Jersey publishes first risk assessment for money laundering

Wednesday 30 September 2020

Jersey has published its first official assessment of the risk of the island being used by criminals to launder the proceeds of crime.

The Island had to act because the international standard setter on financial crime – called the Financial Action Task Force – recommended that every finance centre carries out a ‘National Risk Assessment’ to identify, assessment and understand their money laundering risks, and take action to mitigate them.

Jersey’s own assessment of itself is that, overall, it does a pretty good job - but the report does identify areas of improvement.

Areas scoring badly included the quality of Jersey’s anti-money-laundering policy and strategy and the quality of intelligence gathering and processing with the police’s financial intelligence team.

Among other areas, the Island scored highly in the integrity and independence of its financial crime prosecutors, the effectiveness of its definition of money laundering crimes and the quality of its border controls.

Pictured: Jersey's risk 'heat map', which places various sectors relative to the threat posed by, and their vulnerability to, money laundering.

The 22 recommendations of the report address the weak areas. They include ensuring that policy development is “sufficiently resourced and agile enough” to develop and co-ordinate a policy response to emerging threats; and to “determine whether there are specific reasons for the lack of data available in evidencing money laundering investigations."

The report includes a risk 'heat map’, which a general overview of where money-laundering risks lie in Jersey. It puts the Island’s three biggest areas of financial activity - banking, funds and trust – at the highest level of risk but adds this is understandable considering the size and scale of these sectors.

Externally, it concludes that there needs to be a better country-by-country understanding of risk by trust companies, banks, fund providers and lawyers, especially when doing business with Hong Kong, India, Ireland, Kenya, Russia, Switzerland, the UAE, UK and USA.

Jersey’s National Risk Assessment, which is based on data taken from 2013 to 2018, does not cover the risks of terrorist funding and crypto-currency but these will be covered by future reports. An update of the assessment will also be published next year.

Pictured: Jersey's 'vulnerability' table, which is based on a 0 to 1 scale, 0.1 being 'very poor' and 0.9 being 'very good'.

The Government, who wrote the report in collaboration with the JFSC, industry representatives and the police, will now implement the recommendations, which they hope will be in place before the next Moneyval inspection in 2023.

External Relations Minister Ian Gorst, who also has political responsibility for the finance industry, said: “Financial crime is constantly evolving and becoming more sophisticated and complex, meaning that new threats are regularly emerging for Jersey. 

Pictured: External Relations Minister Ian Gorst.

“As an international finance centre, Jersey is inevitably exposed to money laundering threats. We have a social and economic duty to detect and prevent these threats and we undertake this responsibility with the utmost diligence.

“This report represents Jersey’s next step in the continually evolving call upon jurisdictions by the global community to assess in more detail the financial crime risks that they face and do more to prevent illicit finance worldwide.”

Click here to read the full report.