Financial crime examination feedback 2023 - 2024

1             Executive summary

1.1       Introduction

1.1.1              This feedback paper sets out the key findings from the financial crime examinations conducted from Q4 2023 to the end of 2024. Its purpose is to help supervised persons assess the effectiveness of their own systems and controls in preventing and detecting financial crime and to support compliance with Jersey’s legal and regulatory framework.

1.1.2              We also cover common or high-risk findings from examinations, along with practical examples of good practice and self-assessment prompts.

1.1.3              By reflecting on these findings you can identify any gaps you may have in your own framework and take proactive steps to strengthen your controls to prevent and detect financial crime.

1.1.4              This feedback should be read alongside the guidance notes set out in the Handbook.

1.1.5              We hope you find this paper useful, and we welcome feedback to help us continue to provide valuable content. 

1.2         Background

What is the financial crime examination unit?

1.2.1              The financial crime examination unit (FCEU) is a dedicated team of examiners who conduct desk-based and onsite examinations of supervised persons’ compliance with legal and regulatory obligations, with a specific focus on controls to prevent and detect financial crime.

Why are financial crime examinations important?

1.2.2              Robust and effective controls to prevent and detect financial crime are essential to protect supervised persons, their customers, employees and the island as a whole. Individual businesses therefore have a vested interest to ensure that Jersey remains a well-respected international finance centre (IFC) which continues to attract vibrant and legitimate business.

1.2.3              By analysing supervised persons’ controls and compliance with relevant laws and regulations, financial crime examinations enable us to understand, assess and feedback to supervised persons on the significance of risks prevalent in their business. Further analysis undertaken and published by the FCEU in our feedback papers enables us to extend this learning across industry in Jersey.

What does and FCEU examination involve?

1.2.4              FCEU examinations have a three-stage process.

1.2.5              During the planning stage a supervised person is informed they have been selected for examination and initial requests for information are made (which may include policies and procedures, registers, a sample of customer files and so on). A preliminary meeting is held during which a supervised person meets the team conducting the examination, who will provide an overview of what to expect.

1.2.6              During the fieldwork stage examiners undertake a desk-based review of the information received from the supervised person. Examiners also prepare for and attend the supervised person’s office for the onsite section of the examination.

1.2.7              The reporting stage follows the onsite examination and covers the period during which the examination report is drafted, any factual inaccuracies are raised, and the final report is issued to the entity.

Questions to ask yourself

If you are selected for a financial crime examination, have you carefully reviewed the initial information requests and FCEU questionnaire in advance of the preliminary meeting? Any questions on the content of those documents, or what is expected can be discussed during the preliminary meeting. Have you thought of some questions after the preliminary meeting? Do not hesitate to contact the lead examiner or member of the team at [email protected] for clarification.

Recent changes to our process

1.2.8              The Financial Action Task Force (FATF) refers to the risk-based approach to preventing money laundering, terrorist financing and proliferation financing as being the cornerstone of its Recommendations. We revised our process in 2023 with an enhanced risk-based approach being central to the changes. We aim to effectively utilise our resources by focusing on those risks that could cause the greatest harm to our guiding principles. These changes to the process were introduced in Q4 2023 and developed in 2024. The key changes introduced are as follows:

• Previously, financial crime examinations considered an entity’s systems and controls against the requirements set out in all relevant sections of the Handbook. Examinations now focus on specific aspects of the regulatory framework. The scope of each examination will differ depending on the known or perceived areas of greatest risk for a supervised person. It will include a selection of the following themes
  • business risk assessment (BRA) and governance
  • systems and controls
  • the roles of the Money Laundering Compliance Officer (MLCO) and Money Laundering Reporting Officer (MLRO)
  • identification measures
  • reliance and exemptions
  • ongoing monitoring
  • sanctions
  • suspicious activity reports
  • employee screening
  • training and awarenes
•       Examiners now send initial questions by email to a supervised person in advance of the onsite section of the examination. This enables us to gain an understanding of a supervised person’s business and control framework in advance, allowing for a more focused approach to questions and interviews during the onsite element of the examination.
•       As a result of the more focused scope, the onsite section of the examination generally takes one week, with the end of the onsite examination marked by a meeting (referred to as a “closing” meeting) in the week following the visit.

What happens after the examination?

1.2.9              All supervised persons who have been examined receive direct written feedback from the examination team, usually in the form of a report. Once the final report is issued, the supervised person is required to prepare a formal action plan to remediate deficiencies identified and set out timescales for completion. This must be submitted to the supervised person’s supervisor within 20 working days after the FCEU issues the final report.

Read our guidance

When conducting remediation activity, supervised persons are expected to understand and address the root causes of findings and assess whether issues are isolated or systemic. Read our guidance on how to approach a remediation action plan.

Why should you keep reading?

1.2.10          We expect the board and senior management of all supervised persons to:

›          review relevant feedback papers and guidance notes we publish

›          consider that information against their own arrangements and identify deficiencies or areas for enhancement

›          take appropriate and prompt action to remedy deficiencies identified

 Read the full feedback paper