Our 2020 priorities

Our key projects for 2020 can be categorised under our three strategic priorities to:

• Build even more effective supervision
• Embed risk-focused choices throughout our work
• Strengthen our organisational resilience.

In each case, we will have a particular focus on the financial crime threat. While the forthcoming MONEYVAL assessment is driving an Island-wide programme in which we play an important part, we believe that our ability to tackle financial crime over a prolonged period is crucial to maintaining Jersey’s international reputation.

Build even more effective supervision

Good regulation requires effective legislation, policy, codes, guidance, reporting, data analysis, examinations, remediation oversight and enforcement. From this year, increased attention turns to analysis, examinations, remediation oversight and enforcement (collectively: Supervision).

We have already been working for the last three years to develop our approaches to day-to-day supervision and have made significant progress. In 2020, we will take this further.

While the core focus of our supervision activities for the year ahead will be to strengthen our effectiveness at fighting the financial crime threat, we will also develop further our approach to supervising business conduct and prudential matters.

As part of our programme to become even more effective supervisors and improve our regulatory framework, in 2020 we will be:

Focusing on fighting financial crime by:

• conducting an increasing number of financial crime compliance focused examinations
• completing the National Risk Assessment with the Government of Jersey and, where relevant, leading the implementation of any changes
• identifying and proposing solutions for gaps in Jersey’s Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) regime
• building statistical evidence to show Jersey’s effectiveness in fighting financial crime using supervisory risk data
• exploring with Government the appropriate regulatory regime for non-profit organisations, money or value transfer services, and virtual asset service providers
• developing our supervisors’ capabilities through structured training and development so we are recognised as an AML/ CFT centre of excellence
• increasing significantly our engagement with Industry on AML/CFT risks and how to tackle them
• preparing for the next MONEYVAL assessment under Government’s leadership
• completing our working group review on the potential for an initiative to control costs of KYC business models.

Developing our supervisory approach by:

• redesigning, where appropriate, our day-to-day internal supervisory processes and the supporting technology, so we can continue to improve the way we use our supervisory data. This will allow us to make the most efficient use of our skilled resources and develop the most rounded and insightful perspective on the businesses we supervise
• developing further our coordination between front-line supervisors and our enforcement team and increasing our engagement with relevant regulated businesses. This will help us achieve the most effective case management process when we do uncover issues, so that remediation programmes, settlements and Enforcement proceedings are focused on achieving the greatest benefit
• conducting careful testing of our new risk system via an expanded examination programme so that we can refine, develop and further improve it
• improving the way we record and manage information so we can demonstrate our supervisory effectiveness. We have to continue to evolve in light of new challenges facing the Island and any potential responsibilities that we may take on in the future. In 2020 this is likely to include work in respect of developing a supervisory approach for Consumer Lending and Pensions regulation.

Resolution Authority

Having the capacity to participate in the orderly resolution of banks is an important part of being a competent and professional financial services centre. The Bank of England, for example, has set out its expectation that UK banks will be resolvable by 2022. Other major jurisdictions have similar targets. Jersey must have a resolution regime in place to demonstrate competence to the relevant UK and international authorities.

We have engaged positively with the Government of Jersey about the option of the JFSC carrying out this function, which we welcome. In the event that it sits with us, we will form a separate resolution function within the organisation and begin this important work. This will require careful and measured interaction with banks based in Jersey.

Closely related to this, we will develop our working relationship with Government’s advisory body on the financial stability risks faced by the Island’s economy as a whole, the (interim) Financial Stability Board.

Embed risk-focused choices throughout our work

Making risk-focused choices is about concentrating our resources, and predominantly supervisory activity, on those regulated businesses that pose the greatest risk to consumers, Industry and Jersey’s reputation. Achieving proportionate risk-focused choices is at the core of our success as a regulator, just as managing risk effectively is critical for businesses within our community.

For a number of years we have been working to develop our operational capacity so that we can focus dynamically on risk.

In 2020, we will enhance recently implemented systems to improve our data management and foster the relevant skills among our staff.

Rolling out risk systems across all our activities by:

• tailoring supervisory interactions with regulated businesses based on the risk data that we collect and testing whether this improves our supervisory effectiveness
• cleaning, refining and structuring our data to develop improved risk indicators
• building on the 2019 risk model development by refining and enhancing it throughout 2020
• assessing the outputs from our risk model, then calibrating the model to enhance our understanding of businesses, with a view to implementing a revised model by the end of 2020
• enhancing the way we report on activities to demonstrate the alignment of risk, resources and outcomes.

Using data more effectively to inform our decisions by:

• establishing a data management team
• automating more processes related to the risk system so that we focus our people on complex rather than routine matters.

Managing the regulatory risk of innovation by:

• publishing additional guidance to streamline interactions with our Innovation Hub
• liaising with Digital Jersey, at Director General level, on Fintech
• developing a coordinated approach to risk-assessing innovative business proposals across our Registry and authorisation functions
• exploring new ways to work with Industry on new products.

Strengthen our organisational resilience

As we strengthen our organisational resilience, we will be able to assign our resources to tackle changing risks without compromising our effectiveness. This includes making sure that everyone who needs to do business with us can do so in the most straightforward way.

In 2020 we will focus on:

Enhancing our digital interactions by:

• preparing for the automation of more stakeholder interactions by building on the success of current straight-through-processes such as the Jersey Private Fund application
• building new portals, leading to better interaction with us
• continuing to improve our website in line with user feedback.

Modernising our Registry by:

• establishing a new Registry User Group
• comprehensively rebuilding our registry systems
• implementing the new Registry Law
• amending rules and processes to clarify rights and obligations for registry customers
• further improving customer access and experience through our portals and application programming interface (API).

Being even more accessible by:

• ensuring our new portals facilitate more effective Industry interactions
• supporting an externally-led review of our authorisations process to ensure we get the balance right between flexibility to support new business and robust checks to contribute to reducing the risk that investors and consumers may face.

Ensuring our finances are stable and sustainable by:

• reviewing our cost controls and financial management approach
• working with all our stakeholders to review our fee structures.

Developing and supporting our staff by:

• centralising our operational risk assessments
• implementing a new approach to staff career development
• developing the next stage of our internal staff training programme, focused on financial crime
• developing new employment options for temporary and part-time staff including ‘return-to-work’ parents
• measuring our environmental impact.