Helping build regulatory and registry standards

Leading the way

In 2019, the JFSC was recognised for setting the standard for international finance centre regulation. In the first evaluation of its kind by the Group of International Finance Centre Supervisors (GIFCS), we were awarded the top ratings for our trust company regulation.

As a founder member of the GIFCS, we felt it was important to lead the way and help set a standard for future evaluations. Other jurisdictions are now able to use our evaluation to make changes to their own regimes, which can only lead to higher standards of international regulation among other finance centres. We are committed to working with other jurisdictions to achieve this.

Focusing on fighting financial crime

As we have already highlighted in this annual report, we have renewed focus on countering the financial crime threat, particularly as we embark on our four-year strategic roadmap.

During 2019, in preparation for the Island’s forthcoming assessment of its compliance with the 40 FATF Recommendations and 11 Immediate Outcomes, we continued to devote substantial resources to the National Risk Assessment, providing aggregated industry data to all the 14 project teams, chairing 11 of them and significantly contributing to the work of the other three. We also played a key role in supporting the Government with its project governance culminating with us planning and overseeing the World Bank Workshops in November. Overall, our work in this area has been an impressive achievement for the whole organisation. We received positive feedback from the World Bank on our role.

As we seek to further enhance our supervisory approach to anti-money laundering and fighting financial crime, during 2019 we continued to make valued contributions to international standard setting. Particular accomplishments included receiving positive references in a FATF beneficial ownership best practice paper and undertaking considerable work at and for the MONEYVAL plenaries. This included our Chief Adviser for Financial Crime participating in MONEYVAL’s evaluation of Malta’s AML/CFT regime.

Many of our enforcement investigations have connections to other jurisdictions so effective collaboration with international regulators and law enforcement agencies is a critical component of our work. In 2019, we attended the first Crown Dependencies Enforcement meeting and cooperated with other international enforcement divisions on their investigations.

Engaging internationally

Our Director General, Martin Moloney, represented Jersey and the JFSC on the international stage at IOSCO, working as Chairman of a special working group on the market risks arising in relation to Exchange Traded Funds. He led a hugely successful workshop hosted by the Securities and Exchange Commission in Washington where industry, financial economists and regulators got together to analyse the risks and how best to manage them. This IOSCO work is on-going and is a key part of a wider IOSCO agenda to develop its standards and supporting guidance to respond to growth and change in the funds industry across the globe. This is an example of where we are contributing to developing global standards.

Speaking on emerging risks, our Director General also took part in other events such as a closed-door workshop on emerging risks organised by Harvard University, with key US and European regulators and asset management industry leaders. He was also a member of the MONEYVAL Strategy Review Group that worked out the approach the FATF-Style Regional Body/ Assessment Body will now take to expanding its critically important work over the next period.

Our Chief Adviser of Financial Crime, Hamish Armstrong, took a leading role in the inaugural FATF Supervisors’ Forum, which aimed to identify challenges and propose projects for the FATF to deliver in relation to AML/CFT supervision held by the new Chinese Presidency of FATF in Sanya, China. Subsequently Hamish was asked to co-chair the FATF working group to develop new guidance for supervisors in this key area. When the well-known Toronto Centre in Canada recently compiled guidance for regulators across the globe on how to do risk-based supervision, it singled out the JFSC as an example of good practice.

As an organisation, we participated in four GIFCS regulatory colleges in relation to trust company businesses with a multi-jurisdictional presence and we took part in seven banking colleges where businesses’ home regulators are in the UK, Switzerland and South Africa.

Registry

We have an international reputation for being a centre of excellence for our registries. Global standard setters and the international registry community consider Jersey to be in a leading position for our central register of beneficial ownership and control. During 2019, FATF explicitly recognised this in its newly published guidance, highlighting the work of the JFSC to develop good practices in this area.

We have worked tirelessly to uphold that standard, in particular by satisfying the Exchange of Notes signed between the Jersey and UK Governments in 2016. This agreement is in place to ensure that we keep our register accurate and up-to-date, and that we share highly sensitive information with trusted international law enforcement agencies and tax authorities on request. Following the first mutual review of the Notes, we achieved a positive review in 2019, demonstrating that we are maintaining our exemplary standards.

In late 2019, members of our Registry team attended a workshop in Rome, Italy, on beneficial ownership and control.

Our Registrar Julian Lamb is highly respected in registry circles and is a member of a number of Boards, including the International Association of Commercial Administrators (IACA) and the European Business Registry Association (EBRA). Ensuring the Island is benchmarked and positioned correctly, Julian represented Jersey at other fora during the year.

Connecting with our domestic stakeholders

Closer to home, and in September 2019 we hosted three seminars in one day for circa 900 Industry practitioners to update them on our supervision and registry activities. The supervisory outreach had a particular focus on fighting financial crime and our new Financial Crime Examination Unit, while our Registry event, co-hosted with the Government of Jersey, outlined the new Registry Law and associated processes for Registry customers.

Every year we engage with the local trade associations and Jersey Finance to update and raise awareness of key regulatory matters. 2019 was no exception with members of JFSC staff presenting at events held by STEP, the Jersey Compliance Officers Association, the Jersey Association of Directors and Officers, the Jersey Association of Trust Companies and Jersey Finance.

We equally engaged regularly with the Jersey Bankers Association, Jersey Law Society, the Jersey Funds Association and the Jersey Gambling Association. We also presented at numerous events arranged by Jersey law firms and attended a number of ‘round- table’ and panel discussions arranged by regulatory consultancy firms.

We held regular meetings with the Channel Islands Financial Ombudsman and, through the Jersey Consumer Council, we delivered several lunchtime talks to members of the public about what good financial advice looks like.

We also further developed our working relationship with the Government of Jersey so that we could complete the development of the Registry Law and Limited Liability Companies legislative packs.

During the year, a Registry Law Working Group was established with JFSC-wide representation. Heading into 2020, the group had produced the third version of the law drafting for review, which was ready for the launch of the Government’s public consultation.

Collaborating on innovation

The work we do in the Fintech space really gained momentum in 2019, as we started to take an even more proactive approach to working with local agencies and innovators. Consequently, we saw the number of Fintech related enquiries we received during the year double, compared to 2018, and triple from 2016.

Innovators continue to face challenges in gaining traction in this globally regulated and complex sector and we are strongly committed to working with them to roll out viable and internationally credible products.

Having launched our dedicated Innovation Hub in 2014, we increased our activities during 2019 by starting to engage with businesses at an earlier stage and working more closely with the Government, Digital Jersey and Jersey Finance on emerging technologies. We helped to develop the Island’s first Fintech roadmap and our Fintech lead started to base herself at Digital Jersey for one day a month to offer on-hand informal support to start-up businesses. This type of activity will continue in 2020 and beyond.

On the international stage, we joined the Global Financial Innovation Network, a group of 57 regulators and observers from around the world who are focussing on cross-border testing, regulatory technology and collaboration. 2019 saw us participate in a pilot for cross-border testing.

We continued to be involved in the IOSCO groups for Fintech and Initial Coin Offerings, having attended two Fintech conferences and one Hackathon.