Draft Proceeds of Crime (Amendment No. 2) (Jersey) Law 200-
European Convention on Human Rights
In accordance with the provisions of Article 16 of the
Human Rights (Jersey) Law 2000 the Minister for Treasury and Resources has made
the following statement –
In the view of the Minister for Treasury and Resources
the provisions of the Draft Proceeds of Crime (Amendment No. 2) (Jersey)
Law 200- are compatible with the Convention Rights.
(Signed) Senator T.A. Le Sueur
REPORT
The Island’s framework to counter money laundering and the financing of terrorism will be subject to review by the International Monetary Fund (“IMF”) in October 2008.
A set of changes to the Proceeds of Crime (Jersey) Law 1999 (“POCL”), as well as the Drug Trafficking Offences (Jersey) Law 1988 (“DTOL”) and the Terrorism (Jersey) Law 2002 (“TL”), have already been passed by the States of Jersey and are now in force. The most important changes introduced in this ‘first wave’ of amendments were the introduction of standardised obligations to report knowledge or suspicion of money laundering and terrorist financing across all 3 Laws and extended powers to investigate suspected money laundering and terrorist financing.
These amendments form the ‘second wave’ of amendments and fall into 5 discrete areas:
1.
Designating Officers
Article 1 of the POCL currently defines a police
officer as meaning “a member of the
Honorary Police, the States of Jersey Police Force, the Agent of the Impôts or
any other officer of the Impôts”.
Currently, the POCL, DTOL and TL all provide that certain offences will not be committed by a person who knows or suspects another is engaged in money laundering, drug trafficking or terrorist financing, provided that knowledge or suspicion is disclosed to a police officer. Financial institutions routinely make such disclosures to the Joint Financial Crimes Unit (“JFCU”) in a set format, known as a suspicious activity report. As the POCL currently stands, disclosures can be made to an honorary police officer, as well as States of Jersey Police or Customs Officer, although in practice they all go to the JFCU.
Jersey was last assessed by the IMF in 2003. The 2003 IMF report noted that, for the purpose of reporting knowledge or suspicion of money laundering, the definition of “police officer” in Jersey legislation was too broad. In particular, the IMF was of the view that the definition, in this context, should be amended to remove any reference to honorary police officers. Furthermore, the IMF requested Jersey to require such disclosures to be submitted to the JFCU, which has practical responsibility for the receipt, analysis and dissemination of suspicious activity reports from financial institutions.
It is not possible for the Law to be amended to require that disclosures are made directly to “the JFCU” because the JFCU has no separate statutory identity. In order to get around this issue the approach used in the Money Laundering (Jersey) Order, 2008 (“MLO”) has been adopted. The MLO already establishes the concept of designated police and customs officers (to be designated by the Chief of Police and the Agent of the Impôts) as a means of specifying the staff of the JFCU (see Article 6 of the MLO).
The amendments set out in Articles 2 – 5 would mean that in the case of a disclosure by a financial institution, the disclosure would have to be made to a designated officer who will be an officer in the JFCU. In the case of a disclosure by anyone else, who may not be aware of the existence of the JFCU, a disclosure can still be made to any member of the Honorary Police, the States of Jersey Police or a Customs Officer.
2.
Provision for Codes and guidance to be issued under the Supervisory Bodies Law
Article 4 also amends Article 34D(7) of the POCL, so that new Codes of Practice issued under the Proceeds of Crime (Supervisory Bodies (Jersey) Law 2008 (“Supervisory Bodies Law”), can be taken into account by the Royal Court when determining if an offence under Article 34D (failure in a financial institution to make a report) has been committed. This reflects a revision already made to Article 23(6) of the TL by the Supervisory Bodies Law to make reference to Codes of Practice and guidance that will be issued under the Supervisory Bodies Law by the Commission and any body that is designated by the Minister under Article 6 of that Law. It is proposed that the same change is made to Article 40A(7) of the DTOL so that there is consistency among the 3 Laws.
3. Tipping off when a disclosure will be
made
Article 6 amends Article 35 of the POCL so that the offence of tipping off is committed not only where a report has been made but where it will be made, in order to prevent tipping off taking place prior to the making if a report. This will bring the provision in line with Article 35 of the TL. It is proposed that Article 41 of the DTOL is amended in the same way.
4. Definition of business relationship
The definition of “business relationship” in Schedule 3, paragraph 6(2) of the POCL would be amended by Article 7 to mirror the definition that is now used in Article 1(1) of the MLO. The same amendment is proposed to Schedule 2, paragraph 6(2) of the DTOL and Schedule 6, paragraph 7(2) of the TL.
5. Person carrying on financial services
business
Article 36(1) of the POCL defines “financial services business” as a business described in Schedule 2 of that Law. In this context, business is to be understood as the type of business that may be conducted, e.g. deposit-taking business, or the business of operating a casino, and a person that carries on financial services business is generally described as such.
However, throughout Schedule 2 of the POCL, reference is not made to a person that carries on a financial services business, but instead to a “financial services business”. The amendments in Article 7 are designed to correct this anomaly.
Financial and manpower
implications
There are no financial or manpower implications for the States arising from the adoption of this draft Law.
European Convention on Human Rights
Article 16 of the Human
Rights (Jersey) Law 2000 requires the Minister in charge of a Projet de Loi to
make a statement about the compatibility of the provisions of the Projet with
the Convention rights (as defined by Article 1 of the Law). On 28th July
2008 the Minister for Treasury and Resources made the following statement
before Second Reading of this Projet in the States Assembly –
In the view of the Minister for Treasury and Resources
the provisions of the Draft Proceeds of Crime (Amendment No. 2) (Jersey)
Law 200- are compatible with the Convention Rights.
Explanatory Note
This draft Law amends the Proceeds of Crime (Jersey) Law 1999 (the “principal Law”).
Article 1 defines the principal Law.
Article 2 amends the Interpretation Article in the principal Law to insert the definitions “designated police officer” and “designated customs officer” to mean an officer designated under Article 34E.
Article 3 amends Article 29 of the principal Law to reflect the new references in that Part to “designated police officer” and “designated customs officer”.
Article 4 amends Article 34D of the principal Law to restrict the persons to whom financial institutions must report suspicion of money laundering to a designated police officer or a designated customs officer. The existing provision allows disclosure to be made to any police officer or customs officer. The amendment also allows the Royal Court to take into account Codes of Practice issued by supervisory bodies under the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008 for the purpose of determining whether a person has committed an offence under Article 34D.
Article 5 inserts a new Article 34E to give the Chief Officer of the States of Jersey Police Force and the Agent of the Impôts power to designate one or more officers for the purpose of Article 34D.
Article 6 amends Article 35 of the principal Law to broaden the circumstances in which one of the offences relating to tipping-off may be committed to include suspicion that disclosure will be made to a police officer about suspicion of money laundering, not just where such disclosure has been made.
Article 7 amends various references to “financial services business” in Schedule 3 to the principal Law so that its provisions relate to the person carrying on a financial services business rather than to the business itself. The Article also amends the definition of “business relationship” to reflect the definition in the Money Laundering (Jersey) Order 2008.
Article 8 provides for the title of the draft Law and that it shall come into force 7 days after registration.
