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R.80/2021
Our priority from the start was to keep our people, Industry and our Registry customers safe, while staying open for business.
Contents
2020: At a glance 06 07
01 Vision from the top:
Chair's statement 08 11
02 Being resilient in 2020:
Director General's statement 12 15
03 Guiding principles and key deliverables 16 21
04 Principal risks and uncertainties 22 27
05 2020: In detail 28 59
- Delivering against our strategic roadmap 30 31
- Responding to the pandemic 32 33
- Engaging more effectively with
our stakeholders 34 37
- Supervising with focus on fighting financial crime 38 41
- Taking action to protect the public 42 43
- Building our understanding of risk 44 45
- Helping to build regulatory and registry standards 46 49
- Building better processes 50 53
- Developing our people 54 57
- Committing to environmental, social
and governance principles (ESG) 58 59 06 Finance and resources 60 63
07 Governance 64 75
08 Independent auditor s report to the
Chief Minister of the Government of Jersey 76 83
09 Financial statements 84 101 10 Appendix 102 105 11 Notes 106 107
Jersey Financial
Services Commission Annual Report
2020
2020:
At a glance
More than doubled our engagement and
outreach with website updates, webinars Enabled new businesses and virtual meetings Started to upgrade the to come to Jersey by
introducing new fees for core systems used by
businesses applying for our supervisors
eligible foreign limited
partnerships to continue Moved all our services people online to as limited partnerships
work from home for the year in response in Jersey
to Covid-19
Kept the Registry fully Launched our first
operational when programme of webinars
other jurisdictions did Launched new regulatory platform - myProfile - Continued our policy work not, contributing in for stakeholders to update and manage their on sustainable investments large part to an influx information
of new business to
the Island
Undertook a full review Published our report on of our authorisations
a shared KYC utility framework to make
improvements to how we process licences
01 31
Supported Industry with flexibility on
deadlines and business continuity plans Reviewed our
financial resilience
One of very few jurisdictions to Worked with the Government of Jersey to move to remote examinations finalise the Island's first National Risk
Assessment for anti-money laundering
Published more than 58 examinations on 100+ businesses 20 consultation and
feedback papers
Discussed revised fee structures with Industry and Registry customers
Completed the initial build work for the new digital Registry and myRegistry and went live early in 2021
p.08 p.09 Annual Report 2019Annual Report 2020
0 1.
Vision from the top:
Chair s statement
_ 01
Vision from the top:
Chair s statement Supervision, rcan be challenging for businesses, but thenecessary. Whilst Coonumber of examinations wf examinations in 2021, remediation and enfore undertvid-19 rook in 2020, our educed the number efleccement acting y artion e at the same time be clear on our eabout the behaOutrraise the standaroperations, facilitation oeach is also one oviour od of compliance on the Island. f firms and their people. f the tf technological eools wxpece will use ttations volution, o
investment in risk-based assessment to underpin
the deployment of resources ensured our visits I can summarise these strands as building
were carefully targeted. We expect to increase the Jersey s reputation. Robust and resilient
the investment we have made in our proportionate and effective supervision, and Supervision team. strong Industry engagement all help to build
our reputation as a jurisdiction. The stronger Where we identify failings that put customers at our reputation, the better the prospects for the risk or create opportunities for financial crime, Island s economic wellbeing. The JFSC can play
2020 has been an extraordinary year. The Island, its people and its businesses we will take action. It is not in the interest of its part in this, but the responsibility is shared. have been deeply affected by Covid-19. The pandemic has impacted each one those who abide by the rules for Jersey to be Government, business and regulator all have a role
seen as a soft touch by those who do not. One of to play. Ill-judged business choices can unravel of us and, whilst restrictions are being eased, the clock cannot be turned back: my reflections on the outcome of our work this hard-won gains. The chase for short-term profits
our lives have been indelibly marked by the events of the last year. year is the pivotal role of Boards. Responsibility can hamper long-term interests. Let us work
for compliance failings and poor systems and together in 2021 to continue to build
I am very grateful to the team at the JFSC, ably led by our Director General, for their work maintaining the controls sit with Boards. We will continue to our reputation.
continuity of our operations, our engagement with businesses and our support to the local community. highlight examples of good and poor governance
It is much appreciated. in our work.
