Jul 16, 2014 - advise relevant persons through a mailshot email; and. 2.6.3.3 ... impact on a limited number of relevant
POSITION PAPER AML 2014
REVISIONS TO COMMISSION AML/CFT HANDBOOKS Approach in respect of amending provisions in the Handbooks for the Prevention and Detection of Money Laundering and the Financing of Terrorism for: • Financial Services Regulatory Laws
Business
Regulated
• the Accountancy Sector • the Legal Sector • Estate Agents and High Value Dealers
ISSUED JULY 2014
under
the
GLOSSARY OF TERMS Amendment No. 6
means the Money Laundering (Amendment No 6) (Jersey) Order 2013
Amendment No. 7
means the draft Money Laundering (Amendment No 7) (Jersey) Order 201-
AML/CFT Handbook
means the Handbook for the Prevention and Detection of Money Laundering and the Financing of Terrorism for Financial Services Business Regulated under the Regulatory Laws
CDD
means customer due diligence
Commission
means the Jersey Financial Services Commission
Commission Law
means the Financial Services Commission (Jersey) Law 1998
FATF
means the Financial Action Task Force
Handbook for the Accountancy Sector
means the Handbook for the Prevention and Detection of Money Laundering and the Financing of Terrorism for the Accountancy Sector
Handbook for Estate Agents and High Value Dealers
means the Handbook for the Prevention and Detection of Money Laundering and the Financing of Terrorism for Estate Agents and High Value Dealers
Handbook for the Legal Sector
means the Handbook for the Prevention and Detection of Money Laundering and the Financing of Terrorism for the Legal Sector means collectively the: •
Handbooks
• • •
AML/CFT Handbook, Handbook for the Accountancy Sector, Handbook for the Legal Sector and Handbook for Estate Agents and High Value Dealers
Jersey Finance
means Jersey Finance Limited
Money Laundering Order
means the Money Laundering (Jersey) Order 2008
Proceeds of Crime Law
means the Proceeds of Crime (Jersey) Law 1999
relevant person
means a person carrying on a financial services business (as described in Schedule 2 of the Proceeds of Crime Law) and which is carrying on that business in or from within Jersey, or, if a Jersey legal person, carrying on that business in any part of the world
Supervisory Bodies Law
means the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008
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Contents
CONTENTS 1
2
The Commission ............................................................................................................................. 4 1.1 Overview ........................................................................................................................... 4 1.2
Commission’s functions .................................................................................................. 4
1.3
Guiding principles............................................................................................................ 4
1.4 Commission’s role with respect to AML/CFT............................................................. 5 Approach to Future Consultation ................................................................................................ 7 2.1 Overview ........................................................................................................................... 7 2.2
Basis for the planned consultation ................................................................................. 8
2.3
Cost benefit analysis ........................................................................................................ 8
2.4
Responding to each consultation paper ........................................................................ 8
2.5
Consultation feedback ..................................................................................................... 9
3
2.6 Communication strategy ................................................................................................. 9 Outline of matters to be consulted on ...................................................................................... 10 3.1 Nature of changes........................................................................................................... 10
4
3.2 Who will be affected?..................................................................................................... 11 Structure of the Handbooks ....................................................................................................... 13 4.1 Amended structure ........................................................................................................ 13 4.2
Glossary ........................................................................................................................... 13
4.3 Part 1 of the AML/CFT Handbook ............................................................................. 13 Appendix A:........................................................................................................................................... 15 Content Mapping for three Handbooks – as at 16 July 2014 .............................................. 15 Appendix B ............................................................................................................................................ 27 New Structure of the AML/CFT Handbook ........................................................................ 27 Appendix C ............................................................................................................................................ 28 Glossary for the Handbooks ................................................................................................... 28
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The Commission
1
THE COMMISSION
1.1
Overview 1.1.1
1.2
The Jersey Financial Services Commission (the “Commission”) is a statutory body corporate established under the Financial Services Commission (Jersey) Law 1998 (the “Commission Law”). It is responsible for the supervision and development of financial services provided in or from within Jersey.
Commission’s functions 1.2.1
The Commission Law prescribes that the Commission shall be responsible for: 1.2.1.1
the supervision and development of financial services provided in or from within Jersey;
1.2.1.2
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;
1.2.1.3
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;
1.2.1.4
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
1.2.1.5
1.3
Guiding principles 1.3.1
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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: 1.3.1.1
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;
1.3.1.2
the protection and enhancement of the reputation and integrity of Jersey in commercial and financial matters;
1.3.1.3
the best economic interests of Jersey; and
1.3.1.4
the need to counter financial crime in both Jersey and elsewhere.
ISSUED JULY 2014
The Commission
1.4
Commission’s role with respect to AML/CFT 1.4.1
1.4.2
With respect to the need to counter financial crime in both Jersey and elsewhere, the Commission is the supervisory body that exercises supervisory functions in respect of: 1.4.1.1
regulated persons 1; and
1.4.1.2
persons carrying on a specified Schedule 2 business1.
The supervisory functions to be exercised by the Commission are defined in Article 2 of the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008 (the “Supervisory Bodies Law”), namely: 1.4.2.1
monitoring compliance by a supervised person1 with: • any requirement to which that person is subject under the Supervisory Bodies Law; • any Order made under Article 37 of the Proceeds of Crime (Jersey) Law 1999 (the “Proceeds of Crime Law”); • any direction under Article 6 of the Money Laundering and Weapons Development (Directions) (Jersey) Law 2012; and • any Code of Practice that applies to that person or the supervised business1 carried on by that person;
1.4.2.2
1.4.3
1
carrying out the functions, powers and duties conferred under the Supervisory Bodies Law for the purpose of compliance by a supervised person with the requirements described in 1.4.2.1.
