In 2014 there were many substantive Money laundering law changes in jersey, what were they and why?

What did the Proceeds of Crime and Terrorism (Miscellaneous Provisions) (Jersey) Law 2014 (MISC LAW) change in Jersey and why?

The MISC law had four aims, namely to:

To address outstanding technical issues identified in Jersey’s 2009 IMF Assessment Report;
To address an identified gap against the revised Financial Action Task Force (“FATF”) standards, issued in February 2012.
1. Jersey will be assessed against the revised standards when the next but one assessment of the Island takes place, probably in 2017 (the next assessment being due to take place in 2014 under the 2004 standards); and
to allow for the following Conventions to be extended to Jersey – Jersey needed to align specific provisions with requirements of the
1. United Nations Convention against Transnational Organized Crime (“Palermo Convention”) and
2. Council of Europe Convention 141 on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (“Strasbourg Convention”),

And against these X3

Ensure that Jersey had one set of provisions that relate to the laundering of the proceeds of criminal conduct, including the restraint and confiscation of such proceeds.
1. Until the misc law Jersey had anti-money laundering provisions in each of the
  1. Proceeds of Crime (Jersey) Law 1999,
  2. the Terrorism (Jersey) Law 2002 and
  3. the Drug Trafficking Offences (Jersey) Law 1988.

The split was
1. drug money laundering was dealt with under the Drug Trafficking Offences (Jersey) Law 1988,
2. the money laundering of terrorist property under the Terrorism (Jersey) Law 2002 and
3. any other form of money laundering under the Proceeds of Crime (Jersey) Law 1999;

The main thrust of the Misc law was to

to separate provisions dealing with proceeds of crime of all kinds, including the proceeds of crime relating to drug trafficking, and to have these all in one place (the Proceeds of Crime (Jersey) Law 1999) while retaining separate provision to deal with property used instrumentally in or in facilitating certain crimes in the
1. Terrorism (Jersey) Law 2002 and
2. the Misuse of Drugs (Jersey) Law 1978,
to reflect IMF recommendations by amending
1. The Proceeds of Crime (Jersey) Law 1999 and
2. the Terrorism (Jersey) Law 2002
The Misc law contains provisions amending the Proceeds of Crime (Jersey) Law 1999 and the Terrorism (Jersey) Law 2002. Alongside this there is another Part of the Misc Law
1. repealed the Drug Trafficking Offences (Jersey) Law 1988 and placed certain provisions of that law which remain to be preserved into the Misuse of Drugs (Jersey) Law 1978
  1. (other provisions of the Drug Trafficking Offences (Jersey) Law 1988 are preserved by an extension of the scope of the Proceeds of Crime (Jersey) Law 1999).
2. There is another Part dealing with transitional arrangements and the Schedule makes the necessary consequential amendments to other pieces of legislation.

One set of anti-money laundering provisions

The key rationale for creating One Set Of Anti-Money Laundering Provisions is that under the existing provisions, the prosecuting authorities must establish at any early stage whether the Proceeds of Crime (Jersey) Law 1999, the Terrorism (Jersey) Law 2002 or the Drug Trafficking Offences (Jersey) Law 1988 provisions apply in respect of the proceeds of criminal conduct, in any given case.
1. At the early stages of an investigation, there may not be sufficient evidence to establish whether the proceeds of criminal conduct in question relate to a drug trafficking offence or another form of criminal conduct. Currently, decisions have to be made as to which of the three laws powers are to be exercised under.
In addition to the practical issues highlighted above, the money laundering offences vary in scope and material elements across the three laws.
1. The prosecuting authorities are also of the view that the current money laundering offences are too numerous and specific.
2. The opportunity has thus been taken to revise the existing money laundering offences in order to address the concerns raised above and produce a single statute which addresses the requirements of the jurisdiction more effectively.

Listed below are the amendments proposed in order to address particular technical issues identified by the IMF, with references to the relevant parts of the Assessment Report:

