JERSEY
Summary
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Sanctions

None

FAFT AML Deficient

No

Higher Risk Areas

US Dept of State Money Laundering assessment

Offshore Finance Centre

Medium Risk areas

Weakness in Government Legislation to combat Money Laundering

 

 

ANTI-MONEY LAUNDERING

 

FATF Status

Jersey is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

 

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Jersey was undertaken by the Financial Action Task Force (FATF) in 2016. According to that Evaluation, Jersey was deemed Compliant for 17 and Largely Compliant for 31 of the FATF 40 + 9 Recommendations. It was Partially Compliant or Non-Compliant for 0 of the 6 Core Recommendations.

 

Key Findings from latest Mutual Evaluation Report (2016):

As a well-established international financial centre, with a mature and sophisticated AML/CFT regime, Jersey is nevertheless confronted with a range of money laundering risks, stemming from the nature of its financial sector business conducted in or from Jersey, which creates a material vulnerability to being used in the layering and integration stages of money laundering schemes. These generally involve proceeds generated outside the island. ML risks arising from the very low and falling domestic criminality rate are generally not considered as high. With respect to TF risks, Jersey’s vulnerability arises from its global connections rather than local criminal/terrorist activity. The authorities, through the Financial Crime Strategy Group, monitor ML/TF risks on an on-going basis and have taken a number of measures aimed at mitigating identified risks.

Jersey has made significant progress since its last evaluation by the IMF, by bringing its AML/CFT regime more closely in line with the FATF 40 Recommendations (2003) and 9 Special Recommendations (2004) recommendations, and by taking measures to consolidate its legal and institutional framework for combating money laundering (ML) and terrorist financing (TF). These reforms reflect the authorities’ political commitment to counter money laundering and the financing of terrorism, which is also embodied in the AML/CFT strategy and action plan which were developed since the last evaluation. A number of important legal changes were implemented shortly before or days after the on-site visit, bringing the legal framework to a high level of compliance with the global standards assessed in this report.

Jersey has amended its legislation to bring both the money laundering and the financing of terrorism offences in line with the relevant international standards. Most of the previously identified shortcomings have been addressed prior to or shortly after the visit. While the FT offence has so far not been tested before the courts in Jersey, there have been several important convictions for money laundering.

The legal framework governing provisional measures and confiscation is comprehensive and has been efficiently used in several cases regarding both proceeds of predicate offences and in respect of money laundering. However, the total confiscated sums are considered to be low.

Several legal and operational changes have been implemented since the previous evaluation, which impact positively on the effectiveness of the work carried out by the FIU. Jersey has yet to address the remaining issues with respect to the autonomy of the FIU, by reviewing its legal status and its positioning within the Police’s overall structure.

The AML/CFT preventive measures to which financial institutions and DNFBPs are subject have been strengthened and updated and are largely in line with the international standard, although some technical deficiencies remain. Reporting entities have a good understanding of their AML/CFT risks and obligations. Most financial institutions are adequately regulated and supervised, on a risk sensitive basis, with securities and insurance sector having received relatively little supervisory attention in terms of on-site visits. The Commission has adequate powers, and has applied effectively sanctions and other measures available in its supervisory function.

Jersey has very well-functioning AML/CFT coordination processes at both policy and operational levels.

With respect to international co-operation, Jersey authorities have adopted a proactive approach. This is reflected by the active FIU information exchanges with foreign counterparts, as well as, in the context of mutual legal assistance, by several positive examples of assistance provided to assist foreign countries to locate and confiscate the proceeds of crime and to prosecute the associated predicate and money laundering offences, either in Jersey or abroad.

 

US Department of State Money Laundering assessment (INCSR)

Jersey was deemed a Jurisdiction of Primary Concern by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR).

Key Findings from the report are as follows: -

Perceived Risks:

Jersey, the largest of the Channel Islands, is an international financial center offering a sophisticated array of offshore services. Jersey is a self-governing British Crown Dependency with its own parliament, government, legal system, and jurisprudence. The UK is responsible for Jersey’s defense and international representation, while the island has autonomy in relation to its domestic affairs, including taxation and the regulation of its financial services sector.

The financial services industry is a key sector, with banking, investment services, and trust and company services accounting for approximately half of Jersey’s total economic activity. As a substantial proportion of customer relationships are with nonresidents, adherence to know-your-customer rules is an area of focus for efforts to limit illicit money from foreign criminal activity. Jersey authorities continue to indicate concern regarding the incidence of domestic drug-related crimes. The customs and law enforcement authorities devote considerable resources to countering these crimes. A large proportion of suspicious activity reporting is tax-related. In January 2015, Jersey published a typologies report outlining laundering methods and techniques of concern including tax evasion, corruption, laundering the proceeds of corruption with the involvement of politically exposed persons (PEPs), the use of money service businesses, and the use of pre-paid cards. Island authorities have undertaken successful measures, as recent high profile cases have shown, to protect the financial services industry against the laundering of the proceeds of foreign political corruption. Jersey requires beneficial ownership information to be obtained and held by its regulated trust and company service providers and by its company registrar in a central registry, which can be accessed by law enforcement and tax authorities.

 

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SANCTIONS

There are no international sanctions currently in force against this country.

 

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BRIBERY & CORRUPTION

 

Index

Rating (100-Good / 0-Bad)

Transparency International Corruption Index

N/A

World Governance Indicator – Control of Corruption

84

 

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INVESTMENT CLIMATE

Jersey's economy is based on international financial services, agriculture, and tourism. In 2010 the financial services sector accounted for about 50% of the island's output. Potatoes, cauliflower, tomatoes, and especially flowers are important export crops, shipped mostly to the UK. The Jersey breed of dairy cattle is known worldwide and represents an important export income earner. Milk products go to the UK and other EU countries. Tourism accounts for one-quarter of GDP. In recent years, the government has encouraged light industry to locate in Jersey with the result that an electronics industry has developed, displacing more traditional industries. All raw material and energy requirements are imported as well as a large share of Jersey's food needs. Light taxes and death duties make the island a popular tax haven. In January 2013, Jersey signed a tax agreement with Guernsey and the Isle of Man, in order to enable the islands' authorities to end tax avoidance and evasion. Living standards come close to those of the UK.