In accordance with Article 22 of the Supervisory Bodies Law, the Commission, as the supervisory body, has prepared and issued Codes of Practice. Currently, these may be found as “regulatory requirements” in: 1.4.3.1
The Handbook for the Prevention and Detection of Money Laundering and the Financing of Terrorism for Financial Services Business Regulated under the Regulatory Laws (the “AML/CFT Handbook”);
1.4.3.2
The Handbook for the Prevention and Detection of Money Laundering and the Financing of Terrorism for the Legal Sector (the “Handbook for the Legal Sector”);
1.4.3.3
The Handbook for the Prevention and Detection of Money Laundering and the Financing of Terrorism for the Accountancy Sector (the “Handbook for the Accountancy Sector”); and
These terms are defined in Article 1 of the Supervisory Bodies Law.
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The Commission 1.4.3.4
1.4.4
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The Handbook for the Prevention and Detection of Money Laundering and the Financing of Terrorism for Estate Agents and High Value Dealers (the “Handbook for Estate Agents and High Value Dealers”).
These four documents are collectively referred to in this paper as “the Handbooks”.
ISSUED JULY 2014
Approach to Consultation
2
APPROACH TO FUTURE CONSULTATION
2.1
Overview Consultation papers 2.1.1
The Commission has identified a need to propose changes to the Handbooks. The proposed changes: (i) take account of recent and proposed legislative amendments; (ii) provide guidance on specific sectors; and (iii) emanate from the Commission’s continuous review of its regulatory processes.
2.1.2
In order to cover these changes in a way that promotes an efficient use of Commission and industry resources, this position paper highlights the publication of a series of consultation papers over the coming months.
2.1.3
Each of the consultation papers in the series will provide full details of the proposed changes, and submissions will be invited on each consultation paper as it is published.
2.1.4
This position paper describes the approach to be taken to the series of consultation papers; provides a very high-level overview of the matters to be consulted on; and provides an indicative timeline for each consultation.
2.1.5
Many of the changes proposed will have an impact on all Handbooks. Rather than include multiple Handbook references in the relevant consultation papers the Commission will only reference sections of the AML/CFT Handbook. To assist those relevant persons within the scope of either the Handbook for the Legal Sector or the Handbook for the Accountancy Sector, Appendix A contains a mapping (at paragraph heading level) of those Handbooks against the AML/CFT Handbook.
2.1.6
Appendix A does not include the Handbook for Estate Agents and High Value Dealers as the construction of the document is quite different.
New structure 2.1.7
Additionally, this position paper provides information on the amended structure for the Handbooks which is to be implemented by the Commission.
Other Handbooks 2.1.8
The amendments to the Handbook for the Legal Sector, the Handbook for the Accountancy Sector, and the Handbook for Estate Agents and High Value Dealers will be based on the underlying policy/principles of the relevant consultation paper.
2.1.9
With respect to the accountancy, legal, estate agent and high value dealer sectors, in addition to the amendments that will be proposed through the series of consultation papers, the Commission is separately conducting work which will propose other amendments to the relevant Handbooks to take account of matters that are particular to those sectors. Consultation on these
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Approach to Consultation amendments will be conducted directly with the impacted sector and will not form part of the series of consultation papers.
2.2
2.3
Basis for the planned consultation 2.2.1
The Commission will issue the planned consultation papers 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”.
2.2.2
In addition, the Commission is required to consult on amendments to Codes of Practice that are issued in accordance with Article 22 of the Supervisory Bodies Law. In the Handbooks, the Codes of Practice are currently described as “regulatory requirements” to differentiate from the parts of the Handbooks that summarise the statutory requirements or provide guidance.
Cost benefit analysis 2.3.1
2.4
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Each consultation paper will include a section relating to the costs and benefits associated with the subject of the consultation.
Responding to each consultation paper 2.4.1
The Commission intends to invites comments in writing from interested parties on each consultation paper as it is published.
2.4.2
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.
2.4.3
To assist in analysing responses to the consultation paper, respondents are asked to: 2.4.3.1
prioritise comments and to indicate their relative importance; and
2.4.3.2
respond as specifically as possible and, where they refer to costs, to quantify those costs.
2.4.4
At this stage, it is anticipated that the comment period for each consultation paper will be between four and six weeks from the date of publication.
2.4.5
Mindful of the necessarily short period of time available for responding, the questions associated with each consultation will also be made available as an online survey which may be completed alongside a consideration of the proposed amendments.
2.4.6
Whilst the Commission’s strong preference is (where possible) for respondents to use the online survey, respondents may also email their responses to the Commission using the following address:
[email protected]. It will also be possible to respond through Jersey Finance Limited (“Jersey Finance”). Where responses are submitted by e-mail or through Jersey Finance, please
ISSUED JULY 2014
Approach to Consultation include the consultation paper number in the subject line of the email e.g. Consultation Paper AML 1. 2.4.7
2.5
2.6
If you require any assistance, clarification or wish to discuss any aspect of any of the consultation papers prior to formulating a response, it is of course appropriate to contact Andrew Le Brun at the Commission.
Consultation feedback 2.5.1
Whilst it continues to be the policy of the Commission to make the content of all responses available for public inspection unless specifically requested otherwise, the Commission does not anticipate publishing the responses it receives.
2.5.2
Given the nature of the series of consultation papers, the Commission has decided to provide feedback after publication of the first three consultations and then again at the end of the series. The Commission will prepare and publish appropriate sections of the Handbooks as part of the feedback papers.
2.5.3
It is intended that the majority of changes that are proposed to the Handbooks should have effect before the end of 2014.
Communication strategy 2.6.1
In order to better manage the series of consultation papers and provide interested parties with regular information, the Commission will establish a new webpage on its website.
2.6.2
The webpage will contain the series of consultation papers, feedback papers, and the latest news regarding closing comment periods and forthcoming consultation papers.
2.6.3
When one of the series of consultation papers is published the Commission will, at a minimum: 2.6.3.1
update the Latest News section of the Commission website;
2.6.3.2
advise relevant persons through a mailshot email; and
2.6.3.3
publish the consultation paper on the Commission’s new webpage.
2.6.4
As this position paper, the series of consultation papers and the two feedback papers are linked, the Commission has adapted its numbering convention such that the papers will be referred to as Consultation Paper AML 1, Consultation Paper AML 2 etc.
2.6.5
The Commission will also continue to involve its AML/CFT Steering Group in the consultation process.
