Press Release - 8 March 2001
JERSEY'S NEXT STEPS ON ABACHA ENQUIRY
The Jersey Financial Services Commission today announced the next steps in its continuing investigation into the Island's financial institutions involvement with former President of Nigeria, General Sani Abacha.
Richard Pratt, Director General of the Commission said: "The Commission has ordered an investigation into each of the Island institutions which are alleged to have handled Abacha money. These investigations continue. However, the Commission is now clear that we should develop and issue further general guidelines addressing issues that have already emerged. In respect of individual institutions, the Commission will ensure that any control weaknesses are rectified and will decide on what, if any, regulatory action to take in the light of its continuing investigation."
The issues that have already arisen, and on which guidance will be developed, are:
There is a clear need for an established policy by each institution on the handling of accounts from public figures and their associates - and that all policies should be followed.
Where an institution establishes that it is dealing with a public figure or associates, it is vital that it should fully understand the validity and nature of the anticipated funds in the context of the position held by the public figure.
Institutions should identify the source of wealth of public figures and the source of funds for large transactions. They should build a profile of expected account activity for public figures and monitor transactions so as to compare them with that profile in order to identify and report suspicious transactions.
The above principles apply equally where the institution accepts a public figure account from an intermediary or other introducer, even where that introducer is part of the same group.
In the event that a suspicion arises in relation to a public figure, an institution should examine other accounts introduced from the same source.
In addition to the further guidance on public figures outlined above, the Commission will re examine the anti money laundering Guidance Notes. In particular it will wish to re-emphasise the importance of knowledge of the source of funds and source of wealth of any high profile or high net worth individuals. The Notes should also give further advice and guidance on the monitoring of transactions.
The Commission confirmed that:
All of the accounts so far identified, which were opened by General Abacha's associates (none from Abacha himself have yet been identified in Jersey) were opened before the present "all serious crimes" anti money laundering legislation was in place.
All of the institutions involved are taking the issue seriously, are co-operating with the Commission and are resolved to take the action necessary to minimise the risks of accepting accounts such as those of Abacha's associates.
The Commission has worked closely with other regulatory bodies, including the FSA in the UK, in conducting its investigation and will continue to do so.
The Commission noted that the key principles outlined above in respect of public figures apply equally to other relationships with high profile and high net worth individuals. They are already embedded in the anti money laundering regime in Jersey. Since the accounts from Abacha's associates were taken on, Jersey has strengthened the anti money laundering regime by:
Extending the legislation relating to money laundering by introducing the "all serious crimes" Proceeds of Crime Law 1998, its accompanying Order, and the anti money laundering Guidance Notes;
Introducing new legislation bringing trust company business into regulation, so that the Commission can supervise compliance with the anti money laundering requirements in trust companies as well as all other main parts of the financial services industry in Jersey;
Issued a reminder notice about the risks of accounts from public figures;
Published a consultation paper with proposals for further strengthening of the "Know your customer" requirements in Jersey.
The Island's anti money laundering defences have been subject to many evaluations including one from an international team (US, France, Malta and the UK), which concluded that Jersey was "close to complete adherence to the 40 recommendations of the FATF".
Richard Pratt concluded: "The Island's anti money laundering defences are sound but can never give a 100% guarantee against abuse. The Commission has taken action by ordering an investigation and identifying the issues that should be learned by the whole industry. We will continue the investigation (which may lead us to new financial institutions in Jersey) and then decide what further action to take. We already have powers of direction, powers to put conditions on licences of regulated institutions, powers to publish statements ("name and shame") or powers to revoke licences. We will consider if any such action is justified when we have the full facts."
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