Richard Pratt, director general of the Jersey Financial Services Commission, says that in most respects Jersey’s regulation follows behind that of other jurisdictions, except in matters of trust and company business.
owever, the industry continues to voice concern that the JFSC has already introduced more regulation than exists in other finance centres – and that this is imposing further costs and discouraging new business.
urther questions have been raised this week following the decision by the UK regulator, the Financial Services Authority, to ditch plans to force finance companies to verify the identity of their existing customers.
The FSA said that it dropped the scheme after a review found that new systems and procedures needed for the checks would have cost firms between £92 million and £174 million.
he regulations would have obliged financial institutions to carry out checks on clients recruited between 1994, when the anti-money laundering regulations were introduced, and 2001, when the FSA was set up.
The authority said that it was concerned that the new requirement might have reduced the industry’s competitiveness and inconvenienced customers.
ersey-based firms are already being asked to carry out these checks in accordance with the Commission’s anti-money laundering guidance notes and ‘know your customer’ position paper.
ut Mr Pratt said that the proposals were not a legal requirement here – nor had firms been given a deadline for completion.
The same measures have been agreed in Guernsey and the Isle of Man, and they follow the recommendations of the Basel Committee on Banking Supervision and the Financial Action Task Force,’ he said.
There are important differences between the UK and Jersey.
The UK has principally a retail customer base, with a different spread of risks.
Jersey does more private banking and has more high net worth clients.
Clive Jones, the chairman of the Jersey Finance Industry Association, this month expressed concern that in terms of regulation Jersey was more of a leader than a follower.
Speaking at the recent JFSC conference he commented: ‘Where I have particular concerns is on the issue of a level playing field.
The industry has been an active partner in the drive to improve regulation, but it has warned about the dangers of going too fast, too quickly.
To be the leader in some cases can be helpful.
However, it is also sometimes helpful to let others take the lead and to observe the impact on their business.
Otherwise we risk developing a reputation for being unnecessarily difficult to deal with.
In response, Mr Pratt said that it was his view that Jersey was for the most part a follower rather than a leader.
‘We are a leader in the context of trust company business regulation, and I don’t think many would think that this wasn’t the right thing to do.
If you look at what’s happening in other parts of the regulatory field, we tend to follow, not too far behind.
In terms of the European Union Directive and the Proceeds of Crime Law, things have been done in the UK and EU which we haven’t done yet.