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Outline of matters to be consulted on
3
OUTLINE OF MATTERS TO BE CONSULTED ON
3.1
Nature of changes
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3.1.1
The nature and purpose of the proposed changes may be classified in the following five ways.
3.1.2
First, updates to provisions of the Handbooks to: 3.1.2.1
reflect the changes made to the Money Laundering (Jersey) Order 2008 (the “Money Laundering Order”) by the Money Laundering (Amendment No 6) (Jersey) Order 2013, in force from 18 December 2013 (“Amendment No. 6”);
3.1.2.2
anticipate changes that the Minister will be asked to make to the Money Laundering Order following the recent consultation on the draft Money Laundering (Amendment No 7) (Jersey) Order 201(“Amendment No. 7”); and
3.1.2.3
reflect changes made to the Proceeds of Crime Law and Terrorism (Jersey) Law 2002 following the coming into force of the Proceeds of Crime and Terrorism (Miscellaneous Provisions) (Jersey) Law 2014 on 4 August 2014.
3.1.3
Second, general updates to the provisions of the Handbooks to reduce duplication of statutory and regulatory requirements, promote greater consistency in terminology between the Money Laundering Order and the Handbooks, and to clarify the status and improve the clarity of guidance.
3.1.4
Third, with respect to sector specific guidance: 3.1.4.1
new sector specific guidance for funds and fund services businesses; and
3.1.4.2
updates to existing guidance for trust company business.
3.1.5
Fourth, new guidance on the use of technology and the risks presented by the introduction of new products and services, starting with the increasing use of pre-paid cards.
3.1.6
Fifth, new guidance in relation to specific AML/CFT obligations, namely training and reporting of suspicious activity – areas that were identified in 2013 as needing some further work.
ISSUED JULY 2014
Outline of matters to be consulted on 3.1.7
An indicative timetable for the publication of the series of papers is as follows: Ref
Para. Ref.
Subject or Sections (see Appendix B)
Indicative publication date
Consultation Papers AML 1
Section 1 of AML/CFT Handbook
Early August
AML 2
3.1.2 & 3.1.3
New Sections 2, 3, 4, 5 and 7 of the AML/CFT Handbook
Mid to end August
AML 3
3.1.2 & 3.1.3
Remaining sections of the AML/CFT Handbook
Early to mid- September
Feedback Paper Feedback on consultation papers AML 1 to 3
Early to mid-October
Consultation Papers AML 4
3.1.4
Changes to sector specific guidance for trust company business
September
AML 5
3.1.4
First draft framework for sector specific guidance for funds and fund services business
September
AML 6
3.1.5
New guidance on risks inherent in pre-paid cards
Mid to end September
3.1.6
New guidance in relation to specific AML/CFT obligations, including provision of training for those involved in development of technology, and on reporting of suspicious transactions (including timeliness)
Mid-October
AML 7
Feedback Paper Feedback on consultation papers AML 4 to 7. Publication of the final AML/CFT Handbook, including any consequential amendments on Parts 2 and 3 of the AML/CFT Handbook.
3.2
Late November
Who will be affected? 3.2.1
Dependent on the subject of the consultation paper the changes that are proposed in any particular consultation paper may affect some or all relevant persons.
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Outline of matters to be consulted on
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3.2.2
Some consultation papers in the series will propose changes that will have an impact on a limited number of relevant persons (for example, consultation on sector-specific guidance).
3.2.3
Each consultation paper in the series will provide detail on those relevant persons potentially affected by the proposed amendments.
ISSUED JULY 2014
Structure of the Handbooks
4
STRUCTURE OF THE HANDBOOKS
4.1
Amended structure 4.1.1
In conjunction with amending the Handbooks through the series of consultation papers, the Commission is taking the opportunity to restructure the AML/CFT Handbook. Where relevant, equivalent amendments will be applied to the Handbook for the Accountancy Sector, the Handbook for the Legal Sector, and the Handbook for Estate Agents and High Value Dealers.
4.1.2
Appendix B shows the proposed new structure for the AML/CFT Handbook.
4.1.3
The structure of the Handbooks will be amended as follows: 4.1.3.1
use of a single Glossary across all Handbooks (see 4.2);
4.1.3.2
Part 1 of the AML/CFT Handbook to comprise of three elements: • General sections, including some renumbering and reordering (see 4.3), • Sector specific sections, and • Appendices;
4.2
deletion of the log of amendments (Part 4 of the AML/CFT Handbook), on the basis that the Commission will, in future, publish marked-up versions of the Handbooks to highlight changes (in the same way that it currently does for Codes of Practice issued under the Financial Services (Jersey) Law 1998 and other regulatory laws); and
4.1.3.4
publication of a new Part 4 to the AML/CFT Handbook containing further reference material.
Glossary 4.2.1
4.3
4.1.3.3
Currently there are two glossaries associated with the Handbooks with many of the defined terms being common to both glossaries. These glossaries will be merged – as presented in Appendix C.
Part 1 of the AML/CFT Handbook 4.3.1
In order to assist with the “digestion” of current Section 4 of the AML/CFT Handbook, a long and very technical section, the following areas are to be addressed in new shorter sections: 4.3.1.1
Reliance on obliged persons – new Section 5; and
4.3.1.2
Enhanced and simplified customer due diligence (“CDD”) measures - new Section 7.
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Structure of the Handbooks
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4.3.2
Part of current Section 3, dealing with the application of enhanced CDD measures is to be moved to new Section 7, so that the focus of Section 3 will be to provide a general overview of the application of identification measures to customers.
4.3.3
Current Section 9, which deals with the application of identification measures to “existing customers”, is to be moved to Section 4 and covered as part of a section dealing with the timing of identification measures. As a result, all provisions dealing with finding out the identity of, and obtaining evidence of identity for, customers will be presented in one section.
