MONEY SERVICE BUSINESS

Frequently Asked Questions (FAQ)

Q: What is ‘money service business’?

A person carries on money service business if the person carries on the business of any of the following:

• a bureau de change;
• providing cheque cashing services;
• transmitting or receiving funds by wire or other electronic means;
• engaging in money transmission services.

This definition is contained in Article 2 of the Financial Services (Jersey) Law 1998 (as amended by the Financial Services (Amendment of Law) (Jersey) Regulations 2007).
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Q: I arrange for money transfers to be effected by another firm for my customers/clients. Do I need to apply to the Commission for approval to carry on money service business?

No. Where a business is a user of a money transmission service (either for its customers/clients or for the business' own purposes) - rather than the provider of a money transmission service - it would not be regarded as carrying on money service business and would not need to apply to the Commission.
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Q: Does a person who wishes to conduct money service business need the Commission’s prior approval?

Unless a person who wishes to carry on money service business can benefit from an exemption (see the FAQs below on exemptions) they must obtain the prior approval of the Commission to do so. (For persons already carrying on money service business at the time the regulatory regime for such business came into effect on 26 July 2007, there are transitional provisions which allow such a person to lawfully carry on money service business provided they make an application to the Commission by 26 January 2008. For further information on these transitional provisions, please contact the Commission.)

To apply to the Commission for approval to carry on money service business please complete the money service business application form (click here to download a form).
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Q: I understand there is an exemption linked to turnover. How does that work?

There is an exemption from having to obtain the Commission’s prior approval to carry on money service business in cases where turnover (defined below) during the last completed financial period of the money service business (which in most cases will be 12 months long) is less than £300,000. However, the person who intends to use the exemption must give the Commission prior notification of the intention to carry on money service business. (The Commission has a specific form that should be used to give such notification. For more information please see the FAQ below on the notification process.)

‘Turnover’ in relation to money service business is the cumulative total during a financial period of all or any of the following:

• foreign currency that is, in the course of the person carrying on the business of a bureau de change, bought from or sold to customers of the bureau de change (counting one side of the transaction only);
• funds transmitted or received by the person in the course of carrying on the business of transmitting or receiving funds by wire or other electronic means, or money transmission services;
• cheques cashed by the person in the course of carrying on the business of providing cheque cashing services.

(Note that some money service business transactions are excluded from the categories shown above for the purposes of calculating turnover. For further information, please see Article 2(2) of the Financial Services (Money Service Business (Exemptions)) (Jersey) Order 2007.)

Where a person has commenced a money service business – but has not completed a financial period – money service business turnover will be deemed to be below £300,000 for the first 18 months of trading or until the date when money service business turnover is ascertained, whichever is earlier.

The turnover exemption is expected to be used primarily by hotels and other hospitality businesses that provide a small bureau de change facility for the convenience of their customers.

The detail of the turnover exemption can be found in Article 4 of the Financial Services (Money Service Business (Exemptions)) (Jersey) Order 2007.

(There are transitional provisions for persons already carrying on money service business at the time the regulatory regime for such business came into effect on 26 July 2007 and which had a money service business turnover of less than £300,000 in their last financial period. In such cases, the person may lawfully continue to carry on money service business provided they notify the Commission that they are doing so by 26 January 2008. For further information on these transitional provisions, please contact the Commission.)
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Q: What can I do if I have a complaint against a money service business?

The Commission has issued a guidance note on this subject. The guidance note can be found in the ‘Investors’ Corner’ part of this website or can be viewed by clicking here.
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Q: I understand there is an exemption for deposit-takers. How does that work?

Deposit-takers that are registered under the Banking Business (Jersey) Law 1991 are exempt from the need to obtain the Commission’s prior approval to carry on money service business. However, before carrying on money service business the deposit-taker must notify the Commission that it will be doing so. (The Commission has a specific form that should be used to give such notification. For more information please see the FAQ below on the notification process.)

The detail of this exemption can be found in Article 5 of the Financial Services (Money Service Business (Exemptions)) (Jersey) Order 2007.

(There are transitional provisions for deposit-takers already carrying on money service business at the time the regulatory regime for such business came into effect on 26 July 2007. In such cases, the deposit-taker may lawfully continue to carry on money service business provided it notifies the Commission that it is doing so by 26 January 2008. For further information on these transitional provisions, please contact the Commission.)
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Q: Are any specific money service business activities exempted from the regulatory regime for money service business?

There are three types of money service business activity that are exempt and not subject to the Financial Services (Jersey) Law 1998.

The first is a transaction where a payment for goods or service is made in one currency and the change is given in another currency. The main purpose of this exemption is to avoid shops that accept payment in one currency and give the change in another from being treated as carrying on a bureau de change activity.

The second exempt activity is a funds or money transfer made for the sole purpose of enabling a person to pay for goods or services, or enabling a person to access their own money. The main purpose of this exemption is to take outside of the money service business regime issuers of debit cards, credit cards or electronic money that are used solely as a means of payment for goods or services. This exemption will also take out of the regime for money service business those who provide ‘cash-back’ facilities (mainly supermarkets) and providers of ATM (‘hole-in-the wall’) machines.

