Recent reports in the press suggest that, after a 3-year information gathering process, Lloyds Banking Group has frozen the accounts of approximately 8,000 clients in Jersey who failed to provide sufficient proof of their identity. Appleby's Jared Dann looks at the anti-money laundering picture in Jersey.
The Financial Times has reported that this process has formed part of an ongoing initiative by Lloyds to bolster the AML controls in its Jersey operations.
Press reports also suggest that HSBC, Barclays and Royal Bank of Scotland International have followed suit in sending letters to those Jersey account holders for whom they do not have sufficient Know Your Client documentation.
While the number of accounts involved suggests that AML controls in the past may have been insufficiently stringent, these initiatives demonstrate that the island's financial institutions are taking their AML responsibilities seriously. They are also just one of a number of developments which demonstrate Jersey's commitment to maintaining its reputation as a leading offshore financial centre.
These developments include Jersey's excellent performance in its most recent Moneyval review in 2016 (Moneyval is a committee of the Council of Europe which assesses compliance with international anti-money laundering and anti-terrorism financing standards). By contrast, Malta - an EU member - has very recently failed its initial Moneyval assessment and reports suggest that it has been given a year to put its house in order or risk the imposition of sanctions. In the past few days, the OECD has also confirmed that it is satisfied with Jersey's newly introduced economic substance legislation, which is intended to prevent tax avoidance through the improper shifting of profits to low tax jurisdictions.
The Jersey government is currently working closely with the US and Nigerian Governments (in efforts which I have witnessed at first hand) to return to Nigeria more than $300m which was looted from the country by its former President, General Abacha, and his associates.
This is the culmination of a process lasting more than ten years which has required the passing of new legislation in Jersey (the Civil Asset Recovery (International Co-operation, Jersey) Law 2007) to facilitate the confiscation and the return of the funds.
In the same vein, the Jersey Financial Services Commission has acquired new powers to fine regulated firms or individuals up to £4 million for serious or recurring breaches of the code of conduct, and has recently issued its first such penalty.
While there is clearly plenty more to be done in order to satisfy Jersey's critics, there can be no doubt that the Island and its financial institutions have taken giant steps to combat money laundering and the financing of terrorism, and that the picture in this area remains a positive one.
Jared Dann is a group partner in the Dispute Resolution department at Appleby in Jersey. This article was first published in connect magazine