ISSUED JULY 2014
Appendix A - Content Mapping for three Handbooks – as at 16 July 2014
APPENDIX A: Content Mapping for three Handbooks – as at 16 July 2014 AML/CFT Handbook
Handbook for the Legal Sector
Handbook for the Accountancy Sector
1
INTRODUCTION
1
INTRODUCTION
1
INTRODUCTION
1.1
Objectives of the Handbook
1.1
Objectives of the Handbook
1.1
Objectives of the Handbook
1.2
Structure of the Handbook
1.2
Structure of the Handbook
1.2
Structure of this Handbook
1.3
Legal status and sanctions for noncompliance
1.3
Legal status of this Handbook and sanctions for non-compliance
1.3
Legal status of this Handbook and sanctions for non-compliance
1.3.1
Handbook
1.3.1
This Handbook
1.3.1
This Handbook
1.3.2
Money Laundering Order
1.3.2
Money Laundering Order
1.3.2
Money Laundering Order
1.3.3
Regulatory Requirements
1.3.3
Regulatory Requirements
1.3.3
Regulatory Requirements
1.4
Scope of the Money Laundering Order and regulatory requirements
1.4
Scope of the Money Laundering Order and regulatory requirements
1.4
Scope of the Order and regulatory requirements
1.4.1
Application of the Money Laundering Order to financial services business conducted in Jersey
1.4.1
Application of the Order to lawyers conducting relevant business in Jersey
1.4.1
Application of the Order to accountants, auditors, tax advisors and insolvency practitioners conducting relevant business in Jersey
1.4.2
Application of the Money Laundering Order and Regulatory Requirements outside Jersey
1.4.2
Application of the Order and Regulatory Requirements outside Jersey
1.4.2
Application of the Order and Regulatory Requirements outside Jersey
1.4.3
Application of Regulatory Requirements
1.4.3
Application of Regulatory Requirements
1.4.3
Application of Regulatory Requirements
1.5
Definition of financial services business
1.5
Definition of lawyers undertaking specified Schedule 2 business
1.5
Definition and overview of accountants undertaking specified Schedule 2 business
1.5.1
Activities covered by the Money Laundering Order 1.5.1
Accountancy Services
REVISIONS TO COMMISSION AML/CFT HANDBOOKS
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Appendix A – Content Mapping for three Handbooks – as at 16 July 2014
AML/CFT Handbook
Handbook for the Legal Sector
Handbook for the Accountancy Sector 1.5.2
Tax Advisers
1.5.3
Audit Services
1.5.4
Insolvency practitioners
1.5.5
Accountants undertaking regulated business
1.6
Risk based approach
1.6
Risk based approach
1.6
Risk based approach
1.7
Equivalence of requirements in other countries and territories
1.7
Equivalence of requirements in other countries and territories
1.7
Equivalence of requirements in other countries and territories
1.7.1
Equivalent business
1.7.1
Equivalent business
1.7.1
Equivalent business
1.7.2
Equivalent countries and territories
1.7.2
Equivalent countries and territories
1.7.2
Equivalent countries and territories
1.7.3
Determining equivalence
1.7.3
Determining equivalence
1.7.3
Determining equivalence
2
CORPORATE GOVERNANCE
2
CORPORATE GOVERNANCE
2
CORPORATE GOVERNANCE
2.1
Overview of section
2.1
Overview of section
2.1
Overview of section
2.2
Obligation to have procedures and controls
2.2
Obligation to have procedures and controls
2.2
Obligation to have procedures and controls
2.3
Board responsibilities
2.3
Senior management responsibilities
2.3
Senior management responsibilities
2.3.1
Business risk assessment
2.3.1
Business risk assessment
2.3.1
Business risk assessment
2.4
Assessing service area vulnerabilities and warning signs
2.4
Money laundering warning signs for the accountancy sector
2.4.1
Secretive clients
2.4.2
Unusual instructions
2.4.3
Use of Client accounts
2.4.4
Accountancy and audit services
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2.4.1
Use of Client accounts
2.4.2
Establish a policy on handling cash
2.4.3
Source of funds
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Appendix A - Content Mapping for three Handbooks – as at 16 July 2014
AML/CFT Handbook
Handbook for the Legal Sector
Handbook for the Accountancy Sector
2.4.4
Private client work – Administration of estates
2.4.5
Administration of estates
2.4.5
Charities
2.4.6
Charities
2.4.6
Property transactions
2.4.7
Company and commercial work 2.4.7
Taxation services
2.4.8
Business recovery or receiverships
2.4
Systems and controls, training and awareness
2.5
Systems, controls, training and awareness
2.5
Systems, controls, training and awareness
2.4.1
Oversight of the effectiveness of systems and controls
2.5.1
Oversight of the effectiveness of systems and controls
2.5.1
Oversight of the effectiveness of systems and controls
2.4.2
Oversight of compliance with systems and controls
2.5.2
Monitoring compliance
2.5.2
Monitoring compliance
2.5.3
The auditor’s responsibility for monitoring compliance
2.4.3
Consideration of cultural barriers
2.5.3
Consideration of cultural barriers
2.5.4
Consideration of cultural barriers
2.4.4
Outsourcing
2.5.4
Outsourcing
2.5.5
Outsourcing
2.5
The Money Laundering Compliance Officer (MLCO)
2.6
The Money Laundering Compliance Officer (“MLCO”)
2.6
The Money Laundering Compliance Officer (“MLCO”)
2.6
The Money Laundering Reporting Officer (MLRO)
2.7
The Money Laundering Reporting Officer (“MLRO”)
2.7
The Money Laundering Reporting Officer (“MLRO”)
3
CUSTOMER DUE DILIGENCE REQUIREMENTS
3
CLIENT DUE DILIGENCE (“CDD”) REQUIREMENTS
3
CLIENT DUE DILIGENCE (“CDD”) REQUIREMENTS
3.1
Overview of section
3.1
Overview of section
3.1
Overview of section
3.2
Obligation to conduct customer due diligence measures
3.2
Obligation to conduct CDD
3.2
Obligation to conduct CDD measures
3.3
Risk based approach to customer due diligence
3.3
Risk based approach to CDD
3.3
Risk based approach to CDD
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Appendix A – Content Mapping for three Handbooks – as at 16 July 2014
AML/CFT Handbook
Handbook for the Legal Sector
Handbook for the Accountancy Sector
3.3.1
Customer due diligence information – Stage 1
3.3.1
CDD information – Stage 1
3.3.1
CDD information – Stage 1
3.3.2
Customer due diligence profile – Stage 1
3.3.2
CDD profile – Stage 1
3.3.2
CDD profile – Stage 1
3.3.3
Source of funds and wealth – Stages 1 and 2
3.3.3
Source of funds and wealth – Stages 1 and 2
3.3.3
Source of funds and wealth – Stages 1 and 2
3.3.4
Evaluation of customer due diligence information – Stage 2
3.3.4
