After talking to a client today I have put together a summary of recent changes to the ‘tipping-off’ offence under Jersey law

• PROCEEDS OF CRIME AND TERRORISM (TIPPING OFF – EXCEPTIONS) (JERSEY) REGULATIONS 2014 – Revised Edition
• https://www.jerseylaw.je/laws/revised/Pages/08.780.80.aspx

Please note this update is only intended to give a summary and general overview of the subject matter. It is not intended to be comprehensive and does not constitute, and should not be taken to be qualified legal/regulatory advice. If you would like advice or further information on any issue raised by this musing, please email/telephone one of your usual COMSURE contacts.

THEN AND NOW

We were all familiar with the ‘tipping off’ offence under the Proceeds of Crime Law, but in 2014 it was amended in order to comply with international standards, by broadening its scope, primarily by removing the requirement to show that there has been any prejudice to a current or proposed police investigation.

NOW

This offence can now therefore be committed by anyone who knows or suspects that an internal or external Suspicious Activity Report (SAR) has been or will be made and then discloses that fact or any information relating to it, to any other person. As you will see this is a very broad offence, effectively creating a blanket ban on disclosure of SARs and the information contained in them, and Regulations have consequently been made to establish certain exceptions which define the restricted circumstances when disclosure is permitted.

2016

By now you should have urgently instigated a review of your procedures relating to handling of internal and external SARs, in particular, to warn staff about these more restrictive circumstances and to check that procedures for storage of and access to records of SARs are reviewed and amended to comply with them.

Review

In carrying out a review, businesses will need to get to grips with the limited, and relatively complicated, set of scenarios when disclosure now permitted under the new Regulations and in doing so there are several key points to bear in mind, which are touched on below:

1. You will need to distinguish between
   1. disclosure of the SAR (internal or external) itself in the prescribed format on the one hand, which is much more restricted than separate disclosure of any of the information in the SAR, on the other hand;
2. You will need to
   1. consider whether copies of SARs can be accessed from outside Jersey since, under the new Regulations, such access is only permitted in limited circumstances;
3. You will need to
   1. check whether your procedures allow the identity of the original reporter to be disclosed and, if so, how, as this is also restricted;
4. You will need to
   1. categorise persons who are ’employees’ of the entity from which the SAR arises, which includes directors, officers, partners, and, in our view, would also include staff engaged in the entity’s business as secondees, outsourced agents, consultants, etc, but does not include employees of other group companies;
5. You will need to
   1. consider how your overseas businesses may be affected by these rules where they are required to comply with the Money Laundering (Jersey) Order 2008;
6. You may also want to
   1. consider storing information in an SAR separately to the actual SAR itself and without including the identity of the reporter with that information, as this will allow for more flexible sharing of information in appropriate circumstances.
7. In deciding whether any particular disclosure is permitted, you should ask yourself the following questions:
   1. Is the disclosure made with the written permission of the JFCU, is it required by law or is it connected with the enforcement of statutes relating to criminal conduct or the proceeds of criminal conduct?
   2. If not, is it made “in good faith for the purpose of preventing or detecting money laundering” and disclosed within one of the following scenarios:
      1. to the firm’s MLRO;
      2. to fellow ’employees’;

Within a financial group, sharing common ownership, management or compliance control;

1. between financial services businesses in Jersey or Jersey entities, who act for a common customer or in a common transaction or service;
2. to the customs, police, JFCU, JFSC or other AML supervisory body;
3. by MLROs for the purpose of their functions in that capacity;

To legal advisers and accountants.

1. In any of these above cases, is an internal or external SAR (or a copy of it) being disclosed?
   1. This is generally prohibited except where disclosure is required by law, disclosed to your MLRO or disclosed to fellow ’employees’ in Jersey.
2. In any of these above cases, is the identity of the original reporter being disclosed?
   1. This too is generally prohibited except for disclosure to fellow ’employees’ and police and regulatory authorities.

The application of the new Regulations is already proving complex in practice and deserves careful attention as the tipping-off offence carries serious penalties of up to five years’ imprisonment or an unlimited fine or both and can, of course, apply to corporate persons and their directors and officers, just as much as to individuals.

As mentioned if you are unsure about these matters call Comsure.