The amendments to the Proceeds of Crime (Jersey) Law, approved by Jersey’s government on 26 June, are designed to ensure Jersey complies with the recommendations highlighted in the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and Financing of Terrorism (Moneyval) report, published in 2016.

Overall, the two amendments (see below) are focused on strengthening Jersey’s ability to secure higher volumes of prosecutions and confiscations in cases of financial crime.

Specifically, they widen the definition of ‘criminal property’ and change the requirement of two qualifying offences to just one, when making assumptions regarding criminal conduct and also the burden of proof concerning criminal property..

From an operational perspective I suggest there may be little change to how you manages ML risk although I do suggest that the emphasis on SOF/SOW questions become more focussed and relevant.On this last point, you may however be interested to note that Jersey powers to seize and hold assets is increasing (a stricter regime than exists in England and Wales) and the burden of proof that applies when a convicted defendant has assets and has been convicted of a serious offence. It is for the Defendant to prove that assets held or transferred after the offence came by reason other than crime

Read below for further details

Proceeds of Crime (Jersey) Law 1999 technical update

Definition of criminal property (article 29) and assumptions as to ‘criminal conduct’ (Article 5) to be amended

Background

The Draft Proceeds of Crime (Amendment No. 3) (Jersey) Law 201- (the “draft Law”) proposes amendments to the Proceeds of Crime (Jersey) Law 1999 (the “1999 Law”) following the publication of the 4th round report on Jersey’s compliance with the FATF Recommendations (2003) by the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (“Moneyval”).

The draft Law was lodged (March 2018) further to recommendations by the Jersey Financial Crime Strategy Group, which makes recommendations to the Government on financial crime policy for Jersey.

Definition of criminal property Article 29 defines “criminal property” for the purposes of the 1999 Law.

The Moneyval report on Jersey (paragraphs 205 and 246) recommended amending the definition to cover property obtained through the commission of an offence consistent with the definition of criminal property in Article 1(e) of the UN Convention against Transnational Organised Crime (Palermo) –

•  “Proceeds of crime” shall mean any property derived from or obtained, directly or indirectly, through the commission of an offence.”

It has also been recommended by the Financial Crime Strategy Group that the definition should be further widened to include instances where property is used in or intended for use in unlawful conduct.

The draft Law therefore amends the definition of “criminal property” in Article 29 of the 1999 Law as follows –

a)to include property obtained, directly or indirectly through the commission of an offence; and

b)to include property that is used in, or intended to be used in criminal conduct.

Assumptions in Article 5 of the Proceeds of Crime (Jersey) Law 1999

Under Article 5 of the 1999 Law, assumptions as to ‘criminal conduct’ are only available if the defendant is being sentenced for

• at least 2 qualifying offences (i.e. which attract a maximum penalty of one or more years’ imprisonment, and the court is satisfied that they are offences from which the defendant has benefited), or
• he has in the previous 6 years been sentenced for one or more qualifying offences.

The Moneyval Report criticised this and, in order to meet the concerns of Moneyval and to enhance the effectiveness of confiscations, it has been recommended by the Financial Crime Strategy Group that a ‘one qualifying offence’ threshold should apply for the assumptions in Article 5 of the 1999 Law.

The draft Law therefore amends the position so that the assumptions should be made available to the court when asked to do so by H.M. Attorney General, or on its own motion to make those assumptions to determine if the defendant has benefitted from criminal conduct and, if so, to what extent, when a defendant is being sentenced for one qualifying offence.

The principal change in the Law is to amend Article 5 of the Proceeds of Crime (Jersey) Law 1999 (“the 1999 Law”) so that the assumptions in respect of the provenance of property acquired by the Defendant after the crime will apply after conviction for a single offence.

This is a stricter regime than exists in England and Wales under the Proceeds of Crime Act 2002, which look to a course of conduct involving multiple offences so as to evidence a “criminal lifestyle”.

If an individual commits an offence as defined in Schedule 1 (i.e. essentially any serious offence), then the property is assumed to be a product of that offence unless shown otherwise (Article 5(7) of the 1999 Law.)

The question may be viewed both in terms of Article 1 of Protocol 1 – as to whether their right to possessions is being disturbed otherwise than by law – or Article 6 – a right to a fair trial when determining civil rights.

The question is whether they have a right to possess the property in question, and it makes little difference which way it is analysed. If the process for determining whether it is their property is arbitrary, then the rights will not have been infringed “by law” – and in these circumstances that is much the same question as person concerned has been given a fair hearing on the issue.

Ultimately, the provision relates to the burden of proof that applies when a convicted defendant has assets and has been convicted of a serious offence. It is for the Defendant to prove that assets held or transferred after the offence came by reason other than crime. Whether the assets were criminal property is a question of fact for the court, and it often will matter little where the burden actually is, once evidence is brought forward by the parties. For example,

• in taxation appeals the burden is on the taxpayer to prove that the assessment is wrong, yet that burden is seldom a relevant factor once evidence is called. In a world of increasingly electronic transactions, it is seldom an onerous burden to prove the provenance of assets.

So there is nothing strange or irregular with such a burden.

This is particularly the case, given that such confiscation proceedings, whilst taking place in a criminal trial, are a civil rather than a criminal matter for the purposes of Convention Rights (see Director of the Assets Recovery Agency v Jia Jin He [2004] EWHC 3012 (Admin).)

The change made by the amendment is that the provision will apply after only one offence rather than 2 (or 3, depending on the period of offending) – but the essential danger of the issue to be tried by the court remains the same.

Article 29 is not a provision relating to property or other rights. It amends the definition of criminal property, and expands it to include property that is used in, or intended to be used in, criminal conduct. It does not change the mental element required for the offence.

It is not at first the clearest provision, but once it is understood that it cannot be read as applying to simply any property that has historically been used in crime, then its meaning has the clarity required of a criminal offence. An item with no purpose outside crime will be caught, as will more neutral items where there is an intent to use them in crime.

https://statesassembly.gov.je/assemblypropositions/2018/p.75-2018.pdf