By way of background “Thematic examinations” allows the JFSC to better understand particular thematic risks that cut across a range of firms in a specific sector or affect a sector as a whole.  In conductiong these thematic reviews the JFSC, address thematic risks using a range of tools including

1. questionnaires,
2. on-site visits and
3. guidance.

For 2019 they have identified the following thematic examinations which our Supervision Examination Unit (SEU) will undertake during 2019.

1. Quarter 1 – Outsourcing Arrangements (OA)

2.Quarter 2 – The Role of the Money Laundering Reporting Officer (MLRO)

3.Quarter 3 – Reliance

4.Quarter 4 – Compliance Monitoring

5.Through the year in conjunction with the above – CYBER-SECURITY + OTHERS

These are expanded upon below

6. Quarter 1 – Outsourcing Arrangements (OA)

This will be a continuation of the thematic examination which they started in

a. Quarter 4 of 2018 and will include finalising fieldwork and reporting on any findings.   For the JFSC 2018 update on the above, please click here -http://www.jerseyfsc.org/media/2127/20180809-jfsc-industry-update-q4-thematic-examination-programme.pdf or read below

i. Outsourcing Arrangements (OA) › In response to the industry’s request, on 1 March 2017, the JFSC issued new ‘Outsourcing Policy and Guidance Notes’ 2 (OPGN), which came into effect on 1 June 2017 for all new OAs

ii.Registered persons with existing OAs were also required to adhere to this OPGN 15 months from the date of its publication, that deadline being 1 June 2

iii.Some key changes introduced within the new OPGN included, inter alia, amendments to scope of the Policy, removal of the distinction between ‘delegation’ and ‘outsourcing’ and introduction of a definition of ‘material’.

iv. In light of the above-mentioned changes, the Supervision Examination Unit (SEU) will examine whether registered persons who have OAs,

1. have taken adequate measures to counter any material risks relating to those arrangements and
2. have appropriate systems and controls to exercise oversight over the outsourced activities.

v.In addition, the SEU will review and assess

1. the extent to which registered persons understood the new requirements and adopted the applicable deadlines when it comes to outsourced activities.

7. Quarter 2 – The Role of the Money Laundering Reporting Officer (MLRO)

1. The MLRO plays a vitally important role in ensuring that not only the Registered (or Relevant) Person complies with Jersey’s AML/CFT legislative and regulatory framework but also protects the Island’s reputation as an international finance centre, with high regulatory standards in countering financial crime in Jersey and elsewhere. In this thematic they will therefore consider

1. How the Registered (or Relevant) Person exercises appropriate governance, control oversight and support of the MLRO. For  example,

1. does the MLRO have appropriate independence?
2. Do they have sufficient seniority and authority within the business?
3. Do they fulfil other operational roles within the business and, if so, how is this being managed to ensure it does not impinge on their ability to effectively fulfil their role as an MLRO?
4. Is an independent check on the performance of the MLRO conduct

ii. How the MLRO discharges their obligations under the AML/CFT legislative and regulatory framework. This will include, but will not be limited to,

1. looking at whether all internal SARs are assessed on a timely basis;
2. that the decision of whether or not to externalise a SAR is always documented appropriately; and
3. that externalised SARs contain all the relevant information.

iii. he Quarter 2 Thematic will be led by the SEU, it will also include members of the JFSC’s Supervision Team who are responsible for the supervision of Designated Non-Financial Business or Profession (DNFPBs).

8. Quarter 3 – Reliance

1. In May 2016, Moneyval issued a report summarising Jersey’s position against the 40 Financial Action Task Force (FATF) recommendations (2003) and nine special recommendations (2004).
2. Jersey received a “partially compliant” rating against Recommendation 9 – “Reliance” and concerns were raised around effectiveness.
3. Conducting this thematic will give the JFSC a better understanding of the current use of “Reliance” across all sectors and they  will check adherence to the requirements of Article 16 and 16A of the Money Laundering (Jersey) Order 2008 and the AML/CFT Handbooks.

9. Quarter 4 – Compliance Monitoring

1. The JFSC consider Compliance Monitoring to be the assessment of a Registered Person’s adherence to applicable legislative and regulatory requirements and corresponding controls, and should therefore be an integral part of a Registered Person’s risk management framework.
2. Despite the JFSC issuing previous guidance in relation to Compliance Monitoring[see footnote 1], a repeat finding in recent supervisory examinations (both Thematic and Entity Risk) has been Registered Persons being unable to evidence full compliance with the requirements of the Code in respect of this important Principle.
3. In this identified thematic they will therefore test

         i. the governance and oversight of the compliance function by the senior management of the Registered Person and

         ii. the adequacy and effectiveness of Compliance Monitoring carried out by the Compliance Function/Compliance Officer.

10.CYBER-SECURITY + OTHERS

1. the jfsc aslo sate thet may supplement the above identified themes by additional themed examinations, as required. One such theme is cyber-security and sector specific Supervision Managers will lead a pilot thematic on this during 2019.
2. THE jfsc will issue further information on this theme in due course.

Footnote 1 – http://www.jerseyfsc.org/pdf/CEO-Ltr-re-GN-Compliance-Monitoring-6-December-2013.pdf  – http://www.jerseyfsc.org/pdf/GN-Compliance-Monitoring-6-December-2013.pdf

Read the release here – http://www.jerseyfsc.org/media/2284/2018-11-27-jfsc-release-re-seu-led-themes-2019.pdf