The Government, further to consultation with the Jersey Financial Services Commission ("JFSC"), has recently published an Order clarifying the scope of the Proceeds of Crime (Duties of Non-Professional Trustees) (Jersey) Order 2016 (the "NPTO") (the "Order").
The Order
The Order makes the following proposed amendments to the NPTO:
- clarifies that the NPTO only applies to natural persons, such that legal persons should not be considered non-professional trustees under the NPTO; and
- aligns the terminology of the NPTO with terminology adopted by the financial action task force (the "FATF"), by replacing the existing term "by way of business" with the FATF term "as a business".
In particular, Article 2 of the NPTO, which sets out its application, is substituted as follows:
This Order applies to a natural person –
a)who is acting as a trustee of an express trust (as defined by Article 1(1) of the Financial Services (Jersey) Law 1998); but
b)whose activity is not conducted as a business.
The Government, in setting out their rationale for the proposed amendments, highlight that they reflect the original intention behind the NPTO, and findings of the recently published 'Legal Persons / Legal Arrangements National Risk Assessment' (the "LPA NRA").
The proposed amendments also reflect the Government's continued and proactive management of national anti-money laundering and countering the financing of terrorism and/or proliferation ("AML/CFT/CPF") risks, as they evolve.
Amended Guidelines
Having considered both the LPA NRA and the proposed amendments to the NPTO, the JFSC proposes to amend its 'Guidelines on interpretation – Article 36 of the Proceeds of Crime (Jersey) Law 1999' (the "Guidelines"). We expect the amended Guidelines to clarify that legal persons, such as private trust companies ("PTCs"), and other corporate bodies, will be considered to be acting "as a business" where they act as a trustee of an express trust.
Effect
These developments provide welcome clarification in respect of the application of the "as a business" test to PTCs, and other corporate bodies, acting as a trustee of an express trust. However, they also confirm that these entities may well be within scope of registration under the Proceeds of Crime (Supervisory Bodies) Law 2008 (the "Supervisory Bodies Law"), and thus subject to AML/CFT/CPF obligations.
These entities may, however, have the benefit of being eligible to appoint an anti-money laundering service provider ("AMLSP") to assist them in meeting their AML/CFT/CPF obligations, thereby mitigating the operational impact of the proposed amendments to the NPTO.
Next steps
The Order was made on 22 August and is coming into force on 29 August 2023.
Further to the issuing of the Order, the JFSC is now asking all PTCs to regularise their position by registering with the JFSC under the Supervisory Bodies Law. The JFSC further indicates that it will work with industry to facilitate registration of entities in a reasonable and timely manner, and highlights that it exercises its powers reasonably and proportionately and looks at any breach of requirements on a case-by-case basis.
In light of this development, PTCs, and other corporate entities, acting as a trustee of an express trust not currently registered under the Supervisory Bodies Law, will need to consider/re-consider their registration requirement under the Supervisory Bodies Law.
Our dedicated regulatory risk and advisory team has extensive experience in advising on, and assisting with, schedule 2 registrations under the Supervisory Bodies Law, and is on hand to assist in this assessment and/or registration, where required. We will also keep clients updated as the schedule 2 registration regime continues to develop.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