Evaluation of CDD information – Stage 2
3.3.4
Evaluation of CDD information – Stage 2
3.3.5
Customer risk assessment – Stage 3
3.3.5
Client risk assessment – Stage 3
3.3.5
Client risk assessment – Stage 3
3.3.6
Identification and verifying identity – Stage 4
3.3.6
Identification and verifying identity – Stage 4
3.3.6
Updating customer due diligence and customer risk assessments – Stage 5
3.3.7
Updating CDD and client risk assessments – Stage 5
3.3.7
Updating client due diligence and client risk assessments – Stage 5
3.4
Enhanced customer due diligence measures
3.3.8
Enhanced CDD measures
3.4
Enhanced client due diligence measures
3.4.1
Customer that is a politically exposed person (PEP) (Article 15(5))
3.3.9
Customer that is a politically exposed person (PEP) (Article 15(5))
3.4.1
Customer that is a politically exposed person (PEP) (Article 15(5))
3.4.2
Customer with a relevant connection to a country or territory that is subject to a FATF call to apply countermeasures
3.3.10
Customer with a relevant connection to a country or territory that is subject to a FATF call to apply countermeasures
3.4.2
Customer with a relevant connection to a country or territory that is subject to a FATF call to apply countermeasures
3.4.3
Higher risk customers
3.3.11
Higher risk clients
3.4.3
Higher risk clients
3.4
Simplified due diligence
3.4.1
Reduced or simplified CDD requirements for lower value one-off transactions
3.5
Application of CDD requirements to existing clients
3.5
Application of CDD requirements to existing clients
3.5.1
Annual reappointment as auditor
3.5.2
Introduced and intermediary relationships
3.6
CDD requirements when acquiring another business or a block of clients
3.5
CDD requirements when acquiring a business or a block of customers
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3.6
CDD requirements when acquiring another business or a block of clients
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Appendix A - Content Mapping for three Handbooks – as at 16 July 2014
AML/CFT Handbook
Handbook for the Legal Sector
Handbook for the Accountancy Sector
4
IDENTIFICATION AND VERIFICATION OF IDENTITY
4
IDENTIFICATION AND VERIFICATION OF IDENTITY
4
IDENTIFICATION AND VERIFICATION OF IDENTITY
4.1
Overview of section
4.1
Overview of section
4.1
Overview of section
4.2
Obligation to identify and verify identity of applicant for business
4.2
Obligation to identify and verify identity of applicant for business
4.2
Obligation to identify and verify identity of applicant for business
4.3
Identification and verification: Individuals
4.3
Identification and verification: Individuals
4.3
Identification and verification: Individuals
4.3.1
Finding out identity
4.3.1
Finding out identity
4.3.1
Finding out identity
4.3.2
Verifying identity
4.3.2
Verifying identity
4.3.2
Verifying identity
4.3.3
Independent data sources
4.3.3
Independent data sources
4.3.3
Independent data sources
4.3.4
Guarding against the financial exclusion of Jersey residents
4.3.5
Verification of residential address of overseas residents
4.3.4
Verification of residential address of overseas residents
4.3.4
Verification of residential address of overseas residents
4.4
Identification and verification: trustees and express trusts
4.4
Identification and verification: trustees and express trusts
4.4
Identification and verification: trustees and express trusts
4.4.1
Finding out identity
4.4.1
Finding out identity
4.4.1
Finding out identity
4.4.2
Verifying identity
4.4.2
Verifying identity
4.4.2
Verifying identity
4.4.3
Copy documentation provided by regulated trust and company services provider
4.4.3
Copy documentation provided by regulated trust and company services provider
4.4.3
Copy documentation provided by regulated trust and company services provider
4.5
Identification and verification: legal bodies and legal arrangements
4.5
Identification and verification: legal bodies and legal arrangements
4.5
Identification and verification: legal bodies and legal arrangements
4.5.1
Finding out identity - companies
4.5.1
Finding out identity - companies
4.5.1
Finding out identity - companies
4.5.2
Verifying identity - companies
4.5.2
Verifying identity - companies
4.5.2
Verifying identity - companies
4.5.3
Finding out identity – foundations (except charities)
4.5.3
Finding out identity – foundations (except charities)
4.5.3
Finding out identity – foundations (except charities)
4.5.4
Verifying identity – foundations (except charities)
4.5.4
Verifying identity – foundations (except charities)
4.5.4
Verifying identity – foundations (except charities)
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Handbook for the Accountancy Sector
4.5.5
Finding out identity – partnerships
4.5.5
Finding out identity – partnerships
4.5.5
Finding out identity – partnerships
4.5.6
Verifying identity – partnerships
4.5.6
Verifying identity – partnerships
4.5.6
Verifying identity – partnerships
4.5.7
Copy documentation provided by regulated trust and company services provider
4.5.7
Copy documentation provided by regulated trust and company services provider
4.5.7
Copy documentation provided by regulated trust and company services provider
4.6
Identification and verification: authorised agent of applicants for business
4.6
Identification and verification: authorised agent of applicants for business
4.6
Identification and verification: authorised agent of applicants for business
4.7
Identification and verification: applicants acting for third parties (intermediary relationships)
4.7
Identification and verification: applicants acting for third parties (intermediary relationships)
4.7
Identification and verification: applicants acting for third parties (intermediary relationships)
4.8
Non-face to face Identification and verification
4.8
Non-face to face Identification and verification
4.8
Non-face to face Identification and verification
4.8.1
Enhanced customer identification measures
4.8.1
Enhanced customer identification measures
4.8.1
Enhanced client identification measures
4.8.2
Suitable certification
4.8.2
Suitable certification
4.8.2
Suitable certification
4.8.3
Copy documentation provided by regulated trust and company services provider
4.8.3
Copy documentation provided by regulated trust and company services provider
4.8.3
Copy documentation provided by regulated trust and company services provider
4.9
Exceptions from identification measures
