PRESS RELEASE 14 March
COMMISSION ISSUES FEEDBACK PAPER ON CONSULTATION
RESPONSES TO DRAFT LEGISLATION TO OVERSEE MONEY SERVICE BUSINESSES
The Commission has today issued a feedback paper reporting
on responses it received to Consultation Paper No. 11 2006:
Money Service Business (the “consultation paper”)
issued in November 2006. The purpose of the consultation paper
was to consult on draft legislation to regulate money service
businesses - those in the business of a bureau de change,
the business of providing cheque cashing facilities, and the
business of transmitting or receiving funds by wire or other
electronic means – under the Financial Services (Jersey)
Law 1998 (the “Financial Services Law”).
The current absence of such a regulatory regime for money
service business puts the Island at variance with international
standards issued by the Financial Action Task Force on Money
Laundering (“FATF”). The aim
of the legislative proposals described in the consultation
paper is to provide a mechanism for the oversight of money
service businesses that will meet international standards
but in a way that will avoid undue bureaucracy and placing
unrealistic demands on the Commission’s resources.
In summary, the legislative proposals described in the consultation
paper will result in the disclosure to the Commission of the
identity of all persons who carry on money service business.
All money service businesses will become subject to oversight
(to varying degrees), as required by FATF recommendations.
In the case of persons with turnover in excess of a prescribed
threshold, this oversight will involve a pre-authorisation
“fit and proper” assessment and proactive ongoing
supervision by the Commission. In the case of other persons
that carry on money service business, oversight will involve
the notification to the Commission of the carrying on of money
service business and the use, by the Commission, of its reactive
supervisory powers as and when needed.
The draft legislation consulted upon consisted of Regulations
to bring money service business within the scope of the Financial
Services Law and an Exemption Order to exempt certain types
of money service business from registration under the Financial
Services Law. Draft Codes of Practice for the conduct of money
service business were also consulted upon.
KEY ISSUES RAISED BY RESPONDENTS
Respondents raised two main concerns. The first was that the
proposed turnover threshold of £50,000 was too low.
The responses indicated that, because of the economics of
a money service business, a much higher turnover would be
required to make it economic to afford the proposed registration
The Commission is intending to address this concern by implementing
a turnover threshold of £300,000, rather than the £50,000
originally proposed. However, to mitigate the risk that those
seeking to launder money or to finance terrorism might seek
to gain an advantage by diverting illicit activities to businesses
using the turnover threshold exemption, the Commission is
proposing that the one-off transaction threshold under which
customer identification procedures are not required , be lowered
for money service businesses from £10,000 to £1,000.
The Commission will also review the turnover threshold within
12 months of the Regulations coming into force.
The second main concern was the requirement for a money service
business to provide a Jersey-based compliance officer. This
was felt impracticable when the principal was based off-island
and provided its services through a Jersey agent. (The requirement
for a compliance officer will not apply to those businesses
that can use the turnover threshold exemption.)
The Commission intends to address this concern by allowing,
subject to certain conditions being met, a non-Jersey principal
to designate an employee of their Jersey-based agent to act
as its local compliance officer.
As well as the two main concerns referred to above, respondents
provided a number of helpful comments on other aspects of
the legislative proposals. A summary of all responses received
and a note of how the Commission intends to address the matters
raised in those responses is set out in the feedback paper.
The Commission will now instruct the Law Draftsman to prepare
suitably amended draft legislation which, once approved by
the Board of Commissioners, will be recommended to the Minister
for Economic Development. If approved by the Minister, the
draft Regulations will be laid before the States for consideration
and, if thought fit, enactment. Contemporaneously, the Exemption
Order (and a necessary Fees Order) will be brought into effect,
following which the Commission will issue the Codes of Practice.
Although timescales are somewhat difficult to forecast given
the number of different stages that the draft legislation
has to go through before enactment, the Commission would hope
that the legislation will be enacted by the autumn of 2007.
A copy of the feedback paper can be obtained from the Commission’s
or from the reception desk at its offices at Nelson House,
- Ends -
For further information please contact: -
Andrew Le Brun,
Director, International & Policy Division
Jersey Financial Services Commission
Tel: + 44 (0) 1534 822065
Fax: + 44 (0) 1534 82001