Remote VASP serving residents in Jersey

JFSC Guidance Notes for Virtual Asset Service Providers (VASPs): (Crucial document!)

Designated Business (Registration and Oversight) (Jersey) Law 2019: https://www.jerseylaw.je/laws/enacted/Pages/designated-business-(registration-and-oversight)-(jersey)-law-2019.aspx-(jersey)-law-2019.aspx)

Financial Services (Jersey) Law 1998 (FSJL): This law regulates traditional financial services. Certain virtual asset activities could, in specific circumstances, also fall under its scope, requiring a traditional licence (e.g., if a crypto offering constitutes a collective investment fund or an investment product).

Money Laundering (Jersey) Order 2008 (MLO): Sets out the specific AML/CFT obligations for "financial services businesses" and "designated businesses."

Proceeds of Crime (Jersey) Law 1999 (PCL): Defines money laundering and terrorist financing offences.

The Money Laundering (Jersey) Law 2008 (as amended): This law establishes the preventative measures that financial services businesses (including VASPs) must take to combat money laundering and terrorist financing. It mandates compliance with the requirements set out in the Money Laundering Order.

The Money Laundering (Prevention and Detection of Money Laundering) (Jersey) Order 2008 (as amended) (the "ML Order"): This is the core regulatory instrument that specifies the detailed AML/CFT requirements for financial services businesses, including customer due diligence, reporting, record-keeping, and internal controls.

The Proceeds of Crime (Jersey) Law 1999 (as amended): This is the principal law creating offences related to money laundering and the financing of terrorism. It defines criminal conduct and the various money laundering offences.

JFSC AML/CFT Handbook: While not primary legislation, the JFSC's AML/CFT Handbook is a critical guidance document that provides practical advice and interpretations of the statutory requirements, demonstrating how businesses should comply. VASPs must refer to the relevant sections of this handbook.

Exchange between virtual assets and fiat currencies.

Exchange between one or more forms of virtual assets.

Transfer of virtual assets.

Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets.

Participation in and provision of financial services related to an issuer’s offer and/or sale of a virtual asset.

Identification and Verification of the Customer:

Identification and Verification of Beneficial Ownership:

Understanding the Purpose and Nature of the Business Relationship:

Continuously scrutinize transactions to ensure they are consistent with the VASP's knowledge of the customer, their business, and risk profile.

Politically Exposed Persons (PEPs): Senior foreign and domestic public officials, their family members, and close associates. Enhanced scrutiny of transactions and source of wealth/funds is mandatory.

High-Risk Jurisdictions: Customers or transactions involving countries identified by FATF or the JFSC as having inadequate AML/CFT regimes.

Entity Targeted: Volopa (Jersey) Limited (an e-money institution). Violation Type: Significant and systemic breaches of the Money Laundering (Jersey) Order 2008 concerning its AML/CFT systems and controls. This included failures in client due diligence, transaction monitoring, and governance. While not explicitly stated as crypto-specific, e-money institutions often facilitate transactions that can involve virtual assets, making robust AML controls crucial in this space. Penalty Amount: £395,097 (civil financial penalty).

Entity Targeted: Ms Kateryna Sazonova (former Money Laundering Reporting Officer (MLRO) and Compliance Officer for a licensed trust company). Violation Type: Failure to make a Suspicious Activity Report (SAR) regarding a client whose funds were identified as proceeds of a cyber fraud. Cyber fraud frequently involves the use of virtual assets for the movement and concealment of illicit funds, making this action highly relevant to the crypto space indirectly. Penalty Amount: Prohibited from performing any function as a Money Laundering Reporting Officer, Compliance Officer, or Principal Person for any person registered under regulatory laws in Jersey. No specific financial penalty was imposed on her in this public statement.

Investment Product/Arrangement: The JFSC considers whether the token grants rights or has features that make it an "investment product" or part of an "investment arrangement." This involves assessing:

Nature of the Rights: Does the token represent ownership, debt, a right to a share of profits, voting rights, or participation in a collective scheme?

Expectation of Profit: Is there an expectation of profit derived from the efforts of others (e.g., the issuer's management, development of a platform)?

Economic Reality: What is the economic reality of the arrangement, regardless of how it is labelled? Is it being marketed as an investment opportunity?