Working Together for Regulatory Effectiveness

In a complex global regulatory environment, we are committed to working closely with our stakeholders to safeguard the best economic interests of Jersey and defend our reputation as a leading international finance centre.

To achieve regulatory effectiveness, we continue to move forward with our strategic commitments to facilitate business integrity, influence the digitalisation of financial services and develop our people, systems and capability to be a high performing organisation.

In September 2023 Jersey welcomed assessors from MONEYVAL to conduct an onsite evaluation of Jersey’s compliance with Financial Action Task Force (FATF) recommendations on combatting money laundering, terrorist financing and proliferation financing.

Over the past three years, we have placed Jersey’s MONEYVAL evaluation front and centre in our strategy and operations in recognition of how important a positive result was for Jersey’s international reputation and market access. This period also saw our regulatory remit increase following legislative change to align with FATF standards.

I am pleased to say we have seen a very strong result for the Island. MONEYVAL’s report confirms that Jersey’s effectiveness in preventing financial crime is among the highest level found in jurisdictions evaluated around the world.

Assessors recognised the strengths of our beneficial ownership regime and JFSC colleagues’ knowledge, skills and expertise. This reflects well on Jersey, the JFSC and our Companies Registry, and will continue to make Jersey an attractive proposition for international investors looking for a stable, well-regulated jurisdiction.

The essential legislative and regulatory change needed to ensure this positive result was only possible with industry’s support and commitment. We recognise the impact this period has had on those we supervise and we will continue to work alongside them as they absorb these changes.

The JFSC’s focus now is to implement the MONEYVAL report’s recommended actions and build on our strong foundations. We will also consider how we can simplify the regulatory framework to support business integrity while still meeting international standards.

Over the past 12 months, the complexity of managing financial crime risk has only increased, with the growing importance of sanctions, the ongoing adoption of virtual assets and other technologies and the increasing ‘borderlessness’ of financial services. We continue to consider our policy framework against these realities.

In our 2024 business plan we highlighted the importance of balancing our focus on financial crime with our focus on conduct and prudential matters.

Our conduct and prudential focus includes aligning our framework with the appropriate elements of Basel III, the international regulatory framework for banks. Earlier this year we published a roadmap and a consultation paper outlining the Basel III framework elements we are proposing to adopt.

Digital transformation is one of our strategic anchors. We recognise the need for continuous upskilling and investment in this area.

Recent enhancements to the myJFSC portal have reduced barriers and increased efficiency for our users. We have introduced the ability to download draft applications in response to requests from industry. Our enhanced portal administrator functionality is also saving users and our team an average of 60 hours a month, freeing us up to support stakeholders with other requests.

Elsewhere, we have maintained our focus on data collection and management to support our risk-based approach and enable us to share more insights with industry. Our work in this area has included establishing a dedicated Risk, Data and Governance team and enhancing our risk model to enable us to respond, in real-time, to changes in our operating environment.

We continue to take a proactive, commercially aware approach when considering new products and services that industry has expressed a material interest in, including regulatory technology (regtech). Our Innovation Hub recently published new guidance for industry to support their adoption of this technology, with more to come later in the year.

We are also embracing the opportunities that AI presents, through the development of our own AI-powered chatbot assistant. The tool, which is due to be launched later this year, will support our industry stakeholders by acting as a useful first port of call for questions about the AML/CFT/CPF Handbook and Codes of Practice.

Alongside aligning ourselves with international standards, we will continue to support Jersey’s influence globally through increased engagement with international bodies including FATF, the Group of International Finance Centre Supervisors (GIFCS) and the International Organisation of Securities Commissions (IOSCO), among others.

Regularly asking for and acting on feedback from our industry stakeholders is essential for us to be a high-performing organisation. We value industry taking the time to share their views and experiences of working with us, including through our industry survey.

The results of our most recent survey showed we have strengths to build on, including our strong international reputation, the professionalism and knowledge of our team at senior levels, and the value of our in-person events, presentations and meetings.

We understand, however, the frustrations that have come through in the survey results. We recognise the impact of recent regulatory change and that we have more work to do on our portals, website and level of service. Key actions we are taking this year to address this include further updates to myJFSC, making sure our team are contactable and improving our response times.

We continue to review and enhance how we communicate with industry. This includes improving the user friendliness of our examination feedback with a new bitesize format that distils everything the reader needs to know and do on one page. The response from industry to this new format has been very positive. Our Supervision team has also introduced new monthly round-up videos, which tell industry everything they need to know in one place — another helpful tool in an evolving regulatory landscape.

As an organisation we have been through a period of growth in headcount to meet the demands of an expanded regulatory perimeter. Following significant focus on our culture and employee value proposition, we have also seen a substantial reduction in employee turnover, which is now in line with industry norms.

These developments will give industry the stability that we know is a priority for them. We are now focussed on supporting our colleagues’ continuous learning and development to ensure ongoing effectiveness.

With the publication of the Island’s positive MONEYVAL report, now is a good time for the JFSC to take stock and consider how we evolve our strategy. We welcome the opportunity to work with the Government of Jersey and industry in completing a strategic review of the approach to regulation of financial and professional services in Jersey. Such a review very much aligns with our commitment to creating the best regulatory environment possible and ensuring Jersey remains competitive against other international finance centres. We have extended our existing strategy to the end of 2025 to enable full consultation and engagement with stakeholders.

The current independent review by KPMG of our fees, which is looking at how we compare with other jurisdictions, elasticity of fee levels, sector views on fee structures and market trends, aligns to our consideration of competitiveness. We are committed to transparency and simplifying our regulatory fees regime moving forward. We will be sharing the output of this review in Q4 2024 along with our proposed plan to advance changes.

We will also support competitiveness through identifying quick wins, such as the recent updates we made to our Jersey private fund regime, alongside longer-term product development. We will continue to proactively monitor developments in the global regulatory environment, including in AI and digital assets. The Government of Jersey’s future strategic roadmap in sustainable finance will inform our own multi-year plan in this area.

This is an important time for the JFSC as we move into our next strategic cycle. Our focus continues to be on regulatory effectiveness and adherence to our guiding principles of defending Jersey’s reputation, protecting the public from conduct risk, facilitating business for Jersey and fighting financial crime.

PUBLICATION: TIMES GROUP – First for Finance 16th Edition