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THE COMMISSION

Other Independent Evaluations

Document Overview

UK Designated Territory Status
Financial Stability Board assessment of adherence to standards on international cooperation and information exchange
The European Union's Committee on the Prevention of Money Laundering and Terrorist Financing
US Internal Revenue Service (Qualified Intermediary Agreement)
FATF Report on Non Co-operative Countries and Territories
The Financial Stability Forum
The FATF Style Evaluation
The Edwards Report

UK Designated Territory Status

In respect of both Insurance and Collective Investment Funds (the only two areas where such a regime exists), Jersey has been designated a recognised territory by the UK.

The status was only achieved after a full examination of the legislation and regulatory practices of Jersey.

It is a formal recognition that Jersey's regulatory standards are at least equivalent to those in the UK.

Financial Stability Board (FSB) assessment of adherence to standards on international co-operation and information exchange -Top

In March 2010, the FSB commenced an initiative to encourage the adherence of all countries and jurisdictions to regulatory and supervisory standards on international co-operation and information exchange. This initiative was in response to a call by the G20 leaders at their April 2009 Summit in London for the FSB to develop a toolbox of measures to promote adherence to prudential standards and co-operation with jurisdictions.

Whilst the ultimate objective of the FSB's initiative is to promote implementation by all jurisdictions, its initial focus was on the adherence of FSB members and other jurisdictions that rank highly in financial importance. In line with this criteria, the FSB prioritised the evaluation of a pool of approximately 60 jurisdictions. Jersey was included in this pool.

In November 2011, in advance of the G20 Summit in Cannes, the FSB published a statement (click here to view) detailing the outcome of its evaluation. Jurisdictions were placed into one of three groups, depending on their level of adherence to regulatory and supervisory standards on international co-operation and information exchange:

  • Group 1 consists of those jurisdictions "demonstrating sufficiently strong adherence" to the relevant international standards.
  • Group 2 consists of those jurisdictions "making material progress towards demonstrating sufficiently strong adherence" to the relevant international standards.
  • Group 3 consists of those jurisdictions deemed "non-co-operative".

Jersey was placed into Group 1.

Jersey’s Group 1 status was re-confirmed in the 2014 update report published by the FSB, which can be viewed by clicking here.

The European Union's Committee on the Prevention of Money Laundering and Terrorist Financing - Top

In 2008, Jersey's anti-money laundering/countering the financing of terrorism ('AML/CFT') systems were subject to review by the European Union's Committee on the Prevention of Money Laundering and Terrorist Financing. The Committee had been considering which jurisdictions should be considered by European Union ('EU') Member States to have equivalent AML/CFT systems to the EU.

In a 'Common Understanding' published in April 2008 (click here to view) the Committee stated that, "the UK Crown Dependencies (Jersey, Guernsey and the Isle of Man) may also be considered as equivalent by Member States".

Following the publication of the Common Understanding, the United Kingdom government publicly confirmed that it considers Jersey to have EU-equivalent AML/CFT systems (click here to view the UK government's statement).

United States Qualified Intermediary Agreement - Top

The United States Inland Revenue Service ('IRS') has approved Jersey's 'know your customer' provisions for the purpose of its rules on withholding tax.

Effective from 1 January 2001, the IRS have introduced a stricter documentation standard and increase its reporting requirements.

Intermediaries (any person receiving income on behalf of a beneficial owner) that elect for Qualified Intermediary Status will be able to benefit from streamlined documentation and reporting requirements.

Many Jersey based institutions are expected to elect for Qualified Intermediary Status. The IRS has endorsed Jersey's 'know your customer' practices and procedures for opening accounts, having evaluated Jersey's responses to information requested on 18 specific areas. It will now enter into a withholding agreement with Jersey intermediaries.

Jersey provided the IRS with the information and documentation that it requires on the Island's anti-money laundering framework and has welcomed endorsement of its procedures. All Jersey Qualified Intermediaries will be expected to verify the identity of applicants for business using documentation agreed by the JFSC with the IRS, after consultation with the industry.

Jersey's response to this new documentation can be found by clicking here.

Details on Qualified Intermediary applications, a list of jurisdictions whose 'know your customer' rules have been approved by the IRS, and a link to Jersey's 'attachment' can be found by clicking here.

