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PRESS RELEASE 14 March 2007


The Commission has today issued a feedback paper reporting on responses it received to Consultation Paper No. 11 2006: Money Service Business (the “consultation paper”) issued in November 2006. The purpose of the consultation paper was to consult on draft legislation to regulate money service businesses - those in the business of a bureau de change, the business of providing cheque cashing facilities, and the business of transmitting or receiving funds by wire or other electronic means – under the Financial Services (Jersey) Law 1998 (the “Financial Services Law”).

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.

Respondents raised two main concerns. The first was that the proposed turnover threshold of £50,000 was too low. The responses indicated that, because of the economics of a money service business, a much higher turnover would be required to make it economic to afford the proposed registration fee levels.

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.

As well as the two main concerns referred to above, respondents provided a number of helpful comments on other aspects of the legislative proposals. A summary of all responses received and a note of how the Commission intends to address the matters raised in those responses is set out in the feedback paper.

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
or from the reception desk at its offices at Nelson House, David Place.

- Ends -

For further information please contact: -

Andrew Le Brun,
Director, International & Policy Division
Jersey Financial Services Commission

Tel: + 44 (0) 1534 822065
Fax: + 44 (0) 1534 82001



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