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MONEYVAL.

1. A group of assessors from MONEYVAL, or to give it its full title, the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, visited the Island in January this year to assess the jurisdiction.
2. They spent time with the  Commission, the police, the States and also individual firms asking a large number of searching questions about our laws, regulations and how things worked in practice.
3. A few months ago we received a draft report, and some preliminary discussions were held in Strasbourg on its contents.
4. We have now had confirmation that the formal discussion on Jersey’s assessment will be held on the 9th December at the MONEYVAL plenary, meaning we would expect to see publication of the final report sometime in the New Year.
5. The Commission and other authorities invested a lot of effort in preparation for MONEYVAL – the Island will be rated on various criteria; in turn those ratings will be a key influence on others’ views of the effectiveness of our AML/CFT regime – and the ratings we get now stay in place until the next assessment, which may not be until 2021.
6. Once our report is finalised, there will likely be some recommendations for change to be taken forward in 2016. We are cautiously optimistic about the outcome, but nothing is certain until after the plenary.
7. Our MONEYVAL visit was something of a hybrid between previous assessments – which have mainly been based on whether laws and regulations were in place – and what international bodies are increasingly moving towards – which is assessment of actually how effective those laws and regulations are in practice. This is a key shift in approach by the international regulatory community which has implications for both the Commission and regulated firms.
8. We have been working with industry and government on a review of our funds regime. The growth we have seen in the industry this year is impressive, but I think most people would accept that there could be some simplification, while still aiming to maintain the flexibility that currently exists. To date this year has seen a lot of the ground work done, paving the way for deliverables in 2016.
9. Alongside that, we should celebrate the big achievement for Jersey this year in being one of the first jurisdictions to gain a positive assessment from ESMA for our regime, relating to our ability to gain a ‘3rd country passport’ for the purposes of the Alternative Investment Fund Managers Directive.
10. ESMA is the body which brings together all of the EU’s securities regulators, and to gain an endorsement of this type is a genuine ‘feather in the cap’ for Jersey in terms of market access, particularly given that other jurisdictions weren’t successful in the first wave. The path to the passport itself has more stages to go, but we couldn’t be in a better position at the moment.

Civil financial penalties.

1. The various legislative measures to enable the Commission to levy financial penalties on wrong-doers, in certain circumstances, came into force earlier this year. I would point out that – contrary to some views expressed at the time – we haven’t seen our Director of Enforcement Barry Faudemer skipping down the street throwing out fine notices like confetti.
2. The Commission recognises the controversial nature of this subject. However I would like to make three points in support of the power.
   1. First, in terms of acting proportionately, surely it is sensible for the Commission to have a variety of regulatory options when wrong-doing occurs between ‘do nothing’ or the rather ‘nuclear’ option of ‘shut down the firm’.
   2. Second, and I would have thought importantly to you, civil penalties will to some extent mean ‘the polluter pays’.
   3. At the moment the costs of Enforcement action are borne by all firms.
   4. Although a penalty would not be calibrated on the costs of action, and the Commission may have a general preference for money to be used to provide restitution to clients where that is appropriate, the fact is that penalties received by the Commission are credited against industry’s future years’ fees and not – another rumour – spent on providing Commission staff with lavish bonuses or a slap-up Christmas party.
3. Finally, but not least, to put it bluntly, in my view no regulator without this power will be taken seriously in international assessments that are key for market access.
4. In the series of reforms of financial services law undertaken by the European Commission in the light of the financial crisis, the sanctioning powers available to regulators were a key focus, and I have no doubt this will be the case when Jersey is being evaluated, be that for the AIFMD or any other purposes.

Basel III implementation.

1. If possible, I’d prefer no questions on this!
2. Those affected will have seen our consultation paper on capital adequacy and leverage, which closed a couple of weeks ago. There is clearly further work and industry dialogue on this topic needed as we work towards the 2019 implementation date, and we expect to hold some workshops with firms next year.

Freedom of Information Law.

1. In 2016, the Commission expects to be brought within the remit of the Freedom of Information Law.
2. This is another accountability mechanism and we have been reviewing our information management protocols to create a process so that we can deal with requests accordingly.
3. While a somewhat dry phrase, information management – how we gather, analyse and use data, is increasingly one of the key factors in how effective and efficient we can be. I’m sure the same is true of your firms as well in terms of client information. Freedom of Information is not about us releasing confidential details we hold about regulated entities; based on my experience with the FSA in the UK, I would expect many of the questions to be around ‘value for money’ issues on the Commission’s budget.
4. The Commission continues to work with Government to develop and host a number of different registers and in some cases to also run them. Work has been carried out by the Commission in the areas of aircraft, trademarks and the securities interest register for tangible assets. In 2016 we will move, where appropriate, into a building and testing phase, including for the enhanced Registry platform.

MiFID 2.

1. MiFID is the EU financial services legislation that covers investment business and exchanges. As an Island we need to decide our response, given that a material amount of investment business that our firms do is with clients in the EU. This is another key example of the role of the Commission in ensuring market access for Jersey firms.
2. Our positively received work on the AIFMD perhaps provides a way to approach MiFID, and we are in a similar position as we were on the AIFMD of not yet having final requirements or knowing how the UK (one of the main client centres for our firms) is going to implement some key parts of the legislation.
3. It is possible that, unlike the AIFMD however, we will not be able to have a bifurcated regime – that is, MiFID requirements would need to apply to all investment business conducted in the Island. As you might expect, MiFID’s requirements are more detailed than our current Investment Business Codes of Practice. However we still need to get clarity on the possibilities.
4. During 2015 we have undertaken a lot of research with firms to understand their business needs, and this process will continue next year.

Financial Ombudsman.

1. At this point I’d also like to mention the Financial Ombudsman, who will start work very soon.
2. While not applicable to the majority of trust business, the creation of an Ombudsman is a key development in the regulatory framework of the Island, affecting in particular investment businesses and banks, as well as the Commission.