THE finance industry has been warned to look out for rogue states such as North Korea and Iran using Jersey to fund the development of weapons of mass destruction.
Practitioners who are already looking out for evidence of money laundering or terrorist funding must also be aware of ‘proliferation financing’ – the act of providing funds or financial services that are used to make, acquire, transport, sell or stockpile nuclear, chemical or biological weapons.
Industry professionals in Jersey were briefed about the dangers of this kind of activity at a seminar organised by the government and regulator this week.
Although it is considered unlikely that Jersey would ever have a direct role in the manufacturer or procurement of WMDs, its finance industry sends money to more than 200 jurisdictions every year.
These include countries where terrorist acts have taken place over the past few years.
Darya Dolzikova, a research fellow with the Royal United Services Institute, told the workshop that people with responsibility for financial crime prevention in Jersey, including employees who file ‘suspicious transaction reports’, needed to look out for ‘red flags’ which could include legal activities, such as opening restaurants, offering IT services or trading in luxury goods.
‘A key question to ask is: “Why is Jersey in the structure?”,’ she said. ‘A lot of times, it is perfectly reasonable, but you need to constantly ask why.’
Ms Dolzikova shared a real example of a North Korean bank with strong links to the regime in Pyongyang which had been able to set up a structure in the British Virgin Islands.
The entity was set up by Panamanian law firm Mossack Fonseca and revealed in the ‘Panama Papers’.
The meeting also heard that between 2018 and last year, the Jersey Financial Intelligence Unit opened 153 case files concerning the funding of terrorism, after the industry had submitted suspicious activity reports.
One of those case files was suspicious enough to merit a full investigation, but no link with terrorism could be established. However, in many cases, intelligence gathered in Jersey was shared with other agencies worldwide.
On the first anniversary of Russia’s invasion of Ukraine, the audience was told that there had been more than 1,500 asset freezes in Jersey relating to individuals or entities linked to Russia and Belarus.
Practitioners were also warned to be aware of ways that Russia was funding and equipping itself for its widely condemned war. The guidance systems of missiles downed over Ukraine, for instance, have been found to contain electronic chips taken from Western-made fridges.
The workshop was one of several organised by the government before the effectiveness of the Island’s anti-money-laundering processes and anti-terrorist-financing laws are assessed by external inspectors from EU body Moneyval later this year.