This update provides an overview of the recent (and notable) publications, findings and reports issued during the period July 2024 to September 2024 (inclusive).
You can find previous editions of our Regulatory updates here:
Channel Islands Regulatory Update: August 2024
Guernsey
Guernsey Financial Services Commission ("GFSC")
Amendments
1. An amendment to the country list in Appendix I of the Handbook on Countering Financial Crime (AML/CFT/CPF) has been issued. The amendments follow updates by the Financial Action Task Force ("FATF") to its lists of jurisdictions under increased monitoring. The list now includes Monaco and Venezuela, however the FATF has removed Jamaica and Turkey.
Consultation papers
2. The GFSC has also issued consultation papers in relation to:
(a) Fee rates and administrative penalties, proposing an overall proposed increase in fees of 5.3% (in line with current Guernsey inflation) for all fees, and the creation of a specific authorisation fee for an entity that is looking to apply to operate an Investment Exchange;
(b) Protected Cell Company as Pension Service Provider, seeking views from interested parties on a proposal to permit Pension Service Providers (PSPs) to be formed as Protected Cell Companies (PCCs);
(c) New Regulated Investment Exchange Operator Rules, seeking comments from interested parties on the creation of a new set of rules and associated guidance for regulated investment exchange operators; and
(d) Sustainability reporting, the intention being for the GFSC, in discussion with the finance industry, to explore the next steps that the Bailiwick of Guernsey can take to meet the challenges presented by sustainability and climate change risk.
Public statements
3. Public Statement dated 8 July 2024.
4. Public Statement dated and 24 July 2024.
5. Each statement is in relation to various failures to adhere to obligations under, inter alia, the Regulation of Fiduciaries, Administration Businesses and Company Directors, etc (Bailiwick of Guernsey) Law, 2020.
The Office of the Data Protection Authority ("ODPA")
6. Following the ODPA's examination of the Bailiwick's gambling sector, companies in Alderney’s gambling sector are set to address concerns about deceptive design patterns also known as "Dark Patterns". It follows the results from the OPDA’s participation in the annual Global Privacy Enforcement Network (GPEN) ‘Global Privacy Sweep’ earlier this year.
Guernsey Competition & Regulatory Authority ("GCRA")
7. The GCRA:
(a) Issued a further consultation paper on wholesale access services following its findings from its market intelligence gathering to date. The consultation paper invites feedback to better inform its decision on whether to instruct Sure to provide new telecommunications access services; and
(b) Published a regulatory roadmap to access products delivery outlining the process the GCRA intended to follow.
8. The States of Guernsey have voted in favour of suspending the competition law to allow telecoms firm Sure to buy Airtel. This will now enable Sure to finally conclude a merger process that began over two years ago in spring 2022.
OECD Pillar Two
9. Further to an earlier announcement regarding the adoption of the OECD's Pillar Two (see our article here), the States of Guernsey has published a Policy letter regarding the OECD Pillar Two GloBE rules. If introduced and approved, this will enable the Policy & Resources Committee to make Regulations implementing the rules, commentary and guidance in domestic law and thereby introducing an income inclusion rule and a qualified domestic minimum top-up-tax for large in-scope multinational enterprises for accounting periods commencing on or after 1 January 2025.
Jersey
MONEYVAL results and next steps
10. On 24 July 2024, MONEYVAL published a report following the 5th round of evaluation, commending Jersey for strengthening its AML/CFT/CPF legislative and regulatory framework, noting its effectiveness in preventing financial crime is amongst the highest in the world.
11. The Government of Jersey has developed a high-level action plan setting out priorities relevant to financial services and financial crime prevention and communicated these priorities to the relevant financial crime agencies to which they relate including the Jersey Financial Services Commission ("JFSC"), the Financial Intelligence Unit, the Economic Crime and Confiscation Unit, and the Joint Financial Crime Unit of the States of Jersey Police. The JFSC's update to industry on 03 September 2024 stated that work has already started in many areas but a JFSC specific action plan, which will set out what it plans to do over the next few years, will be prepared. Engagement with industry bodies is expected around proposed actions, timings and what can be done to minimise any negative impact on industry. Once feedback has been obtained and digested, the JFSC action plan is expected to be published late October / early November.
Legislative updates
12. On 10 September 2024, the Proceeds of Crime (Low Risk Financial Services Business) (Jersey) Order 2023 ("Low Risk FSB Order") came into force. This puts temporary exemptions made in October 2023 under the Money Laundering (Amendment No. 13) (Jersey) Order 2023 on a permanent footing. Under the Low Risk FSB Order certain activities are designated as "low risk financial services business" and those activities are either fully or partially exempted from the provisions of the Money Laundering (Jersey) Order 2008 ("MLO"). Directors designated as "low risk financial services business" are also exempt from complying with certain obligations under the MLO.
13. The proposition to amend the Financial Services (Disclosure and Provision of Information) (Jersey) Law 2020 with a view to enabling access to Jersey's central register of beneficial ownership and control for obliged entities was approved by the States in September. An ‘obliged entity’ for these purposes is a financial institution and other designated non-financial businesses and professionals required to conduct client due diligence. Later this year, consultation is expected on facilitating access to the register for those with a 'legitimate interest'.
Jersey Financial Services Commission ("JFSC")
14. JFSC have published:
(b) new real world assets Tokenisation Guidance including specific guidance on stablecoins bringing increased regulatory clarity and execution certainty for applicants;
(c) updated guidance on initial coin/token offerings;
(d) A feedback paper confirming it will proceed with its proposed increase in fees of 6% for, amongst other things, investment businesses, funds services businesses, insurance businesses, AIFS, CIFs, and JPFs.
15. The JFSC have also announced that:
(a) its
second themed examination of 2024 would be a cross-sector focus on conflicts of interest, in particular how entities identify, record and manage conflicts (such as disclosure to the customer, application of internal rules relating to confidentiality and declining to act where the risk is considered too high to proceed.
(b) it would make thematic assessment visits to entities in the general insurance mediation business sector. The visits will focus on Section 2 of the GIMB Code of Practice (which states a "registered person must have due regard for the interests of its clients").
Jersey Office of the Information Commissioner
16. The Jersey Office of the Information Commissioner has published a document setting out its key findings following the completion of a full data protection compliance audit focusing on a local, public sector data controller which processes significant volumes of personal data. Helpfully, the document sets out guidance on best practice in respect of data protection training, policies and procedures, personal data sharing, confidentiality, and messaging and virtual applications.
OECD Pillar Two
17. Following draft legislation being lodged in August with a view to implementing Pillar Two in Jersey, the States of Jersey sought submissions in relation to OECD Pillar Two as part of a scrutiny review by the corporate services panel. The panel invited submissions from targeted stakeholders noting that public hearings will also be held with the Minister for External Relations and Minister for Treasury and Resources. On completion of its evidence gathering and analysis, the panel will present a Scrutiny Report including key findings and recommendations in late 2024. The draft legislation is expected to be debated by the States Assembly mid-October.
18. For insights on the proposed approach to the implementation of OECD Pillar Two in Jersey please see our previous article here.
About our Channel Islands Regulatory and Risk Advisory team
Our Channel Islands' Regulatory & Risk Advisory Team has a dedicated team of regulatory experts spanning all practice areas who regularly advise on all aspects of Guernsey and Jersey regulation and tax, including financial services, AML, sanctions, data protection, consumer protection, competition, tax (including Pillar Two), economic substance, FATCA and the CRS. Our team can also provide training to staff on a broad range of topics.
