Registry Supervision and how it will affect you

Overview

Jersey is committed to maintaining its compliance with international standards. This includes the Financial Action Task Force (FATF) standards on transparency, specifically Recommendation 24 which requires jurisdictions to ensure that there is adequate, accurate and up-to-date information on the beneficial ownership and control of legal persons that can be accessed by the competent authorities in a timely manner.

Jersey introduced the Financial Services (Disclosure and Provision of Information) (Jersey) Law 2020, the Financial Services (Disclosure and Provision of Information) (Jersey) Regulations 2020 and the Financial Services (Disclosure and Provision of Information) (Jersey) Order 2020 (collectively, Disclosure Law) to implement this international standard. The Disclosure Law, which came into force in 2021, provides us with the legal authority to collect, maintain and authenticate information in relation to significant persons, beneficial owners (including controllers) and members of legal persons.

To be effective, and to demonstrate compliance with the Disclosure Law, in 2022 we developed a pro-active monitoring mechanism in the form of the Registry Supervision Inspection Programme to authenticate and verify information on our registers.

Registry Supervision Inspection Programme and JFSC Supervision

In other jurisdictions, the regulator who is responsible for supervision of compliance with financial crime legislation is separate from the organisation who maintains that jurisdiction’s companies, business, legal persons or other registers. In Jersey, these functions both sit within our organisation, but the Registry Supervision Inspection Programme is physically and operationally separate to our regulatory Supervision team.

In addition to the provisions under the Disclosure Law as set out above, other Registry Supervision Inspection Programme powers come from the laws which establish Jersey’s registry, the product laws, the Control of Borrowing (Jersey) Law 1947, the Security Interest (Jersey) Law 1983 and 2012 and ancillary regulations and orders (Registry Laws). The Registry Laws can be found here: Registry legislation — Jersey Financial Services Commission (jerseyfsc.org). Our Supervision team’s primary function is to oversee regulated businesses and individuals to ensure they meet their relevant legal and regulatory obligations, including compliance with Jersey’s financial crime legislation, the AML/CFT/CPF Handbook (Handbook), and sector Codes of Practice (Supervision — Jersey Financial Services Commission). The distinct legal frameworks each of our teams operate under are complementary but are designed for different objectives.

Legal framework

Under the Disclosure Law, all companies and other legal persons (herein referred to as the ‘relevant entity’) must provide detailed verified information at incorporation and annually in relation to its:

• significant persons
• beneficial owners (including controllers)
• members/shareholders

This information must be kept up to date. The relevant entity must notify us of any change, error or inaccuracy in relation to beneficial owner information or significant person information (or any other prescribed information) within 21 days of becoming aware of it.

Failing to update this information within the prescribed period without a reasonable excuse is a criminal offence and the relevant entity and the significant persons may be liable to prosecution. In addition, there are late filing fees, which increase on a monthly basis, which can be viewed here: Registry fees — Jersey Financial Services Commission.

If a relevant entity does not comply with the requirement to keep this information up to date, the Registrar may also send a notice to the entity stating that, unless the entity complies with the requirements within 3 months of the date of the notice, the name of the entity may be struck off the register or the registration of the entity may be cancelled and the entity will be dissolved (as applicable).

Relevant entities are also required to submit an annual confirmation statement verifying that certain information provided to us in relation to the entity remains accurate. This includes the beneficial owner information, significant person information and other prescribed information (including details of registered office, details of the members and the relevant entity’s share capital (as applicable)).

The annual confirmation statement must be submitted each year after the year the entity was established and should be filed between 1 January and the end of February. Further detail on the annual confirmation statement can be found here: Annual confirmation — Jersey Financial Services Commission.

Registry Supervision Inspection Programme objective

A core focus for the Registry Supervision Inspection Programme is to ensure basic beneficial ownership and controller information is adequate, accurate and up to date and can be made available to competent authorities.
Registry Supervision Inspection Programme tasks may include:

• inspection meetings are conducted both on and offsite in relation to authenticate information provided to the Registry
• the review of data submitted to Registry to highlight and investigate anomalies
• screening of information held in the Registry database
• regular review of public information sources, including:
  
  • court reports
  • Jersey Gazette
  • Viscount publications
  • local, national and international news reports and publications
  • internet searches

What this means for Jersey relevant entities

Registry Supervision Inspection Officers are required to authenticate information submitted to Registry by the relevant entity; the authentication process is to confirm that a person such as a beneficial owner, controller or significant person is who they say they are. This can be achieved by:

• reviewing original documents
• reviewing any additional or supporting documentation
• making enquiries about the legal person and its ownership

This approach is designed to create a robust framework where we can be confident that the information we hold is in line with international standards.

