Business Plan 2019 Sli.do Q&A - JFSC response - the Jersey ...
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Business Plan 2019 Sli.do Q&A - JFSC response 1. How many civil penalties are likely to be imposed in the next 18 months? Civil Financial penalty legislation was amended in 2018 to allow for the imposition of a civil financial penalty against a Registered Person owing to a significant and material negligent breach of the codes of practice. We anticipate that the change in the law will result in civil penalty cases being processed through our Decision Making Process. As yet it is too early to accurately assess how many cases may be subject to a civil financial penalty. 2. Is the NRA exercise an independent exercise to the current Supervisory regime? As outlined in the feedback paper on Consultation Paper No. 7 2017 'Data for Risk Based Supervision', issued in February 2018, we are committed to capturing sufficient data to support risk based supervision across all aspects of the regulatory framework: prudential, conduct and financial crime. As a result, our recent and ongoing data collection exercises will be used: › To develop our risk based approach to supervision › In aggregated form as part of the Island's National Risk Assessment › To inform the development of further data collection and reporting requirements. › We decided to align these exercises for multiple purposes in order to minimise Industry impact. 3. The GFSC Director General came from the Central Bank of Ireland (CBI) and implemented its Prism supervisory methodology. Now Martin has arrived from the CBI, is Jersey also about to implement Prism and seek alignment with Guernsey? During 2018 we completed a major restructure of the supervisory operating model in order to enhance our risk based approach. As part of this work we agreed the risk model design to capture all aspects of our supervisory responsibilities and we are well advanced in the development of this, which is on track to be operationalised in 2019. 4. Will the Supervision Examination teams also look at AML as well as the new AML team? The remit of our Financial Crime Examination Unit (FCEU) will be to undertake cyclical examinations of those entities which are considered to be inherently high or medium risk in relation to money laundering and terrorist financing. These examinations will consider the full control environment of the entity. The team will sit alongside the existing Supervision Examination Unit (SEU) and where possible will follow the same methodology and timeframes to ensure consistency of approach. The SEU will continue to lead on thematic examinations which may include such subjects as AML and CFT. Page 1 of 5
BP19 Q&A 5. Is the JFSC open to secondments from Industry to help resource the new Financial Crime team? Secondments to the JFSC from Industry and regulators from other jurisdictions have worked well over the years and we are therefore keen to explore all options. We are of course always mindful of managing any potential conflicts appropriately and ensuring sustainability in terms of our resourcing. 6. Will Enhanced Customer Due Diligence be one of the areas for the JFSC to look into? Maybe something for the new AML/CFT team? A relevant person may already use other tools and/or methods to undertake customer due diligence measures, so long as those methods comply with the Money Laundering Order. We would expect firms to be able to demonstrate and explain particular risks with any technology that is just as robust as the traditional methods outlined in the AML Handbook. Our use of technology is a key focus in terms of efficiency and effectiveness and we continue to explore how we can use technology to collate and evaluate data to support our risk based approach to supervision. 7. Under Basel 3, will Jersey consider EU sovereign bonds as risk free? If so this is a massive mistake. The Basel Committee concluded that no specific changes were required regarding the treatment of holdings of sovereign bonds. We will consider the general enhancements proposed in Basel III to risk assessment as part of work on the implementation of Basel III. No holdings, sovereign or otherwise, are exempt from risk assessment, either now or under the proposals. 8. Does the JFSC have plans to look at the rules and guidance issued in relation to PEPs to bring us in line with our peers and international standards? The Jersey Financial Crime Strategy Group consulted on changes to the legal obligations in relation to PEPs in July 2018. These proposals were designed to bring the Jersey regime in line with International Standards and, where applicable, our peers. We expect legislation in this regard to be introduced mid-2019. 9. Mike mentioned 50% of staff work in Supervision, could the JFSC publicise numbers of staff that work in each department so we can understand numbers in each? We have included details of employee distribution on page 5 of our 2019 Business Plan. https://www.jerseyfsc.org/media/2455/jfsc-business-plan-2019.pdf 10. Isle of Man (IOM) has had its first MONEYVAL review under the revised FATF standard and is highly unlikely to get a gold star. Are you talking directly with the IOM regulator to learn from their experience? We are in regular contact with the regulators in the other Crown Dependencies and we monitor the mutual evaluation reports of competitor/comparable jurisdictions with a view to learning from their experiences, both good and bad.
