PRESS RELEASE 14 March 2007
COMMISSION ISSUES FEEDBACK PAPER ON CONSULTATION RESPONSES TO DRAFT LEGISLATION TO OVERSEE MONEY SERVICE BUSINESSES
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
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.
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 website by clicking here
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Andrew Le Brun,
Tel: + 44 (0) 1534 822065