Inspections

Our Registry Supervision team will arrange onsite inspections at the registered office of the relevant entity or invite representatives of the relevant entity to our office to authenticate the information submitted to Registry.

Local business inspections

For local businesses, visits will be arranged in advance and, where possible, will be arranged to fit in with your day-to-day activities. Please contact us if you need to rearrange this visit.

Regulated sector inspections

For entities in the regulated sector, the Registry Supervision team is not required to be onsite to conduct inspections. Trust Company Service Providers (TCSPs) may submit the necessary documentation electronically, allowing our team to carry out the inspection as a desk-based review from our office.

As part of the inspection process, the Registry Supervision team will select a sample of relevant entities from each TCSP. This sample will typically represent approximately 30% of the total entities associated with the TCSP and will be proportionate to the size and complexity of the provider.

To ensure efficiency and minimise disruption, the Registry Supervision team will work closely with our broader Supervision team. Where a TCSP is subject to a Supervision examination, both teams will coordinate their efforts to align inspection activities wherever possible.

Please note that most Supervision examinations will include a Registry review component.

Registered offices - private residences

Where the registered office of a relevant entity is a private residence, the nominated person, a director or the secretary of the relevant entity can attend our office with the documentation needed for authentication of the records or the Registry Supervision Inspection Officers may visit the private residence.

Information and documentation to be reviewed and authenticated

Pursuant to the Disclosure Law, we (via the Registry Supervision Inspection team) have the power to require a relevant entity to authenticate any information or document provided under the Disclosure Law in any manner we reasonably determine.

This is a wide remit and, in addition to beneficial owner information and significant person information, can include details of the nominated person, details of nominee shareholders and nominee directors and anything that may be included in the annual confirmation statement.

The information the Registry Supervision Inspection Officers may request to authenticate the accuracy of this data includes (but is not limited to):

• identification and address verification on all individuals named on the annual confirmation statement (for example, photographic ID and utility bills)
• register of directors, secretary and members
• statutory information where corporate bodies are used
• declarations of trust, where applicable

However, the Registry Supervision Inspection team reserves the right to request any other information or documentation that is reasonably determined as being required to authenticate any information or document held by Registry in connection with the Disclosure Law. Our team will also be using existing data from our registers to ensure the accuracy of information previously submitted. For example, this could include checking that the associated party information has been updated for all relevant entities to which an individual is connected.

Authentication exemption in certain circumstances

One of the requirements under the Disclosure Law is that a relevant entity must verify within its annual confirmation statement the name and address of each member who holds 1% or more (in nominal value or in number, as applicable) of all the issued shares of a class, and our Registry Supervision Inspection team can require the relevant entity to authenticate those details. However, the Disclosure Law grants our Registry Supervision Inspection team discretion to require the authentication “in any manner reasonably determined”.

It is generally accepted that individuals with less than a 25% shareholding, voting or appointment rights are unlikely to have significant influence or control over an entity. To align the Disclosure Law 1% or more membership authentication threshold with our Handbook and standards set by the FATF, the Registry Supervision Inspection team will not require authentication of information or documents provided to us for members of a relevant entity who hold less than 25% (in nominal value or in number, as applicable) of all the issued shares of a class. This exemption will not apply where the relevant entity is considered to carry an associated heightened risk. Those risks may include (but are not limited to):

• the relevant entity being connected to a high-risk jurisdiction
• beneficial ownership and/or control, or any of the relevant minority shareholders, is / are associated or connected to a high-risk jurisdiction
• the activity of the relevant entity is sensitive and captured in either table of our Sound Business Policy — Jersey Financial Services Commission
• credible intelligence we receive from a variety of sources indicates that the relevant entity is exposed to other high risks

For the avoidance of doubt:

• whilst the Registry Supervision Inspection team may not require the relevant entity to authenticate the information of members who hold 25% or less (in nominal value or in number, as applicable) of all the issued shares of a class, the relevant entity must provide us with verified information in accordance with the Disclosure Law
• the authentication exemption does not apply to significant persons of the relevant entity notwithstanding they may hold a less than a 25% shareholding and the exemption otherwise applies to the relevant entity
• the exemption does not affect the powers of our Registry Supervision Inspection team to require an entity or its nominated or significant person to provide any information required by us pursuant to the Disclosure Law or any other law
• our Registry Supervision Inspection team operate within the Registry Law framework which is distinct from Jersey’s financial crime laws

After the inspection

Our Registry Supervision Inspection team will inform the relevant entity of any identified issues; these will be documented in the findings letter. The remediation of issues should be completed within 21 days. If the remediation is not completed within 21 days, we will issue further correspondence. Failure to collaborate with us may result the relevant entity being issued with a fine.