BP19 Q&A 11. Protecting the consumer has been mentioned - the JFSC hasn't issued any information/guidance regarding Data Protection and personal sensitive data - data is now being traded (e.g. Facebook) and the FCA is now looking at how UK institutions like banks use data. What is going to be the JFSC's output and strategy? We publish guidance on our website about how we process personal data and we have a Data Protection Officer who helps individuals with concerns they might have. Our supervisors have also received training in the security controls to look for when reviewing regulated entities’ systems and controls to help them identify whether measures to protect personal data are in place. Where appropriate, we also collaborate with the Office of the Information Commissioner which is the independent statutory authority with responsibility for promoting and protecting the rights of individuals under Jersey’s data protection laws. We intend to build on these measures during 2019, and to engage in further outreach with Industry. 12. What is the JFSC’s stance on the proposed change to the codes in relation to the insurance of the principal persons? Will this not discourage directors in future and deplete further the skilled professional pool? The intent of the Penalty regime is, among other things, to ensure that a financial disincentive exists to deter contraventions of the Codes and that persons cannot expect to profit from a contravention of the Codes. The Law change was passed unanimously by the States as, in line with established international regulatory practice, the Government of Jersey is of the view that behavioural change is more likely to be achieved when principal persons know that, potentially, they will bear a financial penalty personally for poor conduct. The UK experience with respect to the Senior Manager regime has been that there has been no perceptible impact on the willingness of high quality individuals accepting high-profile positions. 13. Mike, you mentioned in your presentation that for every new initiative introduced, you need to drop another or reprioritise resources. How does this align with Martin’s statement that regulators today need to keep growing in line with increased regulatory demands? I was describing the challenge we currently face - being asked to do ever more at a high standard with existing resources. I think Martin Moloney is referring to the fact most regulators have significantly increased their resources in light of these challenges post the global financial crisis - this is something that Jersey will need to review and consider the resourcing and funding of the JFSC. 14. Did I notice over 23,000 questions relating to the NRA exercise? Does the Commission regard this as a success or could more have been done with Industry before this important programme was rolled out? The 2018 supervisory data collection exercise is considered a success as we collected consistent data across the full spectrum of regulated financial services. Prior to the start of the data collection exercise in March 2018 and in conjunction with the Government of Jersey, we consulted with many Island Trade Bodies and Trade Associations and shared early drafts of the questionnaires and received useful feedback.
BP19 Q&A 15. You discussed Fintech however is Regtech on the JFSC agenda to help Industry map and control changes to regulation that may currently be very manual and time consuming? Absolutely. Regtech is regularly discussed as part of our Fintech agenda with various stakeholders. There are huge efficiency opportunities for both regulator and Industry from Regtech developments. 16. You have mentioned our hard won international reputation - do you think that the blacklisting of Jersey by the Netherlands is a one off or a precursor to further international/European pressure? Only time will tell is the honest answer. Jersey's constructive engagement with the EU code of conduct group could result in a central, co-ordinated, fair and transparent list replacing individual EU member state lists. 17. Do you foresee any changes to regulation or standards as a result of the economic substance law? It is possible that some changes may be necessary depending on the final outcome of that process and any guidance that follows. As usual we will liaise with government and Industry on any necessary changes to our regime. 18. If the UK deregulates after Brexit, how would the JFSC react? There are still multiple permutations as to the outcome of Brexit and it wouldn’t be an efficient use of our limited time to speculate on permutations. The UK, like Jersey, is committed to meeting international standards so we wouldn't envisage a dramatic change in their stance. We continue to have a close and regular dialogue with the UK regulatory authorities in relation to Brexit. 19. When will the change in the results of changes to the code be published by JFSC? If you are referring to the consultation regarding maintenance amendments, we published our final position on 22 March 2019. 20. When will the regulator provide legal and regulatory guidance to Industry on investments into the marijuana industry, which is now legal in Canada, given that clients wish to invest in this sector? There is no current formal position on this subject but we have discussed the topic with Government and further discussions are needed in relation to the Sound Business Practice Policy. Until such time as the position is concluded, issues and applications are being considered on a case by case basis.
BP19 A&A Business Plan 2019 Sli.do Q&A Government response 1. When will arrangements for bank resolution and depositor compensation scheme be clarified? (Government response) The Government of Jersey is currently developing a structural framework for bank resolution in Jersey, and expect to consult with stakeholders in the first half of this year. 2. When will we get guidance on substance rules, our clients are asking for answers! (Government response) The Government of Jersey is committed to providing Industry with as much certainty as possible on the new Economic Substance Law. We have already issued a ‘Key Aspects’ document, an explanatory flowchart, a ‘Q & A document’, and have engaged in extensive discussions with Industry on the application of the law. Relevant documents and contact details for Government on this topic are found here. More comprehensive guidance is under development. 3. Given the concerns over EU relations, is there appetite to better align the MLJO with the EU MLD? (Government response) The Government of Jersey, in collaboration with the JFSC, is working through various tranches of legislative proposals designed to ensure the AML regime remains fit-for-purpose. The changes which may, as a result, be proposed are driven by various external comparators, the most important of which is the 2012 Recommendations of the Financial Action Task Force (FATF). These changes were consulted on last year, law drafting is now ongoing, and a formal response to the consultation will be published in due course. Similarly, the Government will review the EU’s Fourth and Fifth Anti-Money Laundering Directions (AMLDs) along with other external information sources to take account of international best practice and implement changes which further enhance Jersey’s regime. 4. Rather than continually fighting substance battles and incurring costs to address them, is it time to move away from 0pc instead? (Government response) The standard rate of 0% corporate tax is based on two key principles. One is the EU Code of Conduct principle of non-discrimination between resident and non-resident owned companies. The other is the principle of tax neutrality combined with transparency. The Government’s commitment is clear, the Common Strategic Policy 2018-22 includes ‘maintain tax neutrality’ as a direct policy outcome. Page 5 of 5
You can also read