Align what is currently Article 34 of the Proceeds of Crime (Jersey) Law 1999 with the purpose requirements in Article 6(1)(a) of the Palermo Convention [see para. 97 and recommendations at 2.1.2 of the IMF Report].
New Article 31 of the Proceeds of Crime (Jersey) Law 1999
1. will eliminate the purpose requirements for the acts of converting and transferring proceeds of criminal conduct (i.e. it will be an offence to convert and transfer proceeds no matter what your purpose) and
2. will also eliminate the purpose requirement for the acts of concealing or disguising proceeds of criminal conduct;
Limit the defence of payment of adequate consideration in what is currently Article 33(2) of the Proceeds of Crime (Jersey) Law 1999, as it is beyond the standard set out in Article 6(1)(b) of the Palermo Convention [para. 99 & recommendations at 2.1.2 of the IMF Report].
New Article 30 of the Proceeds of Crime (Jersey) Law 1999 will retain the defence of adequate consideration where property is acquired, used, possessed or controlled BUT will provide that this defence SHALL NOT BE available
1. where property or services provided to a person assist that person in criminal conduct,
  1. where a person providing property or services to another person knows, suspects or has reasonable grounds to suspect that the property or services will or may assist the other person in criminal conduct or
  2. where the value of the consideration is significantly less than the value of the property acquired or, as the case may be, the value of its use or possession.
2. This is intended to ensure that where criminal conduct has actually been assisted or there is a risk that it may be so assisted, the defence of adequate consideration will not apply;
Broaden the remit of Article 33 of the Proceeds of Crime (Jersey) Law 1999 to cover SELF-LAUNDERING –
1. the acquisition, possession or use of the proceeds of criminal conduct by the launderer, as opposed to another person on behalf of the launderer [recommendations at 2.1.2 of the IMF Report].
New Article 29 of the of the Proceeds of Crime (Jersey) Law 1999 defines criminal property so that it is clear that where a person is guilty OF ACQUIRING, POSSESSING OR USING PROPERTY under new Article 30 of the Proceeds of Crime (Jersey) Law 1999
1. it does not matter whether the person who benefitted from the criminal conduct was the alleged offender or another person;
Provide that property, or its equivalent value, is to be restrained from the beginning of an investigation.
1. The present requirements for a saisie judiciaire (see Article 15 of the Proceeds of Crime (Jersey) Law 1999, for example) are only triggered if criminal proceedings have been, or are to be, issued [para. 208 and recommendations at 2.3.2 of the IMF Report]. Articles 15 and 16 of the Proceeds of Crime (Jersey) Law 1999 are extended to address this requirement;
Amend all reporting requirements to limit protection for those reporting suspicious transactions to those acting in good faith [para. 544 and recommendations at 3.7.2 of the IMF Report].
1. All the reporting requirements in the Proceeds of Crime (Jersey) Law 1999 and the Terrorism (Jersey) Law 2002 are so amended by the Misc Law;
Broaden the tipping-off provisions by removing the limitation referring to situations that might prejudice an investigation [para. 546 and recommendations at 3.7.2 of the IMF Report].
1. The tipping-off provisions at Article 35 of the Proceeds of Crime (Jersey) Law 1999 and Article 35 of the Terrorism (Jersey) Law 2002 are so amended and are brought into line with each other.
2. The Misc Law provides that regulations may be made in due course setting out circumstances in which it shall not be an offence to disclose information (such as, for example, sharing information intra-group or with the JFSC).
Extend the restraint and confiscation provisions in the Terrorism (Jersey) Law 2002 so that they apply to property of an equivalent value [para. 177, 183 & recommendations at 2.3.2 of the IMF Report].
Proceeds of terrorism now fall within the scope of the Proceeds of Crime (Jersey) Law 1999 which applies to property of equivalent value (property is criminal property if it constitutes proceeds of criminal conduct or represents such proceeds, whether in whole or in part and whether directly or indirectly);
Ensure the terrorist financing offences cover support to terrorists in the form of paying for education, living or similar expenses [para. 154 & 156 of the IMF Report]. New Article 15(3)(c) of the Terrorism (Jersey) Law 2002 specifically addresses this; and
Amend the definition of “terrorism” in Article 2 of the Terrorism (Jersey) Law 2002 to make reference to the offences defined in the 9 Conventions and Protocols listed in the Annex to the International Convention for the Suppression of the Financing of Terrorism.
1. Although all the offences defined therein have been criminalised in Jersey, the definition of “terrorism” in Article 2 further requires that the “use or threat” of action listed in subparagraph 2 be for the purposes set out in subparagraphs (1)(b) and (c).
2. The commission of an offence listed in the Annex should, by itself, amount to an act of terrorism without the additional purposive requirements [para. 149 of the IMF Report]. The definition of terrorism in Article 2 of the Terrorism (Jersey) Law 2002 has been so amended.

ALSO

Revised FATF Standards
1. The revised standards require ancillary offences to include participation, conspiracies and attempts to commit money laundering offences, aspects not currently expressly mentioned in Article 42 of the Proceeds of Crime (Jersey) Law 1999.
2. However, the requirements in the Criminal Offences (Jersey) Law 2009 are sufficiently broad to cover all aspects of the revised standards.
3. Article 42 of the Proceeds of Crime (Jersey) Law 1999 is therefore repealed and reliance is placed on the provisions of the Criminal Offences (Jersey) Law 2009.

Palermo and Strasbourg Conventions

No amendments other than those set out above are required to be made to the Proceeds of Crime (Jersey) Law 1999, the Terrorism (Jersey) Law 2002 or the Misuse of Drugs (Jersey) Law 1978 in connection with compliance with the Palermo and Strasbourg Conventions.
Separately, an amendment to the Shipping (Jersey) Law 2002 is also being progressed in order to comply with the Conventions. It is anticipated this amendment will be lodged for debate by the States Assembly in the near future.

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IMF Recommendations – The full text of the IMF Assessment is available at: http://www.jerseyfsc.org/pdf/Jersey_IMF_Assessment_DAR_AML_CFT.pdf.

A summary table setting out the recommendations made by the IMF can be found in the IMF Action Plan, available at: http://www.jerseyfsc.org/the_commission/international_co-operation/evaluations/jerseys_action_plan.asp