Jersey AML for Accountants: JFSC Handbook and Codes of Practice

Jersey is a major international finance centre, and accountants there carry real anti-money laundering (AML) responsibilities. The Jersey Financial Services Commission (JFSC) supervises accountancy firms, and its AML/CFT Handbook sets out both the statutory requirements and the mandatory Codes of Practice that firms must follow. This guide explains who is covered, what the Handbook is and how binding it is, what it expects of a firm, and what happens when a firm gets it wrong. It draws on the JFSC's Handbook for the accountancy sector, in the version effective from 31 May 2021, and on the JFSC's announcement of its consolidated Handbook. Jersey law and the Handbook are updated regularly, so check the current text on the JFSC website before you rely on any detail. This is general information, not legal advice.

Who is covered?

According to the JFSC's accountancy sector Handbook, the rules apply to relevant persons carrying on "Schedule 2 business" in Jersey, referred to as accountancy firms, including sole practitioners and sole traders. Schedule 2 business covers external accountancy services, tax advice, audit services and insolvency services, and the Handbook has specific sections for tax advisers, auditors and insolvency practitioners. Management consultants can also fall within scope if they provide Schedule 2 services. Jersey-based offices of firms incorporated elsewhere are covered, and Jersey companies must apply the Codes to overseas branches. As elsewhere, the test is what you do, not what your business card says.

Who supervises?

The JFSC is the designated AML and counter-terrorist financing supervisory body for all relevant persons carrying on Schedule 2 business. It issues the AML/CFT Codes of Practice under Article 22 of the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008.

The legal framework

The Handbook explains that the Money Laundering (Jersey) Order 2008 prescribes detailed measures and is made under Article 37 of the Proceeds of Crime (Jersey) Law 1999. Other primary legislation includes the Terrorism (Jersey) Law 2002, the Money Laundering and Weapons Development (Directions) (Jersey) Law 2012 and the Sanctions and Asset-Freezing (Jersey) Law 2019, with related regulations and orders.

The Handbook and how binding it is

The Handbook has three layers, and the difference matters:

• Statutory requirements. Failure to comply is a criminal offence. According to the accountancy sector Handbook, penalties for breaching the Money Laundering Order can include an unlimited fine, up to two years' imprisonment, or both, and failure to report under Article 21 of the Terrorism Law carries up to five years' imprisonment.
• AML/CFT Codes of Practice. These are mandatory ("must"), and failure to follow them may lead to regulatory sanctions. The JFSC considers them in supervision, including on-site examinations.
• Guidance Notes. These describe acceptable approaches ("may") and must be read with the Codes. A firm can adopt other appropriate measures if it can demonstrate compliance.

The Royal Court must take the Handbook into account when assessing compliance with the Money Laundering Order, but compliance with the Handbook is not a complete defence to a criminal offence. The Handbook is aimed at senior management and compliance staff, and it is not designed to be an internal procedures manual, so you still need your own written procedures. Our guide to AML policies, controls and procedures explains what those should contain, from the point of view of UK supervisors.

Consolidation in 2022

The JFSC published a consolidated AML/CFT Handbook on 31 January 2022, merging four previous handbooks into one, and it took effect on 31 May 2022 after a four-month transition period. The JFSC says compliance with its Codes of Practice is mandatory for all supervised persons. Accountancy services were already among the categories that had to follow the Codes, so the change mainly affected other supervised persons. Because the accountancy sector section I read predates consolidation, use the current consolidated Handbook for the wording of requirements.

What a Jersey firm must do

The Handbook summarises these key obligations:

• Risk-based approach. Policies, procedures and controls must be proportionate to the firm's risks, and risk assessments should consider national and sector-specific risk assessments, as well as client, product and transaction types.
• Customer due diligence. Identify clients and verify their identity.
• Reporting. Report knowledge or suspicion of money laundering or terrorist financing.
• Reliance and concessions. Assess equivalence before relying on overseas businesses or applying concessions, and document the basis for the conclusion.
• Overseas conflicts. Tell the JFSC if overseas laws prevent compliance with the Codes, and take other reasonable steps to manage the risk.
• Documentation. Keep documented, risk-based systems and be able to justify them to law enforcement, courts and regulators.
• Training. Make sure staff are trained and aware of the risks.

The principles of customer due diligence are similar in other jurisdictions. Our guide to ultimate beneficial ownership for accountants explains how to trace and record owners, though the Jersey Codes set the specific requirements for Jersey firms.

Sanctions the JFSC can apply

The Handbook lists regulatory sanctions including public statements, registration conditions, directions (including preventing an individual from working in a relevant person), and revocation of registration. A firm can ask the JFSC in advance, in writing, for a variance in exceptional circumstances where strict adherence would produce an anomalous result.

A starting checklist for a Jersey firm

1. Confirm which of your services are Schedule 2 business.
2. Read the current consolidated Handbook, including the sections for your services.
3. Check that your business risk assessment reflects Jersey's national and sector risk assessments.
4. Check that your procedures match the Codes, not just the Guidance Notes.
5. Confirm who handles reports and that staff know how to raise concerns.
6. Record training and diarise reviews.

For wider guidance across jurisdictions, see our CPD courses and the guides linked from our AML and KYC hub.

Frequently asked questions

Who supervises accountants in Jersey?

The Jersey Financial Services Commission is the designated AML/CFT supervisory body for Schedule 2 business, which includes accountancy services.

Are the Codes of Practice optional?

No. According to the JFSC they are mandatory, and failure to follow them may lead to regulatory sanctions. Guidance Notes describe acceptable approaches and are not mandatory in the same way.

Does Schedule 2 business include auditors and insolvency practitioners?

Yes. The accountancy sector Handbook says Schedule 2 business covers external accountancy services, tax advice, audit services and insolvency services.

What are the penalties?

For breaches of the Money Laundering Order, the accountancy sector Handbook refers to an unlimited fine, up to two years' imprisonment, or both. Check the current figures before relying on them.