By C5 Alliance
28/03/2024
The thematic examination programme for 2024 is now underway, focussing on Politically Exposed Persons (PEPs) during the first half of the year followed by Compliance Monitoring and Conflicts of Interest. Entities selected for these examinations will undergo a detailed assessment of their governance, systems, processes and controls relating to the thematic areas of focus.
The thematic examination programme comprises of several key areas of focus:
Supervision Examination Unit’s Thematic Examination Programme:
• Politically exposed persons.
• Compliance Monitoring.
• Conflicts of Interest.
Sector-specific thematic assessment visit (TAV) themes:
• Banking – fraud controls and response.
• Fund Services Business – custody and safekeeping.
• Trust Company Services Providers – enhanced due diligence.
• Investment Business – suitability of advice.
• Designated Non-Financial Services Businesses and Professions
• Non-Profit Organisations – diversion mitigation.
Cross-Sector Thematic Examination Programme
Politically Exposed Persons
Due to the heightened risks associated with PEPs, the JFSC aims to ensure that entities have appropriate measures in place for identifying, monitoring, and managing any risks stemming from affiliations with PEPs.
Compliance Monitoring
The Supervision Examination Unit will look for entities to demonstrate the implementation and maintenance of effective systems and controls, which are essential for adherence to statutory and regulatory requirements.
Conflicts of Interest
The thematic examination will assess entities’ governance, systems, controls, and staff training and awareness regarding conflicts of interest, ensuring entities have robust frameworks to address conflicts effectively.
Sector-Specific Thematic Assessment Visits
The JFSC has implemented a series of thematic assessment visits (TAVs) across each sector.
Banking: Fraud Controls and Response
In the banking sector, the focus will be on the effectiveness of systems and controls designed to detect and prevent fraud. This includes evaluating banks’ risk management frameworks, oversight mechanisms, the process of reporting management information, and the responsibilities assigned locally for the implementation of policies aimed at countering the misuse of Jersey’s banking operations.
How BDO can help:
• Our Certified Fraud Examiner will review your fraud reporting policies and procedures, identifying ways to make it easier for customers, particularly vulnerable ones, to report fraud.
• Assist in reviewing your actions to recover funds once a fraud has been uncovered.
• Review your complaints policy and process.
• Collate information required by the regulator into a presentable format.
Fund Services Business: Custody and Safekeeping
For fund services businesses, the emphasis is placed on mitigating concentration risk stemmed from a restricted number of service providers for custody and safekeeping roles. The assessment reviews entities licensed to hold or control client assets, exploring the adequacy of their control obligations, the effectiveness of management information provided to boards and senior management, and their compliance with rules regarding customer assets.
How BDO can help:
• Review of escalation reporting processes
• Review of fraud & misappropriation processes
• Review policies & procedures related to client funds
• Review MI & identify enhancement opportunities
• Sample transactions for compliance with policies & procedures
• Collate information required by the regulator
Trust Company Business: Enhanced Due Diligence
Trust Company Business providers are under scrutiny for the effectiveness of their Enhanced Due Diligence (EDD) measures in high-risk money laundering or terrorism financing scenarios as outlined in the Money Laundering (Jersey) Order 2008.
How BDO can help:
• Review of periodic review process for customers with EDD measures applied, looking at ways to streamline the process and ensure timely reviews are undertaken.
• Review of beneficial owner and controller information and information maintained to corroborate source of wealth/source of funds, looking at ways to streamline collation of this data and apply automation where possible.
• Collate information required by the regulator into a presentable format.
Investment Business: Suitability of Advice
The TAV assesses firms’ obligations in performing due diligence to ensure the suitability of products and services for their customer’s needs. This includes examining the appropriateness of the advice given, ensuring fair treatment of customers, and evaluating the due care and skill in service delivery alongside the appropriateness and frequency of staff training.
How BDO can help:
• Review staff training in place to ensure investment services are delivered with due care and skill, identifying potential improvements and training solutions.
• Collate information required by the regulator into a presentable format.
Designated Non-Financial Services Businesses and Professions: AML/CFT/CPF Staff Training and Awareness
The TAV aims to establish if supervised persons can demonstrate provisioning of adequate, role-specific AML/CFT/CPF training to employees. The focus leans towards the relevance and comprehension of the training content, adherence to legal enactments, and employees’ understanding of the relevant policies and procedures of the supervised person.
Non-Profit Organisations: Diversion Mitigation
Non-Profit Organisations (NPOs) are evaluated for their measures to mitigate risks of fund diversion to terrorist activities. The assessment involves examining the implementation and effectiveness of internal systems and controls designed to mitigate diversion risks, as prescribed by the NPO Order.
How we can help you prepare for your themed visit
BDO’s experts have extensive experience with regulatory examinations, internal audit, process optimisation, alignment of process to policy and fraud examinations. Our team have experience working with both regulators and regulated entities across the spectrum of sectors in the finance sector.
Preparing for a themed visit from the JFSC requires thorough knowledge of the examination scope and careful scrutiny of an entity’s existing policies, procedures, and controls. Our services are designed to assist regulated entities in Jersey in various ways, including:
• Conducting pre-visit assessments to identify potential areas of improvement.
• Collating documentation required for the visit.
• Testing to check conformance with policies and procedures.
• Assisting in the development or refinement of processes and controls.
• Offering training sessions tailored to enhancing staff understanding and management specific key areas (e.g. conflicts of interest).
• Produce remediation action plans to address any deficiencies.
• Providing guidance on best practices for documentation and record-keeping.
By leveraging our expertise, you can approach your themed visit with confidence, knowing that you are well-prepared and fully aware of any areas for improvement.
Following a themed visit, it is imperative for organisations to engage in and deliver appropriate remedial actions in a timely manner, to address any deficiencies identified. At BDO, we are well positioned to assist your organisation with managing the completion of remedial actions on time.