The third exempt activity is one where a person cashes a cheque drawn by another person on the latter’s own bank account. The purpose of this exemption is to ensure that only persons in the business of cashing third-party cheques (eg, pay cheques) come within the regulatory regime for money service business.

The detail of these exemptions can be found in Article 3 of the Financial Services (Money Service Business (Exemptions)) (Jersey) Order 2007.

Unlike for the turnover exemption and the deposit-takers’ exemption, a person that intends to utilise these exemptions does not have to notify the Commission.
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Q: How does the notification process work?

As referred to in the answers to earlier FAQs, persons who intend to utilise the turnover exemption or the exemption for deposit-takers need to notify the Commission of their intention to do so.

The Commission has designed a specific form on which such notification should be given. It is very straightforward to complete and requires only basic information about the person that will be carrying on money service business. Click here to download a form.
Notification only has to be done once (and not, for example, annually). No fee has to accompany the notification form.

Persons who use the turnover exemption or the exemption for deposit-takers should note that if they stop carrying on money service business they must advise the Commission within three months.
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Q: Does a money service business have to pay fees to the Commission?

Persons who need to apply to the Commission for prior approval to carry on money service business must submit a fee of £2,000 with their application form (reduced to £1,000 if the application is submitted after 30th June in any year). Once approved to carry on money service business, an annual fee of £2,000 is payable by the 31st January of each year.

No fees are payable by persons who benefit from an exemption (eg, the turnover exemption or the deposit-takers’ exemption).

The detail of the fee arrangements can be found in the Financial Services (Money Service Business (Fees)) (Jersey) Order 2007.
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Q:Who do the Codes of Practice for Money Service Business apply to?

The Commission has issued Codes of Practice for the purpose of establishing sound high level principles for the conduct of money service business. The Codes apply to all persons that have been approved by the Commission to carry on money service business (such persons are called ‘registered persons’ in the terminology of the Financial Services (Jersey) Law 1998). The persons to whom the Codes apply will be expected to adhere to the standards set out in them.

The Codes do not apply to persons that benefit from an exemption (see earlier FAQs which describe the exemptions available) except for deposit-takers to whom the Codes do apply.

A copy of the Codes can be downloaded from the Commission’s website. (Click here to view).
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Q:Can the Compliance Officer, Money Laundering Reporting Officer and the Money Laundering Compliance Officer carry out operational activities within a money service business?

The Codes of Practice for money service business allow – where operating volumes are at a level for it to be appropriate – for the roles of the Compliance Officer, Money Laundering Reporting Officer and the Money Laundering Compliance Officer to be undertaken by the same person. In small businesses, it is also possible that the Compliance Officer, Money Laundering Reporting Officer and the Money Laundering Compliance Officer may carry out operational activities within the money service business. That is acceptable provided that care is taken to ensure that there is no conflict between the various roles. For example, a person acting as the Compliance Officer for the money service business should not be responsible for monitoring his own compliance with the business’ operational procedures.

In allocating roles to employees within a money service business care should be taken to ensure that the corporate governance arrangements and the internal control systems of the business are not compromised (see Principle 3 in the Codes of Practice for the requirements to be met in those areas).
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Q:Does a money service business have to keep funds accepted from clients for onward transfer separate from its own assets?

The provisions in Article 20(1) of the Financial Services (Jersey) Law 1998 place a legal obligation on a money service business (unless they benefit from an exemption described in earlier FAQs, for example, the turnover exemption) to keep funds accepted for transfer segregated from its other assets.
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Q:How often will the Commission visit money service businesses?

The Commission uses a risk-based approach to determine the frequency of on-site visits to the premises of all businesses registered under the Financial Services (Jersey) Law 1998. It is anticipated that only the higher-risk money service businesses will receive an annual or biennial visit. Others will receive visits less often, and possibly in very low-risk cases, not at all

A person carrying on money service business using an exemption (except deposit-takers) will not be subject to routine on-site visits. However, the Commission has the power to conduct an on-site visit if circumstances warrant it – ie, if a business is considered to present a higher risk. For example, an on-site visit might be conducted where information comes into the possession of the Commission that indicates that the business is breaching the terms of the exemption provisions or that the business has inadequate controls to meet the requirements of the Money Laundering (Jersey) Order 1999.
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Q:What powers will the Commission have over money service businesses?

In common with other types of financial service business regulated under the Financial Services (Jersey) Law 1998, that law provides the Commission with a range of powers and sanctions that it can use - in appropriate circumstances - in connection with the supervision of persons that carry on money service business (including those who can use the turnover exemption or the deposit-takers’ exemption).

These powers and sanctions include: conditioning a person’s registration (where applicable); the ability to issue directions; making public statements; requiring the provision of information and documents; the ability to seek a Bailiff’s warrant to enter and search premises for information and documents; undertaking investigations, and; co-operating with overseas regulatory authorities.

The Financial Services (Jersey) Law 1998 contains restrictions on when the Commission can use the powers and sanctions available to it.
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Q:How can I find out if a money service business is regulated by you?

The Commission’s website lists all regulated money service businesses. This list will be fully populated once the transitional period has ended (on 26 January 2008). On the home page, click on the “Regulated Entities” box or click here to go direct to the relevant page.
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