4.9
Exceptions from identification measures
4.9
Exceptions from identification measures
4.9.1
Regulated persons and those carrying on equivalent business
4.9.1
Regulated persons and those carrying on equivalent business
4.9.1
Regulated persons and those carrying on equivalent business
4.9.2
Persons authorised to act on behalf of a regulated applicant for business
4.9.2
Bodies corporate with listed securities
4.9.3
Bodies corporate with listed securities
4.9.2
Bodies corporate with listed securities
4.9.3
Jersey public authorities
4.9.4
Jersey public authorities
4.9.3
Jersey public authorities
4.9.4
Persons authorised to act on behalf of an applicant 4.9.5
Jersey property transfers
4.9.5
Identification measures for pension schemes
4.9.6
Other exceptions
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4.10
Identification and verification of identity in intermediary and introduced relationships
4.10
Identification and verification of identity in intermediary and introduced relationships
4.10
Identification and verification of identity in intermediary and introduced relationships
4.10.1
Assessment of risk where reliance placed on intermediaries and introducers
4.10.1
Assessment of risk where reliance placed on intermediaries and introducers
4.10.1
Assessment of risk where reliance placed on intermediaries and introducers
4.10.2
Intermediary relationships – Article 17
4.10.2
Intermediary relationships – reliance where the intermediary is a regulated person (Article 17 of the Order)
4.10.2
Intermediary relationships – reliance where the intermediary is a regulated person (Article 17 of the Order)
4.10.3
Intermediary and introduced relationships – Article 16
4.10.3
Intermediary and introduced relationships – reliance where the intermediary is a nonregulated person (Article 16 of the Order)
4.10.3
Intermediary and introduced relationships – reliance where the intermediary is a nonregulated person (Article 16 of the Order)
4.10.4
Group intermediaries and introducers in certain jurisdictions – Article 16
4.10.4
Group intermediaries and introducers in certain jurisdictions – Article 16
4.10.4
Group intermediaries and introducers in certain jurisdictions – Article 16
4.10.5
Intermediary customers and lower risk products
4.10.5
Intermediary clients and lower risk products
4.10.5
Intermediary clients and lower risk products
4.11
Reduced or simplified measures: verification of identity concession for very low risk products/services
4.12
Timing of initial identification and verification of identity
4.11
Timing of initial identification and verification of identity
4.11
Timing of initial identification and verification of identity
4.12.1
Delayed completion of verification requirements
4.11.1
Delayed completion of verification requirements
4.11.1
When delayed completion of verification requirements is acceptable
4.13
Subsequent identification and verification of identity
4.12
Subsequent identification and verification of identity
4.12
Subsequent identification and verification of identity
4.14
Failure to complete identification or verification of identity
4.13
Failure to complete identification or verification of identity
4.13
Failure to complete identification or verification of identity
4.13.1
Ascertaining legal position
4.13.1
Ascertaining legal position
5
MONITORING ACTIVITY AND TRANSACTIONS
5
MONITORING ACTIVITY AND TRANSACTIONS
5
MONITORING ACTIVITY AND TRANSACTIONS
5.1
Overview of section
5.1
Overview of section
5.1
Overview of section
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5.2
Obligation to monitor
5.2
Obligation to monitor
5.2
Obligation to monitor
5.2.1
Countries and territories that do not, or insufficiently, apply FATF Recommendations
5.3.1
Countries and territories that do not, or insufficiently, apply FATF Recommendations
5.3.3
Countries and territories that do not, or insufficiently, apply FATF Recommendations
5.3
Automated monitoring methods
5.3
Appropriate monitoring procedures
5.3
Appropriate monitoring procedures
5.3.1
Identifying and examining unusual and higher risk activity
5.3.2
Appropriate follow-up action
5.4
Warning signs for the legal sector
6
REPORTING MONEY LAUNDERING AND FINANCING TERRORISM ACTIVITY AND TRANSACTIONS
6
REPORTING MONEY LAUNDERING AND FINANCING TERRORISM ACTIVITY AND TRANSACTIONS
6
REPORTING MONEY LAUNDERING AND FINANCING TERRORISM ACTIVITY AND TRANSACTIONS
6.1
Overview of section
6.1
Overview of section
6.1
Overview of section
6.1.1
Reporting knowledge or suspicion of money laundering and financing terrorism activity on business conducted outside Jersey
6.1.1
Reporting knowledge or suspicion of money laundering and financing terrorism activity on business conducted outside Jersey
6.2
Requirement to disclose of knowledge or suspicion within a firm
6.2
Requirement to disclose of knowledge or suspicion within a firm
6.2.1
What constitutes knowledge or suspicion
6.2.1
What constitutes knowledge or suspicion
6.2.2
Auditors’ further enquiries
6.2
Disclosure of knowledge or suspicion to the JFCU
6.3
Procedures for reporting to the JFCU
6.3.1
Internal reporting procedures
6.2.2
Internal reporting procedures
6.2.3
Internal reporting procedures
6.3.2
Evaluation of suspicious activity reports by the MLRO
6.2.3
Evaluation of SARs by the MLRO
6.2.4
Evaluation of suspicious activity reports by the MLRO
6.3.3
Reporting to the JFCU
6.3
Reporting to the JFCU
6.3
Reporting to the JFCU
6.3.1
Procedures for reporting to the JFCU
6.3.1
Procedures for reporting to the JFCU
6.4
Tipping-off
6.4
Tipping-off
6.4
Tipping off
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6.4.1
The customer due diligence process
6.4.1
Avoiding tipping-off during the CDD process
6.4.1
Avoiding tipping-off during the customer due diligence process
6.4.2
JFCU consent
6.5
Consent to activity and acknowledgement of reports
6.5
Consent to activity and acknowledgement of reports
6.5.1
Pre-transaction/activity consent
6.5.1
Pre-transaction/activity consent
6.5.2
Acknowledgement of post-transaction reports
6.5.2
Acknowledgement of post-transaction reports
6.5.3
Avoiding tipping-off during the JFCU consent process
6.5.3
Avoiding tipping-off during the JFCU consent process
6.6
Reporting to regulators
6.7
Balancing professional work and postreporting requirements
6.7.1
The auditor’s report on financial statements
6.4.3
Terminating a relationship
6.6
