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MONEYVAL last visited Jersey in 2015 to assess the Island’s regulatory regime.  MONEYVAL will be making a further assessment in 2023.  This article considers what this visit means for Jersey and its financial services sector.

What is MONEYVAL?

MONEYVAL is a Council of Europe backed Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism.  It helps ensure members comply with international standards to help combat terrorist financing and money laundering in accordance with the Financial Action Task Force (FATF) recommendations.  MONEYVAL assesses and then reports upon the practical implementation by jurisdictions of FATF’s recommendations.

In 2015 MONEYVAL produced a 300-page report on Jersey’s legislative, regulatory and financial compliance framework and its effectiveness in deterring money launderers, terrorists and bad actors.  MONEYVAL’s on Island assessment was completed through site visits and meetings with representatives from the Government of Jersey, the JFSC and the private sector.  MONEYVAL met with around 110 individuals over 35 meetings to examine and probe the implementation and effectiveness of Jersey industry’s procedures.  MONEYVAL graded how compliant Jersey was against a standardised compliance scale following its visit.  Jersey performed well in 2015 and was compliant with 48 of the 49 FATF recommendations.  However, it was negatively marked for its perceived lack of enforcement against businesses for their non-compliance.

When is MONEYVAL’s next visit?

The next MONEYVAL visit and assessment are due in 2023.  Its primary focus will be on regulated entities.  Ahead of MONEYVAL’s assessment, the JFSC has been visiting, and will continue to visit, Jersey businesses to review policies and procedures.  Where it finds a breach of JFSC guidelines, the regulator is likely to impose civil penalties on the offending party.  Penalties may be imposed against individuals as well as businesses.

Why is enforcement action by the JFSC such a hot topic?

If MONEYVAL gives Jersey an unfavourable report, FATF can ‘blacklist’ Jersey as a jurisdiction.  This means that Jersey would not be recommended as a jurisdiction that complies with international standards.  Iraq has only recently had their blacklisting status removed after 6 years of being deemed high risk.  The impact on Jersey of a negative or average report could be dramatic, and the Island could lose significant business to other jurisdictions.  

The JFSC has increasingly, since the last assessment in 2015, been willing to take more robust enforcement action against regulated entities for non-compliance with JFSC codes.  

The JFSC wishes to demonstrate it is enforcing its regulatory framework before MONEYVAL’s visit.  The JFSC is under scrutiny itself and wants to demonstrate a track record of enforcement to achieve the highest marks possible in MONEYVAL’s report.

How should businesses prepare for MONEYVAL’s visit?

Regulated entities must ensure they have the necessary policies in place to evidence their compliance with the JFSC codes and guidelines and demonstrate that such policies are being implemented.  Businesses should expect to be visited by the JFSC prior to 2023 and prepare accordingly.  Businesses should look at strengthening their processes and providing AML and CFT training to all staff.