Managing complexity and the increased regulatory perimeter

Increased regulatory perimeter

Globally, the remit of financial services regulation has grown, driven by financial failures, political concerns, product innovation, and growth in new sectors. Consequently, the perimeter that regulators are responsible for is increasing substantially and this trend is anticipated to continue. Jersey is not immune to this change and in 2022 we saw an extension of our responsibilities to include for example NPOs and the introduction of new regimes for VASPs and MVTS.

We have advanced our work in aligning Jersey’s AML / CFT scope exemptions with international standards. In addition to the broader scope of regulation there is an increasing amount of reporting required, the regulatory equivalent of what the industry experienced with FATCA for example. The extension of the perimeter, additional reporting, and other events ranging from recent Russian Sanctions to the MONEYVAL assessment, has resulted in a more substantial workload and additional financial needs required by the JFSC to deliver effective supervision of the Island’s finance industry.

Benchmarking exercise

Independent analysis performed on our resourcing levels in relation to comparable regulators and their scope of work, has enabled us to gain external validation about the need to add additional resource to ensure the JFSC continues to be an effective regulator.

Leveraging the Risk Model and digital tools

Against this backdrop, the development and deployment of our Risk Model has enabled us to focus our efforts in those areas where we observed higher risk. This has not only enabled us to evidence our effectiveness as an AML/CFT regulator but also mitigate where possible, rising headcount and consequent fee increases by working in a smarter and more focused way.

Like industry, we continue to explore ways to automate or streamline processes where possible and achieve efficiencies and cost savings across our operations. Inevitably however, there is a need to develop our human resources, processes, and technologies to meet growing demand and complexity.

As part of our digital transformation core work stream, we will leverage opportunities for greater automation to support vision delivery and increase operational effectiveness in step with industry. We will do this on an iterative, continual improvement basis.