission payable by the registered person, and

(ii)

the gross amount of any premiums for reinsurance ceded by the insurer;

in the case of a registered person carrying on trust company business or money service business, any fees or commission received (net of any refunds) in respect of any such business; and in the case of a registered person carrying on general insurance mediation business, fund services business or investment business, any fees or commission retained (net of any refunds) in respect of any such business,

calculated to be the higher of –

(2)

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(i)

the average of that income over the financial years since the registered person has been carrying on the business for which the person is licensed, up to a maximum of the last 5 financial years, but excluding from both the sum of total and number of years used to calculate the average any financial year in which the income was a negative amount; and

(ii)

that income in the registered person’s last complete financial year before the registered person notified the Commission of the contravention, or the Commission notified the registered person of the contravention, as the case may be;

In calculating the relevant income for the purposes of this Order – (a)

if the registered person is regulated under more than one of the Laws mentioned in paragraph (1), the income to be calculated is the total relevant income derived from each business activity giving rise to such regulation and in respect of which a Code of Practice made under such a Law has been contravened by the registered person;

(b)

if the registered person operates in Jersey through a branch of its business the main operation of which is elsewhere, only income ISSUED JANUARY 2015

derived from the business activity giving rise to the contravention, in so far as it is undertaken through that branch, may be brought into account; (c)

3

in the case of trust company business in respect of which there is an affiliation, relevant income derived from the business activity giving rise to the contravention from all members of the affiliation must be brought into account.

Level of penalties The Commission may impose penalties on registered persons only up to the maximum level set out in the table in the Schedule for the appropriate band of penalty, determined according to the nature of the contravention.

4

Citation and commencement (1)

This Order may be cited as the Financial Services Commission (Financial Penalties) (Jersey) Order 201-.

(2)

This Order comes into force on


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SCHEDULE (Article 3) MAXIMUM LEVEL OF PENALTIES

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Band

Nature of contravention

Maximum level of penalty

1

A failure, on more than one occasion in any 4% of relevant income or period of 2 years, to notify the Commission of £10,000, whichever is the a matter required by a Code of Practice (where lower amount. either no notification is made or it is not made within the timeframe required by the Code), if the contravention does not fall into either band 2 or band 3 below.

2

A contravention not falling into band 3 below 6% of relevant income. and not rectified to the satisfaction of the Commission within the timeframe determined by the Commission after discussion with the registered person concerned, which timeframe must be reasonable.

3

A contravention committed either intentionally 8% of relevant income. or recklessly that satisfied one or more of the following, namely that it – (a) caused or risked causing financial loss to the public; (b)

damaged or risked damaging the reputation and integrity of Jersey in commercial and financial matters;

(c)

damaged or risked damaging economic interests of Jersey;

(d)

jeopardized or risked jeopardizing the need to counter financial crime both in Jersey and elsewhere;

(e)

took place for commercial reasons.

the

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