Failure to Prevent offences: the Jersey approach

Jersey's journey to effectively tackle money laundering, and be seen to be doing so, began notably with the publication of Jersey's first National Risk Assessment of Money Laundering in 2020.

More recently updated in 2023, the National Risk Assessment (NRA) noted that tackling money laundering is one of the highest priorities for Jersey so as not to taint its reputation as a leading international financial centre.

A failure to prevent money laundering offence was introduced in June 2022 (the Jersey FTP Offence), which marks a key milestone in this journey. In the consultation on the Jersey FTP Offence the Jersey Government noted that the offence would provide an effective and attractive tool in the fight against economic crime, as had proved to be the case in other jurisdictions with FTP offences, such as the UK and Switzerland. It also observed that the offence would assist in addressing attribution issues created by the identification doctrine, where it can be difficult to establish corporate criminal liability (see the Consultation on amendments under the Proceeds of Crime (Jersey) Law 1999).

At the time of the publication of the MONEYVAL mutual evaluation report of Jersey in 2024, MONEYVAL noted that whilst it was too soon to see the results of the introduction of the Jersey FTP Offence, this (among other measures) demonstrated that "Jersey's commitment to fight serious crime is continuous and solemn". 

Who is covered under the FTP Offence? 

The importance of the Jersey FTP Offence is in its breadth when compared to the FTP offences in the UK and Guernsey: 

1. It applies to a financial services business (FSB) providing a service of that kind in or from within Jersey, regardless of its size or turnover. The offence is "institutional" in nature, doing away with issues arising with the identification doctrine. It is not prescribed, for example, by the size or turnover of the FSB.
2. As it criminalises a failure to prevent money laundering, it necessarily captures criminal property that has been generated by predicate criminal conduct, not specifically linked to an offence such as bribery, corruption, tax evasion or fraud. The predicate criminal conduct need not be committed in Jersey: it is extraterritorial, provided that it would constitute an offence if it had been committed in Jersey.
3. It relates to the acts of a "person associated with" the FSB. This includes employees, agents, persons performing services on behalf of the FSB, and customers or agents of the customer. This is a far wider class of individuals than is required to satisfy the Identification Principle in most corporate criminal offences, which requires the identification of the directing mind and will of the company, and the attribution of the (mis)conduct to those person(s).  

It is a defence for the FSB to have adequately maintained and applied prevention procedures to prevent and detect money laundering. In the absence of such procedures, this would likely represent a separate breach of the secondary money laundering legislation, which is prosecutable as a criminal offence under Article 37(4) of the Proceeds of Crime (Jersey) Law 1999 (the Proceeds of Crime Law). The FSB would likely also be in breach of its regulatory duties and may face separate supervisory and / or enforcement action from the regulator. 

It is also noteworthy that even though the Jersey FTP Offence is institutional, personal liability may arise where a "relevant person" (such as a director, partner, manager etc) of the FSB has consented to or connived in the FSB's commission of that offence. 

Prosecutions 

There have been no prosecutions under the Jersey FTP Offence, but this is likely to only be a matter of time. In the meantime, "standalone" money laundering offences continue to be prosecuted using other judicial tools, including notably Jersey's first deferred prosecution agreement sanctioned in July 2024.

Key recommendations 

While Guernsey has closely followed the lead of the UK in the adoption of FTP legislation, Jersey has followed its own path. 

There is currently only one FTP offence in Jersey, namely the Jersey FTP Offence which is narrower in number than the suite of offences that exist in Guernsey (under the PC Law and Preventative Offences Ordinances) and the UK (under the Bribery Act 2010 and the Economic Crime and Corporate Transparency Act 2023 (the ECCT Law)). However, the Jersey FTP Offence is broader in criminal scope than the regimes in the UK and Guernsey. 

We have the following key recommendations for our clients:  

• Prevention is the best form of defence. The Jersey Financial Services Commission (JFSC) adopts a risk-based approach to regulation. The adequacy of existing policies, procedures and training should be regularly reviewed to ensure that compliance with the applicable JFSC Code(s) of Practice, the Law and secondary money laundering legislation is both being achieved and can be demonstrated.  
• Any new products or services should also be risk assessed at the time of creation, and CDD and KYC screening checks need to be thoroughly assessed at the inception of a relationship and on an ongoing basis. That is particularly where there are changes in the client's risk profile, such as adverse media or unusual transactions. 
• Given the extraterritorial application of the ECCT, organisations with sufficient nexus to the UK – such as those forming part of an offshore group – will need to be aware of the broad definition of an "associated person" in ECCT, regardless of whether or not they are classified as an FSB for the purposes of the Jersey FTP Offence.
• If any actual or potential contraventions of the FTP Offence, or for that matter any other offences under the Law and / or secondary money laundering legislation are identified, the organisation should seek legal advice as a matter of urgency on its legal and regulatory reporting obligations. While a breach cannot be retrospectively avoided, its impact can be mitigated by carefully coordinated but candid engagement with the relevant authorities and an effective crisis management strategy.

About Ogier

Ogier is a professional services firm with the knowledge and expertise to handle the most demanding and complex transactions and provide expert, efficient and cost-effective services to all our clients. We regularly win awards for the quality of our client service, our work and our people.

Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice