Introduction

In the first prosecution of its kind in Jersey, the Royal Court has acquitted Michelle Jardine (represented by Advocate Nuno Santos-Costa) and STM Fiduciaire Limited (“STM”) (represented by Advocate David Steenson) of charges under the Proceeds of Crime (Jersey) Law 1999 (POCA).

Lasting for four days, the result of this trial should give a measure of comfort to financial institutions, MLROs and directors of companies alike whilst also highlighting the importance of these roles in assessing risk and combating cross-border crimes and the associated POCA (money-laundering) offences.

BACKGROUND

Mrs. Jardine and STM were charged with alternative offences of failing to report under 34A and 34D of POCA.  Both of the charges under POCA relate to a failure to disclose information to the Jersey Financial Crimes Unit on the basis of information received.  The offences carry with them penalties of up to 5 years imprisonment.

It was alleged that Mrs. Jardine knew or suspected or had reasonable grounds to know or suspect that a person was engaged in money laundering.

The distinction between the two charges relates to whether

1. such information was received in the course of a trade, profession, business or employment or
2. Whether the information came to them in the course of carrying out a financial services business.

THE CASE

The alleged offences related to actions that took place between 1 May 2011 and 30 June 2011. At that time, Mrs. Jardine was

1. the designated MLRO and director for STM and
2. A director of a company known as Henley & Partners a non-regulated company that was a client of STMs.

It was the Prosecution’s case that Mrs. Jardine and STM failed to report a ‘suspicious’ transaction involving a politically-exposed person (or PEP) from a high-risk jurisdiction, in circumstances where the funds were remitted to them by an unknown third party.

EVIDENCE

The Royal Court heard evidence from

1. JFSC officials,
2. members of the Jersey Financial Crimes Unit,
3. As well as from Mrs. Jardine.

During the course of this evidence the Court heard was referred to

1. the Codes of Practice issued by the JFSC and
2. To the various factors to be considered when assessing whether or not there is a risk of money-laundering.

Defence Argument

Once all of the evidence was heard it was argued by Defence counsel that, in deciding to convict under either of these offences, the Court would set an extremely low criminal threshold for the finance industry as a whole as to when suspicious activity reports should be made.

CLOSING

This is the first time anyone has faced a criminal prosecution for failing to file a Suspicious Activity Report and follows the infamous Caversham case from 2005 for a breach of the money laundering jersey order

This Judgment has shown that, with prudent and diligent background searches, when dealing with PEPs and high-risk jurisdictions, the processes undertaken by Mrs. Jardine can withstand scrutiny.

This said with the new found powers civil regulatory sanctions, alarm bells should still sound, as the process that was afforded to STM and Mrs. Jardine by the courts may not be afforded by the Commission.

Furthermore the timing of the prosecution is interesting in light of Moneyval’s criticism for having so few money laundering prosecutions.  This leaves the question whether Jersey and its regulator still wish to ensure those that are caught not meeting the standard are subject to the strictest sanction as afforded by the law and financial sanction?