The Government of Jersey publishes Risk Overview of Virtual Assets Sector
The Government of Jersey (GoJ) has published its first National Risk Overview of the Virtual Asset (VA) sector in Jersey. The overview builds on input and feedback across all competent authorities as well as Industry representatives. It includes a number of key findings and actions, which form the basis of the next steps.
The report is part of the requirements of the international standard-setter on financial crime, the Financial Action Task Force (FATF), and follows the publication of Jersey's:
- National Risk Assessment of Money Laundering in September 2020
- National Risk Assessment of Terrorist Financing in April 2021
- National risk Assessment of Non-Profit Organisations in April 2022.
This latest report has highlighted:
- Jersey is not currently aligned to the FATF Standards with respect to VA and their service providers. When in force, the Proceeds of Crime (Amendment No. 6) (Jersey) Law 202- (Amendment No. 6) will address this by bringing them fully within scope of anti-money laundering and counter terrorist financing (AML/CFT) obligations.
- The VA sector in Jersey remains small, meaning that the risks relating to money laundering (ML) and terrorist financing (TF) are perceived to be limited in terms of size and impact. Just three entities are registered with us with respect to servicing VAs.
- There is some indirect exposure where business is carried on with entities who themselves deal with VAs directly.
- VA and their service providers are global in nature and frequently operate across several jurisdictions. Cross-border transactions carry increased risk, and can have a lack of clarity, both over which jurisdiction is ultimately responsible for regulating, licensing and supervising entities, and which persons are subject to AML/CFT measures.
- Jersey’s conservative approach to VAs has served as a mitigating factor but has also discouraged authorities and firms from developing a deeper understanding of the VA sector, and the risks it can present. A lack of experience and knowledge means that firms interacting with VAs may be ill equipped to adequately address the risks.
- It is anticipated that this sector will grow, perhaps significantly.
Once Amendment No. 6 is in force, we will be able to collect relevant data on this sector, which will enable authorities to undertake a full risk assessment applying the World Bank methodology, in line with previous National Risk Assessments.
The GoJ is taking positive steps to identify assets, and understand the ML and TF risks prevalent in the VA sector. The GoJ and all other relevant authorities will continue to deepen their understanding of the VA sector and develop the legislative and regulatory regime in line with FATF Standards.
This sector is rapidly evolving and growing, therefore the potential risks will be kept under constant review.
View the full report on the Government website.