THE finance sector has been urged to tighten monitoring of all customers with ties to Russia or Belarus, due to a ‘heightened risk’ of money laundering and the financing of terrorism or weapons of mass destruction.
In a joint statement, External Relations Minister Ian Gorst and the Jersey Financial Services Commission warned that the Island’s largest industry needed to be ‘particularly vigilant’ as the financial system was more likely to be ‘abused’ by those seeking to support Russian president Vladimir Putin’s war effort.
The statement added that increased risks identified included money laundering, terrorist financing and proliferation financing – gathering funds involved with the acquisition of chemical, nuclear or biological weapons.
Jersey is applying sanctions ‘in lockstep’ with the UK, with more than 1,000 Russian individuals and businesses penalised following the invasion of Ukraine.
‘The Government of Jersey and the Jersey Financial Services Commission consider that, currently, there is a significantly increased level of money laundering/terrorist financing/proliferation financing risk in providing services to customer relationships associated with Russia and Belarus,’ the joint statement says.
‘Regulated entities are required to carry out due diligence on a risk basis and this obligation is ongoing. Therefore, those customer relationships are expected to be subject to a higher level of due diligence.’
Finance firms have been advised to refer to the JFSC’s guidance on beneficial owners and controllers should they identify a customer relationship with a non-Jersey resident Russian/Belarussian person or entity.
The statement adds: ‘This applies regardless of the individual or organisation being subject to sanctions, and entities should familiarise themselves with common indicators of sanctions evasion.
‘In accordance with JFSC guidance, firms should actively consider the adequacy of their risk management arrangements in respect of any relevant customer relationships.
‘Transactions and mandate decisions should be subject to senior management approval and there should be appropriate oversight in place by the board, supported by compliance monitoring.’
It adds that care should be taken to avoid sanctions avoidance if the decision is made to terminate a customer relationship.
‘In this situation, regulated entities should apply a high level of due diligence to ensure that they do not assist the evasion of sanctions and ensure that those firms who are party to such transactions are not subject to sanctions.’
Meanwhile, Jersey also confirmed it was suspending all forms of tax co-operation with Russia with immediate effect, following a similar move by the UK.