I loved this. On 16 January the Jersey Evening Press proudly says:
OFFICIALS from Jersey went to the US Embassy in London last month to show the Americans that the Island's financial compliance armoury is every bit as strong as that of the United States'.
And French government officials are expected to come to the Island in the next couple of months on a fact-finding visit to see for themselves how well the Island's finance industry is regulated.
Tres bon, say I.
Then next day they report:
A COMPANY director faces a ban after he overrode both the firm's board and its compliance function to take on a ‘toxic' Eastern European client connection, it has been revealed.
And the director faces a public statement being made about him, according to the Island's most senior finance regulator.
Meanwhile, in a different case the financial regulator acted against a regulated firm for trying to discipline a compliance manager for raising concerns about bad practice.
The director general of the Jersey Financial Services Commission, John Harris, said the compliance manager faced ‘misconceived and intimidatory disciplinary proceedings' for raising the concerns.
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Richard
The first point is a non-point.
In any walk of life, anywhere in the world, you can put whatever steps in place as are necessary to try to stop something happening, but you simply cannot prevent somebody uniliaterally ignoring those controls and breaking the rules. Fines for speeding don’t stop people speeding. Lengthy bans and prison sentences don’t stop people drink-driving, and even the death sentence doesn’t stop people committing murder. If a human being is committed to breaking the law then they will find a way to break the law, regardless of what controls and penalties might result. What you can do of course is put in place controls to minimise the chances of it happening and to maximise the risks of being caught. It is impossible to 100% eradicate all risk of it happening. We aren’t told the facts here, but its quite probable that the Jersey organisation’s own procedures actually discovered and reported the offence.
The second point is a very serious point and the organisation concerned probably deserves everything that will be coming its way by the sounds of it.
By the way, for your information the “boat out in the morning” quip is one used against non-islanders trying to change island life, not against islanders.
Richard,
It really seems that your approach to Jersey is best summed up by:
a) if they report no financial crime, it shows they are not serious about pursuing financial crime and therefore the Island must be full of it; and
b) if they prosecute and punish financial crime, it proves the island is full of financial crime.
Is that fair?
Not at all
The reality is that the second case shows an inclination to suppress crime reporting
Please don’t tell me that it’s the only time it has happened – I won’t believe you
the “inclination to suppress crime reporting” manifesting itself through the Director General of the JFSC announcing the investigation to a packed seminar of compliance officials and JEP journalists?
Give credit where it is due: the JFSC were no doubt tipped off by the compliance officers concerned and punished the firms concerned. Isn’t that what everyone would want?
Oh come on – it took a brave compliance officer who knew he was on the next boat to tip them off in the first place
Most would have just buckled
Ticking boxes is not the same as what actually happens
Surely you know that
Any attempt to suppress the reporting of suspected crime cannot be condoned. Even the staunchest supporter of Jersey would struggle to argue that one.
But Roger is quite right. You are quick to jump on the fact that the initial crime took place in Jersey, but you conveniently overlook on a regular basis the fact that many of the cases that you actually get to hear about do so because of the reporting of the offence by the compliance function at the regulated business itself. You will of course never get the full story in the media because of the tipping off rules.
I can assure you that there are many organisations these days who would employ a “brave” compliance officer. Far more so than 10 years ago when I think your comment may have been completely accurate.
This case reminds me of the HBOS case.
Richard only quoted from what the local paper puts out in public, maybe he cannot afford the online subsrciption!
The article printed on the 17th January in fact goes on to far worse:
“the JFSC had come across 2 or 3 “very worrying incidences” in the way firms responded to objections raised by compliance staff.
“He also said that the commission had been involved with what he termed several ‘remediation” and follow-up programmes, in relation to firms that had not been carrying out functions appropriately.
“As a result, he said that the licenses of about half a dozen firms had been revoked.
“Talking about the general environment, he said that it was still ‘rare’ to find the board of a firm taking full ownership of legal obligations imposed under anti-money-laundering / countering terrorism financing legislation.
“… few had adopted a ‘well-articulated AML/CFT risk appetite approach and a supporting strategy. That is not happening as widely as it should be. . . .
“He said that commission inspections had revealed inadequacies in due diligence procedures for high risk business, including those relating to politically exposed persons.
“And he said that the inadequacies had been seen in banks as well as in trust companies and investment businesses.
“Mr Harris said that the regulator had come across incidences of insufficient power being available to staff involved in the risk and compliance functions within a business.
“He also highlighted what he termed very low numbers of suspicious activity reports filed by trust companies and auditors in particular.”
So, a clean bill of health then.
And all this, remember, is from an offshore finance centre which holds itself up as being in the very top rank of regulation. I wonder what a ‘poorly regulated jurisdiction’ looks like!!
The answer to Roger Phlegm at #2 above must be:
1) they find systems which are weak and would allow financial crime – such systems are commonplace
2) in some of these cases they do take action, removing some bad apples
3) given that the whole set-up in Jersey and other havens is designed to attract business on the edge of legality and in certain cases business that is known to be illegal, the likelihood is that there is plenty of financial crime taking place.
4) the question must then be – is the JFSC a fig-leaf, or is it a genuine attempt to clean things up?
You can read the speech either way
Correction
I wrote;
“Richard only quoted from what the local paper puts out in public, maybe he cannot afford the online subsrciption!”
I meant:
Richard only quoted from what the local paper puts online for all to see, maybe he cannot afford the full online subscription. ( which is the same as the full printed paper )