JFSC’s on-site examination programme 2014
On 17 June 2015, Jersey Financial Services Commission (Commission) published its
FSB on-site examination programme 2014 summary findings with respect to the supervision of fund services and collective investment funds. During 2014, 36 on-site examinations were conducted to examine whether legal requirements are respected. Efforts to improve systems and controls have been acknowledged, however, three key areas remain a concern for regulators. The percentage breakdown of the 2014 examination findings in respect of key areas are detailed below:
- Internal systems and controls (50%)
- Anti-money laundering/ countering the financing of terrorism (AML/ CFI) (27%)
- Corporate governance (23%)
With regard to internal systems and controls it was identified that some firms were lacking appropriate resources to implement compliance activities and compliance monitoring. The quality of compliance monitoring programmes and underlying detailed testing required. Oversight of outsourced activities in particular was deemed not be sufficient in a number of cases.
Furthermore, policies and procedures were found to be inaccurate or out of date (and not reflecting the new Codes which were effective 1 January 2014).
In relation to AML related findings, many firms did not demonstrate appropriate Business Risk Assessments (which was the largest finding in the AML category) and further findings also relate to adequately functioning (and documented) SAR reporting processes.
As for corporate governance, it was noted that some firms do not adequately document and record the deliberations of the Board with others failing to record and consider key conflicts. The supervisory visits also found an increasing number of Personal Account (PA) Dealing issues, such as weaknesses in PA Dealing policies and breaches of such policies not being recorded.
What businesses should be thinking about?
Business should review the full findings as communicated by the JFSC and consider whether improvements can be made to their arrangements. The JFSC communication is a helpful guide to firms who are preparing for a visit but also in terms of ensuring day to day good industry practice.