Terminating a relationship
6.8
Terminating a relationship
6.7
Investigation and the use of court orders
6.9
Investigation and the use of court orders
6.7.1
Feedback from the JFCU
6.9.1
Feedback from the JFCU
7
VETTING, AWARENESS AND TRAINING OF EMPLOYEES
7
VETTING, AWARENESS AND TRAINING OF EMPLOYEES
7
VETTING, AWARENESS AND TRAINING OF EMPLOYEES
7.1
Overview of section
7.1
Overview of section
7.1
Overview of section
7.2
Obligation to promote awareness and to train
7.2
Obligation to promote awareness and to train
7.2
Obligation to promote awareness and to train
7.3
Vetting of relevant employees
7.3
Vetting of relevant employees
7.3
Vetting of relevant employees
7.4
Awareness of employees
7.4
Awareness of employees
7.4
Awareness of employees
7.4.1
All relevant employees (customer facing and non-customer facing)
7.4.1
All relevant employees
7.4.1
All relevant employees
7.4.2
Non-relevant employees
7.4.2
Non-relevant employees
7.4.2
Non-relevant employees
7.4.3
Ongoing awareness (all employees)
7.4.3
Ongoing awareness (all employees)
7.4.3
Ongoing awareness (all employees)
7.5
Training of employees
7.5
Training of employees
7.5
Training of employees
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Handbook for the Accountancy Sector
7.6
Adequacy of training
7.6
Adequacy of training
7.6
Adequacy of training
7.6.1
All relevant employees (customer facing and non-customer facing)
7.6.1
All relevant employees
7.6.1
All relevant employees
7.6.2
The Board
7.6.2
Senior management
7.6.2
Senior management
7.6.3
The MLCO
7.6.3
The MLCO
7.6.3
The MLCO
7.6.4
The MLRO and deputy MLROs
7.6.4
The MLRO and deputy MLROs
7.6.4
The MLRO and deputy MLROs
7.6.5
Non-relevant employees
7.6.5
Non-relevant employees
7.6.5
Non-relevant employees
7.7
Timing and frequency of training
7.7
Timing and frequency of training
7.7
Timing and frequency of training
7.8
Monitoring the effectiveness of promotion and awareness and of training
7.8
Monitoring the effectiveness of promotion and awareness and of training
7.8
Monitoring the effectiveness of promotion and awareness and of training
8
RECORD KEEPING
8
RECORD KEEPING
8
RECORD KEEPING
8.1
Overview of section
8.1
Overview of section
8.1
Overview of section
8.2
Recording evidence of identity and other customer due diligence measures
8.2
Recording evidence of identity and other CDD measures
8.2
Recording evidence of identity and other CDD measures
8.3
Recording transactions
8.3
Recording transactions
8.3
Recording transactions/activity
8.4
Other record keeping requirements
8.4
Other record keeping requirements
8.4
Other record keeping requirements
8.4.1
Compliance monitoring and procedures
8.4.1
Compliance monitoring procedures
8.4.1
Compliance monitoring procedures
8.4.2
Suspicious activity reports
8.4.2
SARs
8.4.2
Suspicious activity reports
8.4.3
Records relating to higher risk activity and transactions
8.4.3
Records relating to higher risk activity and transactions
8.4.3
Records relating to higher risk activity and transactions
8.4.4
Training and awareness
8.4.4
Training and awareness
8.4.4
Training and awareness
8.5
Access to and retrieval of records
8.5
Access to and retrieval of records
8.5
Access to and retrieval of records
8.5.1
External record-keeping
8.5.1
External record keeping
8.5.1
External record keeping
8.5.2
Requirements on closure or transfer of business
8.5.2
Requirements on closure or transfer of business
8.5.2
Requirements on closure or transfer of business
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AML/CFT Handbook 9
EXISTING CUSTOMERS
9.1
Overview of section
9.2
Application of identification measures to existing customers
Handbook for the Legal Sector
9
LEGAL PROFESSIONAL PRIVILEGE (“LPP”)
9.1
Overview of section
9.2
Requirement to report knowledge or suspicion of money laundering or terrorist financing
9.3
Duty of confidentiality
9.4
Application of LPP
9.4.1
Advice privilege
9.4.2
Litigation privilege
9.4.3
Important points to consider
9.4.4
Crime/fraud exception
9.5
Determining when to submit a suspicious activity report
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Handbook for the Accountancy Sector
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Appendix B – New Structure of the AML/CFT Handbook
APPENDIX B New Structure of the AML/CFT Handbook Part 1 – Statutory Requirements, Codes of Practice and Guidance Notes
•
Glossary
General sections
• • • • • • • • • •
Section Section Section Section Section Section Section Section Section Section
1 – Introduction 2 – Corporate governance 3 – Identification measures - overview 4 – Identification measures – finding out identity and obtaining evidence 5 – Identification measures – reliance on obliged persons 6 – Ongoing monitoring 7 – Enhanced and simplified CDD measures 8 – Reporting money laundering and terrorist financing activity 9 – Vetting, awareness and training of employees 10 – Record keeping
Sector specific sections
• • • •
Section Section Section Section
11 12 13 14
– – – –
Banking: Wire transfers Banking: Correspondent banking Trust Company Business Funds and Fund Services Business
Appendices
• • • • •
Appendix Appendix Appendix Appendix Appendix
A: JFCU suspicious activity report template and related guidance B: Equivalent countries and territories C: Written assurance template D1: Countries and territories for which a FATF call for action applies D2: Countries and territories identified as presenting higher risks
Part 2 – Information resource Part 3 – Supervision of compliance with the Handbooks Part 4 – Further reference material
• • • •
Section Section Section Section
1 2 3 4
– – – –
Proceeds of Crime (Jersey) Law 1999 – Schedule 2 Typologies Red flags for suspicious activity reports Guidance on high risk products and services
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Appendix C – Glossary for the Handbooks
APPENDIX C Glossary for the Handbooks Term
Definition
accountancy services
includes any service provided under a contract for services which pertains to the recording, review, analysis, calculation or reporting of financial information
AML/CFT programme
a programme against money laundering and terrorist financing which includes policies and procedures by which every member of the group who carries on a financial services business (or equivalent) shares information that is appropriate for the purpose of preventing and detecting money laundering and terrorist financing
