The regulators in the Channel Islands, the Jersey Financial Services Commission (JFSC) and the Guernsey Financial Services Commission (GFSC), have relaxed certain requirements in order to alleviate some of the current pressures faced by regulated businesses and provided guidance on which regulatory requirements should be prioritised.
Deadlines – the JFSC has extended the deadlines for the submission of audited financial statements by 3 months, subject to notification of the JFSC within 10 business days of the original deadline. The submission of fund statistic returns for Jersey collective investment funds and fund services businesses have also been extended to 40 business days after the quarter end (previously 20 business days) and the supervisory risk date collection exercise deadline has been extended to 30 April 2020.
Adequate financial resources – in light this requirement in each Code of Practice, regulated businesses are advised to monitor their financial position and solvency frequently and to formally document that the entity can maintain adequate resources to meet their commitments.
Outsourcing – a detailed review of outsourcing arrangements (including contingency plans) should be carried out by regulated businesses as soon as possible if it has not been done already.
Notifications – regulated business are urged to continue to make required notifications (preferably in writing rather than telephonically) under the Codes of Practice, particularly as the JFSC uses this information to identify risks and trends.
Regulatory span of control – although temporary absences of senior individuals responsible for governance and management of regulated business are allowed under the Codes of Practice, businesses should identify other individuals who can step in if needed and such individuals may need to submit personal questionnaires to the JFSC as a precaution (prior to their roles becoming critical). Businesses are also expected to ensure that (i) their governance arrangements allow for continuing monitoring and control, (ii) there is appropriate sharing of responsibilities and separation of critical function, (iii) changes to policies and procedures are documented and included in business continuity plans and (iv) regulatory supervisors are actively engaged.
AML/CFT requirements – the use of alternative methods to identify customers under Jersey's AML/CFT regime should be considered (e.g. use of smart phones and tablets) as applying traditional methods may be challenging (e.g. face to face meetings and certified documents). Suspicious activity must still be reported as usual and the JFSC have asked to be notified of attempted or successful cyber-attacks and fraudulent activity.
Compliance monitoring – regulated businesses are advised to continually maintain and execute their compliance monitoring programme, re-asses the risks their business is exposed to and to update their compliance control testing.
PI Insurance – insurance policies should be revisited to ascertain if any notifications to insurers are required and that they still meet the adequate insurance requirement under the Codes of Practice.
Communications – the JFSC can be contacted via email/portals but if any documents that require signature are submitted to the JFSC, businesses are required to maintain records which identify the signatory, record their approval and are reliable and appropriate. Electronically signed or confirmatory emails are also temporarily accepted for personal questionnaire declarations.
Deadlines – the GFSC has made changes to its expectations about the filing of financial returns, for which certain significant deadlines are impending. The returns in question include audited financial statements for fiduciary and investment licensees and funds registered or authorised by the GFSC and annual and half-yearly returns (as applicable) for those funds, and licensees under the fiduciary, investment and insurance regulatory regimes. Specifically, any of the above returns which would ordinarily require auditing (e.g. because they relate to a year end result) may be submitted in an unaudited form without a special concession being sought. Those financial returns for registered and authorised funds and licensees under the fiduciary, investment and insurance regulatory regimes which would require submission by the end of April 2020 (ie in relation to such entities with the previous financial year ended 31 December 2019) may be submitted at any point before the end of May 2020 in unaudited form. Similarly, the deadline for submission of unaudited returns for other such entities with a non-calendar financial year, is extended by 1 month. As things stand, the GFSC will expect audited versions to be submitted for all such funds and financial services businesses by the end of October 2020 (although this deadline is being kept under review and may be extended in due course).
Adequate financial resources – the GFSC expects fiduciary and investment licensees to manage their financial and operational resilience including actively managing their liquidity and monitoring their financial resources requirement, to ascertain whether the current climate requires an adjustment to the manner in which such entities comply with those obligations and to ensure such entities can continue to satisfy them in this climate. Such entities should report to the GFSC immediately if they believe they will be in difficulty in satisfying any of these requirements.
Regulatory span of control – the GFSC does not require firms to notify any changes to business plans resulting from increased home working to comply with Public Health guidance, but does expect early contact from any firm experiencing difficulties in being able to comply with its business plan or other regulatory requirements because of difficulties associated with working from home. The GFSC acknowledges that firms may need to make more use of alternate directors for some key meetings and appoint them at short notice and has therefore advised it will endeavour to expedite the approval of certain appointments. The GFSC is maintaining its efforts to monitor financial stability issues across the financial services sector. As part of this, the GFSC considers it essential that firms continue to make accurate regulatory returns in a timely manner.
AML/CFT requirements – as verifying the identity of customers by face to face meetings or the other usual means by which customers can be identified (eg providing certified copies of documents) may not currently be feasible, the GFSC has reminded firms that electronic verification of the identity of customers is permitted. It has issued guidance on verifying the identity of an individual through a video call on a smartphone, webcam or similar device. The GFSC has warned licensees to stay attuned to the heightened risk of fraud and cyber crime during this period of disruption to the normal operation of firms in the Bailiwick and to ensure that potential weaknesses in processes and procedures are fully assessed, addressed and documented and that all relevant staff are made aware of the increased risk.
Communications – the GFSC has adapted its usual procedure of requiring "wet ink" signatures on application forms and online services agreements (required to obtain access to the online portals), where this is not possible due to a lack of printing/scanning capability, by permitting photographs and handwritten declarations copied from application forms.
For further details, view the full list of the GFSC's statements on COVID-19.
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.