Thematic examination programme 2023

Our thematic examinations are conducted in response to a perceived, current or emerging regulatory risk. A particular topic or topics are selected for consideration and review across a number of different entities and/or individuals from either the same sector or across sectors. This enables the standard of compliance and associated risks on the topic to be assessed more broadly.

Examinations may be conducted through various means, including by way of a questionnaire, in-depth examinations/desk-based activity or a combination of both.

The themes for our 2023 thematic examination programme are:

• Natural persons undertaking Class G trust company business;
• Reliance on obliged persons;
• Countering the Financing of Terrorism / Countering Proliferation Financing; and
• Independent Financial Advisers – investment advice to vulnerable persons

In the event your business is selected for inclusion in a thematic examination, we will contact you due course to provide further details about the examination process.

2023 themes more in detail

Natural persons undertaking Class G trust company business

Natural persons acting or fulfilling the function of or arranging for another person to act or fulfil the function of director or alternate director of a company require a Class G trust company business licence. These individuals are often sought to provide expertise in one or more specific areas, for example real estate funds or hedge funds, or act as trusted family advisors in relation to privately owned companies.

The primary focus of the examination will be the natural persons’ compliance with the applicable money laundering, countering of terrorist financing and countering of proliferation financing obligations. For example, supervised persons will be expected to demonstrate that they have in place a comprehensive business risk assessment, effective systems and controls in relation to taking on new customers and be able to evidence they have undertaken relevant training. We will also be reviewing compliance with certain key parts of the Code of Practice for Trust Company Business as it applies to natural persons.

Reliance on obliged persons

Supervised persons may meet their obligations to apply certain Customer Due Diligence (CDD) or Enhanced CDD measures by placing reliance on measures that have already been applied by an obliged person to find out and obtain evidence of identity of a mutual customer.

Reliance must always be subject to a number of conditions set out in the Money Laundering (Jersey) Order 2008 and to the extent that a supervised person places reliance on an obliged person, it must be able to demonstrate that it meets the required conditions.

Countering the Financing of Terrorism / Countering Proliferation Financing

In general terms, terrorist financing is the provision or collection of funds from legitimate or illegitimate sources with the intention of, or in the knowledge that these funds are intended to be used to carry out any act of terrorism, whether or not those funds are in fact used for that purpose.

Proliferation financing can be described as providing financial services and products for the transfer and export of nuclear, chemical or biological weapons; their means of delivery and related materials. It involves the financing of trade in proliferation sensitive goods, but could also include other financial support for legal or natural persons or arrangements engaged in proliferation.

The examination will look to establish how well effective measures have been implemented by supervised persons to counter terrorist financing and proliferation financing.

Independent Financial Advisers – investment services to vulnerable persons

Principle 2 of the Investment Business Code of Practice states that ‘a registered person must have the highest regard for the interests of its clients’. In particular, the requirements in respect of vulnerability are set out in paragraph 2.5 of the Code as follows ‘a registered person must identify and afford appropriate protection to a vulnerable client’.

Independent Financial Advisers should be able to demonstrate they have a developed strategy and documented approach (including effective policies and procedures) in relation to the provision of investment services to vulnerable persons. The JFSC has previously publishedguidance note outlining its expectations relating to the treatment and level of care provided to vulnerable or potentially vulnerable persons.