Annual Report 2012 - the Jersey Financial Services Commission

International Standards and Policy DevelopmentThe Commission seeks to ensure that theIsland’s framework for regulating andsupervising financial services is of a highstandard so as to comply withinternational standards which aredynamic and increasingly demanding.Main changes in our internationalrelationships during the yearThe Commission worked closely through the year withauthorities in the UK, Guernsey and the Isle of Man tosupport an application by the UK for the CrownDependencies to participate in the mutual evaluationprocesses and procedures of MONEYVAL - the Committeeof Experts on the Evaluation of Anti-Money LaunderingMeasures and the Financing of Terrorism established by theCouncil of Europe.The application was agreed by the Committee ofMinisters of the Council of Europe in October 2012,and paves the way for:• a “progress report” in 2013 on how Jersey hasaddressed recommendations made by the IMF toenhance the Island’s compliance with the FinancialAction Task Force (“FATF”) Recommendations; and• a full mutual evaluation in 2014 or later on Jersey’scompliance with the FATF Recommendations.Historically, whilst Jersey has been an ordinary member ofthe International Organisation of Securities Commissions(“IOSCO”) for some time, it has not been able to take partin IOSCO’s decision-making process. Instead, the UK’sformer Financial Services Authority had been able toexercise a single vote, covering ordinary members of IOSCOin the UK, Crown Dependencies and Overseas Territories.Following a period of lobbying by the Commission,IOSCO agreed to the principle of “one member one vote”in 2013, except in the case of elections, where Jerseywill share a vote with the other Crown Dependenciesand Gibraltar.Jersey (along with Guernsey and the Isle of Man) continuesto be included in transitional provisions that allow Jerseybased(and some other) firms to audit Jersey companiesthat have securities traded on a regulated market in the EU.These transitional provisions will eventually fall away, bywhich time it is hoped that Jersey’s auditor oversight regimewill have been assessed and recognised as “equivalent” byEU Member States. The effect of this is that reliance mightbe placed on Jersey’s oversight of auditors, without need forEU Member States in which a company’s securities aretraded to duplicate registration and oversight requirementsunder their national regimes.In support of such an assessment, the Commissionprovided a detailed description of Jersey’s regime forRecognized Auditors to the European Commission (the “EC”)in December 2011, and the EC is now expected to putforward formal proposals to Member States which willrecognise the equivalence for a number of jurisdictions,including Jersey. These proposals will be subject to theapproval of Member States and comments from theEuropean Parliament, but the current expectation is that anEC Decision – the legal instrument that recognises“equivalence” - will be in place by June 2013.The Commission explored with the EC and EuropeanPayments Council (the “EPC”) the future use by Jerseybanks of The Single European Payments Area (“SEPA”)payment systems, following the EPC’s withdrawal in early2012 of criteria for third country membership.Ahead of publication in 2013 of a report by the EC onSEPA governance arrangements, it is not clear:• who will set new criteria for deciding whether thirdcountry banks might apply to use euro paymentsystems; and• who will assess third country payment frameworksagainst those criteria.The Commission negotiates the agreement of memorandaof understanding with domestic and overseas agencies.During 2012, memoranda of understanding were agreedwith Germany’s BaFin, the National Bank of Slovakia,the United States’ Federal Deposit Insurance Corporationand the Reserve Bank of India.16 | ANNUAL REPORT 2012