Corporate Criminal Liability For Failure To Prevent Money Laundering – Criminal Law

Irina Baranova


Jersey:

Corporate Criminal Liability For Failure To Prevent Money Laundering


To print this article, all you need is to be registered or login on Mondaq.com.

On 28 January 2022 the Government of Jersey launched a
consultation, which closes on 21 February 2022, regarding proposals
to introduce a new corporate criminal offence for any financial
services business (FSB) which fails to prevent money laundering and
terrorist financing.

This offence would be introduced by way of amendment to the
Proceeds of Crime (Jersey) Law 1999 (POCL) and is driven by a
desire to overcome difficulties with the identification doctrine.
Currently, the criminal act of money laundering can only be
attributed to an FSB where the individual(s) committing the offence
represent the directing mind and will of the FSB. Complex corporate
structures therefore make prosecution more difficult; and the
practice of layering by criminals has become common. However, the
new failure-to-prevent  offence would mean that once the
offence of money laundering or financing terrorism is established,
to the criminal standard (beyond reasonable doubt), then it is up
to the corporate body to demonstrate to the civil standard (the
balance of probabilities) that it took adequate or reasonable steps
to prevent the substantive offence.

The Financial Action Task Force (FATF) Methodology requires
jurisdictions to demonstrate that money laundering offences and
activities are investigated, and offenders are prosecuted and
subject to effective, proportionate, and dissuasive sanctions. The
Government of Jersey considers that the introduction of new
statutory measures will enhance the jurisdiction’s
effectiveness of AML/CFT enforcement, in order to better meet the
requirements of the FATF Methodology. The consultation paper goes
on to clarify that it is not just with regard to satisfying the
FATF Methodology that a corporate criminal offence is proposed to
be introduced – the ultimate rationale for corporate criminal
liability is much broader and based on the social implications of
law enforcement. Where corporate bodies commit crimes, it is
important that they are held to account and sanctioned (by fines)
similar to natural persons.

The proposed failure-to-prevent offence would be triggered by
the substantive offences covered under the POCL and the Terrorism
(Jersey) Law 2002 (Terrorism Law) as well as conduct outside Jersey
which, if occurring in Jersey, would be an offence under these
provisions; whereas a contravention of the Money Laundering
(Jersey) Order 2008 (MLO), however, would not trigger the new
offence.

Crucially, FSBs will be relieved to know that the proposed
amendment would provide corporate bodies with a “reasonable
steps” defence tailored to its business and risk requirements.
Of course, there will be subjectivity in what exactly constitutes
“reasonable” steps, or adequate prevention procedures,
depending on the size and risk profile of the business in each case
and the proposed change is intended to be a further incentive for
FSBs to ensure they adopt best practice to fight financial
crime.

We anticipate that there will be considerable overlap between
FSBs complying with the MLO and demonstrating adequate prevention
measures are in place by way of defence to an alleged
failure-to-prevent offence. That is to say, where an FSB has robust
systems in place to prevent such offences it could also have a
ready-made defence; and the proposed failure-to-prevent offence
would also only apply to the sectors which are already regulated
for AML purposes. No additional requirements for other sectors
would be introduced so the Consultation briefing argues that an
increase in effectiveness of enforcement can therefore be achieved
without introducing any new requirements for the financial services
sector. Nonetheless, while there are requirements to prevent money
laundering and terrorist financing already, the introduction of a
failure to prevent offence will focus the minds of FSBs in
considering just how robust their policies and procedures are.

This is the latest in a number of proposed changes to the
anti-money laundering legal and regulatory framework in Jersey.
Please do get in touch with your usual Appleby contact for more
information in relation to the proposed changes or if you wish to
discuss.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

POPULAR ARTICLES ON: Criminal Law from Jersey

What Are The Penalties For Theft?

Hassan Elhais

Theft is an unlawful way of taking and expelling another’s property with the intent of keeping it without his consent.

Travel Ban In UAE: All You Need To Know

Hassan Elhais

“The freedom of movement and residence will be granted within limits of laws” quotes from Article 29 of the UAE constitution offers freedom and simultaneously curtail it on the basis of law.

Whistleblowing In Cyprus

Antoniou McCollum & Co.

New Cyprus whistleblowing legislation regulates the disclosure or reporting of breaches of EU and Cyprus law in the public and private sectors.

A Guide To Dealing With Politically Exposed Persons

Dr Werner & Partner

There are many misconceptions about Politically Exposed Persons (PEPs). Many people think that it is not allowed to service PEPs. Many people think that only Heads of State and Government Ministers are PEPs.

https://www.mondaq.com/jersey/crime/1160570/corporate-criminal-liability-for-failure-to-prevent-money-laundering-

Next Post

New UAE labour law: How do I claim overtime while working from home? - News

In some cases, you may not be entitled for overtime pay while working remotely By Ashish Mehta Published: Sun 13 Feb 2022, 12:43 PM Question: As per my contract, I must work 9.5 hours a day. However, I have been putting in nearly 14-15 hours working from home. Since these […]
New UAE labour law: How do I claim overtime while working from home? – News