FATF Report on Non Co-operative Countries and Territories ('NCCTs') - Top

The Financial Action Task Force was invited by the Group of Seven countries (G7) to identify those countries which do not co-operate in the international fight against money laundering. The FATF drew up a list of 25 criteria by which to judge different jurisdictions, including Jersey, which engage in international financial business.

At a meeting of the Task Force on 21 June 2000, Jersey's commitment to co-operating with other jurisdictions was recognised. Having examined Jersey, the FATF has concluded that the Island should be regarded as co-operative in the fight against money laundering. The FATF report on non co-operative jurisdictions listed 15 non co-operative jurisdictions. The list did not include Jersey or the other Crown Dependencies. The report was presented at the G7 summit in Japan in July 2000.

Jersey has welcomed this report, pointing out that the FATF had access to a draft report arising from a detailed evaluation of the Island by some FATF members including representatives from the USA and France (see the FATF Style Evaluation). The Insular authorities pointed out that when a proper evaluation is carried out, the Island is seen to be in the top division of offshore centres, well regulated and fully co-operative.

At its Plenary meeting in October 2000 the FATF declared that it would continue to monitor weaknesses in the global fight against money laundering. Since then, further jurisdictions have been reviewed in the context of the FATF's work on non co-operative countries and territories. The FATF has amended the list of non co-operative countries when it has been satisfied that a jurisdiction on the list has adequately addressed the deficiencies previously identified.

Since the publication of the original list the FATF has updated the list, removing some jurisdictions and adding others. At no stage has Jersey been on the NCCT list. The FATF website (www.fatf-gafi.org) now states that all 23 jurisdictions identified as NCCTs in 2000 and 2001 are no longer on the NCCT list as they have made significant progress.

The Financial Stability Forum - Offshore Working Group - Top

The Financial Stability Forum was established in 1999. It is a further initiative inspired by the G7 countries to consider factors which have led to financial instability in recent years. It set up working groups, one of which was an Offshore Working Group.

The Group pointed out that there were legitimate uses of offshore centres and that some centres were highly reputable. They surveyed all onshore jurisdictions with extensive dealings with offshore centres and as a result divided all offshore centres between three groups. Jersey is in the first group which is described as co-operative; with a high quality of supervision which largely adheres to international standards.

Jersey has welcomed this report, which arises from a survey of about 40 regulators around the world. The Insular authorities have pointed out that when such a survey is conducted amongst those who regularly do business with the Jersey Financial Services Commission, the result is that Jersey is allocated to the top category of offshore centres.

The Group published its report in April 2000 - which can be found by clicking here. They concluded that it did not appear that offshore centres had contributed to instability. They nevertheless concluded that they might in the future and that there was therefore an interest by the wider financial community in monitoring the standards of regulation in offshore centres.

They recommended that there should be a process of evaluation of offshore centres and that it should be conducted by the International Monetary Fund (IMF).

The FATF style evaluation - Top

As members of the Offshore Group of Banking Supervisors, Jersey encouraged an FATF style evaluation of itself. The other Crown Dependencies did so at the same time.

The evaluation took place in July 1999. The evaluation team consisted of representatives of the US, France, and Malta, with a secretary from the British Treasury.

Its conclusions were published in summary form and can be found by clicking here. The team considered Jersey to be close to 'complete adherence' with the FATF 40 recommendations. They stated that Jersey has a comprehensive system of barriers against money laundering which were in compliance with most of the 40 recommendations set out by the FATF. Some recommendations were made to improve compliance still further.

The Commission has welcomed the report. The recommendations have been addressed in a paper on new Jersey measures to tighten defences against money laundering which can be found by clicking here

The Edwards Report - Top

In February 1998, the British Home Secretary announced a review of financial regulation of the Crown Dependencies (Jersey, Guernsey and the Isle of Man) by former Treasury Official Andrew Edwards.

The Report was published in November 1998. Information on obtaining the full report can be found by contacting The Stationary Office (see http://www.archive.official-documents.co.uk/document/cm41/4109/4109.htm). It found that, like the other Crown Dependencies, Jersey was in the top division of offshore centres; had a formidable arsenal of legislation and had money laundering legislation better than many countries in the FATF or European Union. It made a number of recommendations for improving regulation.

Jersey's response was published in November 1999 and can be found by clicking here.

The British Government indicated its satisfaction with the response in March 2000. Their press statement can be found by clicking here.

 

 

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