AML Unit
the Commission’s Anti-Money Laundering Unit
AML/CFT
anti-money laundering / countering the financing of terrorism
AML/CFT Handbook
Handbook for the Prevention and Detection of Money Laundering and the Financing of Terrorism for Regulated Financial Services Businesses
audit services
audit services provided by way of business pursuant to any function under any enactment
auditor
anyone who is part of the engagement team (not necessarily only those employed by an audit firm)
Basel Committee
Basel Committee on Banking Supervision
BB(J) Law
Banking Business (Jersey) Law 1991
CDD
customer due diligence
CIF(J) Law
Collective Investment Funds (Jersey) Law 1988
Commission
Jersey Financial Services Commission
deputy MLRO
a person designated by the relevant person to whom suspicious activity reports may be made
designated police or customs officer
notices issued under Article 6(1) and 6(2) of the Money Laundering Order providing that police and customs officers that hold posts within the JFCU are designated officers
designated relationship
a relationship established by a customer on behalf of one third party, including a relationship involving sub-accounts for each third party
Directions Law
Money Laundering Development (Directions) (Jersey) Law 2012
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Term
Definition
EEA
European Economic Area
engagement team
comprises all persons who are directly involved in the acceptance and performance of a particular audit
equivalent business
has the meaning given in Article 5 of the Money Laundering Order
EU
European Union
external accountancy services
accountancy services provided to third parties and excludes services provided by accountants employed by public authorities or by undertakings which do not by way of business provide accountancy services to third parties
FATF
Financial Action Task Force
financial services business
has the meaning given in Article 36 of the Proceeds of Crime Law
FS(J) Law
Financial Services (Jersey) Law 1998
group person
a party outside Jersey who is a member of the same financial group as the relevant person but not also an obliged person
his
the term “his” when used in the Handbook with reference to any individual should be understood to mean either “his or her”
IAIS
International Association of Insurance Supervisors
IB(J) Law
Insurance Business (Jersey) Law 1996
identification measures
means those measures described in Article 3(2) of the Money Laundering Order
IMF
International Monetary Fund
insolvency practitioners
those in the business of undertaking insolvency services
insolvency services
services provided by a person if, by way of business, that person accepts appointment as:
IOSCO
•
a liquidator under Chapter 4 of Part 21 of the Companies (Jersey) Law 1991;
•
an insolvency manager appointed under Part 5 of the Limited Liability Partnership (Jersey) Law 1997 as that Law has effect in its application to insolvent limited liability partnerships pursuant to the Limited Liability Partnerships (Insolvency Partnerships) (Jersey) Regulations 1998; or
•
as agent of an official functionary appointed in the case of a remise de biens, cession, or désastre
International Organization of Securities Commissions
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Appendix C – Glossary for the Handbooks
Term
Definition
JFCU
Joint Financial Crimes Unit Officers of the JFCU are the designated police and customs officers for the purposes of the Money Laundering Order
Licence
a generic term to cover: •
a registration granted under the BB(J) Law;
•
a permit granted pursuant to the CIF(J) Law;
•
a certificate issued pursuant to the CIF(J) Law;
•
a registration granted under the FS(J) Law; and
•
a permit granted pursuant to the IB(J) Law
LPP
legal professional privilege
MLCO
the Money Laundering Compliance Officer
MLRO
the Money Laundering Reporting Officer
Money Laundering Order
Money Laundering (Jersey) Order 2008
obliged person
has the meaning given in Article 16 of the Money Laundering Order
PEP
politically exposed person – which has the meaning given in Article 15(6) of the Money Laundering Order
policies and procedures
the way in which a business’ systems and controls are implemented into the day-to-day operation of the business
pooled relationship
a relationship established by a customer behalf of more than one third party
Proceeds of Crime Law
Proceeds of Crime (Jersey) Law 1999
regulated business
has the meaning provided given in Article 1 of the Supervisory Bodies Law
regulated person
has the meaning provided given in Article 1 of the Supervisory Bodies Law
regulatory laws
Collective name for the: BB(J) Law; CIF(J) Law; FS(J) Law and IB(J) Law
relevant employee
an employee whose duty relates to the provision of a financial services business
relevant person
a person carrying on a financial services business in or from within Jersey, and a Jersey body corporate or other legal person registered in Jersey carrying on a financial services business anywhere in the world
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Term
Definition
relevant person carrying on regulated business
relevant person that is regulated by the Commission under the regulatory laws and that holds a licence
SAR
suspicious activity report
sensitive activities
this refers to the activities that have been established, as a matter of policy, by the Commission as sensitive activities, and which are listed on the Commission website – sensitive activities
source of funds
activity which generates funds for a customer
source of wealth
activities which have generated the total net worth of a person
specified Schedule 2 business
has the meaning given in Article 1 of the Supervisory Bodies Law
Supervisory Bodies Law
Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008
systems and controls
a relevant person’s general framework to combat money laundering and the financing of terrorism
tax advisors
those in business offering tax services
Terrorism Law
Terrorism (Jersey) Law 2002
Terrorist Sanctions Measures
Terrorist Asset-Freezing (Jersey) Law 2011; and
UN
United Nations
VAT
Value Added Tax
Wire Transfers Regulations
Community Provisions (Wire Transfers) (Jersey) Regulations 2007
Al-Qa’ida and Taliban (United Nations Measures) (Channel Islands) Order 2002
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