Invaluable oversight
One of the JFSC s guiding principles is to contribute to the long-term economic wellbeing of the Island.
shape the Island s future: balancing facilitating change with maintaining high but proportionate regulatory Deeper engagement with
For me, this means we need to understand the technological, business and regulatory changes that will To close, I would like to thank my fellow
Industry will help us to better Commissioners for their unyielding support
and supervisory standards. Whilst Covid-19 dominated 2020 and will cast a long shadow, we know that and commitment during my first year as
the pace of change in financial services is accelerating and we need to respond. Chair. In particular, 2020 was the last full
understand the challenges yryeear oearstirement in April 2021 mark service for the JFSC and the Island. His f Commissioner Wright s the end os tenure; his f nine
businesses face and how contribution as Commissioner and Deputy Chair are to be commended. We also said farewell Our seamless move we adapt to them trin office and offerinsight during those yo Commissioners Rueespectively, who had boed inears.vtimann and Whelan aluable oth compleversight and ted two terms
As with the firms we regulate, we found that
previous investment in technology facilitated a So how do you demonstrate that controls
high degree of operational resilience during the continue to work effectively, regardless of I must end by honouring the phenomenal pandemic. Our seamless move from our offices whether people are in the office or at home? The
to our homes ensured that users continued to operational resilience of firms across multiple It is inevitable that any review of 2020 must efforts demonstrat2020. They successed bfully adopy our people during ted new ways of access the Registry and its services, and this geographies will increase the opportunity for include reference to the Island s preparations working by staying home or respecting public was seen as an asset by Island businesses. the centralisation of functions, increasing for MONEYVassessment, that is no rAL. Whilst Coeason for complacencvid-19 has delayed our y. health measures in the workplace so the JFSC
specialisation and decreasing costs. The JFSC
We continue to invest in people and processes, could remain open for business. What you have Whilst the pandemic might have given us cause will work with businesses to understand the
as well as working with the Government on the achieved during unquestionably demanding times to pause our IT development, we decided to governance and risk management of new material
National Risk Assessment and legislative changes is testament to your resilience and determination continue our planned investment in technology outsourcing arrangements and the growing use of
to ensure we have the most effective regime in the face of adversity. My thanks go to Martin to improve the resilience and functionality of our the Cloud.
possible. 2021 will see this work continue and, to Moloney and his Executive team for navigating systems. Firms need to be able to set up new assess our own readiness, we have commissioned these unknown waters and achieving so much on schemes and structures efficiently to compete Of course, technological disruption is not just an external review of our work. We see a good the journey. We find ourselves in a strong position
with other jurisdictions. Our multi-million pound about changes to existing businesses. We work outcome from the MONEYVAL assessment as to exit these turbulent times and support the investment into myRegistry and myJSFC support closely with Digital Jersey and Jersey Finance to pivotal to the Island s wellbeing. Island and its financial services industry as we this. We believe that the modernisation of the support innovative new businesses. In fact, in build back better.
Registry will help users update their own systems 2020 our innovation hub helped 74 businesses The accelerated adoption of technology through
and processes. Our investment in technology with their queries about how to develop innovation the crisis has changed how we interact with
removes barriers to change and can catalyse in financial services and how regulation applies to
new investment by users. If it is easier for you to them. This was almost a quarter more enquiries firms. My own Industry engaassociations and firms has been bgement with trade y Zoom. We
do business with us, then it is easier for you to do than we received in 2019 and mainly related have held a number of webinars to flag issues to Mark HobanChair
business with your clients. to RegTech. firms and the launch of our business plan for 2021
was virtual, dramatically increasing the numbers
As another part of our contribution to the
The adoption of remote working not only creates who were able to attend. We will continue this
economic wellbeing of the Island, we need to
new opportunities for business, but also presents approach. Deeper engagement with Industry
demonstrate that, through proportionate and
regulatory challenges. Increased flexible working will help us to better understand the challenges
effective regulation and supervision, financial
in the Island will change how business businesses face and how we adapt to them, and
is done. services firms and their customers can be
confident about doing business in Jersey.
p.12 p.13
02.
Being resilient in 2020:
Director General s statement
_ 02
Being resilient in 2020: In my opinion, our staff
Director General s deservfor the we all our gratitude ay in which they
statement supported each other and
delivered for Jersey something we have had to build ourselves. Our
in 2020 workW2021. As it desophisticate motove ontdesigned supervisor - it is the sophistication vo the neelops, it makand dext phase ovelopes us an incrthisf this work in system easingly continues. We began 2020 with an ambitious plan for capital investment and a demanding of our supervisory approach which is the essential
programme of supervisory engagement. We did not anticipate the events to bulwark of Jersey s reputation.
come, although in our 2020-2023 strategy we did identify the importance of Regulator Regulation has become an increasingly
both our own resilience and the resilience of the Jersey financial services challenging activity. The degree of challenge sector in the face of unidentified threats. For some time the rhas been made less efficient than it should be begulatory side of our work y rseceflector. Markts the intet fraensifying complegmentation, political change, xity of the financial
having an inflexible platform for communications financial sector innovation and the changing face When the Covid-19 pandemic became evident in early March, we were deeply engaged in our challenging with Industry. We have listened to concerns of financial crime all contribute to that challenge. work programme to deliver our 2020 business plan. The pandemic added two new demanding tasks: that, in particular, the filling out of personal At the JFSC, we have a skilled and ambitious team
protecting our staff and their families by moving to remote working; and questionnaires was too time-consuming. This is, who have worked incredibly hard in 2020 to deliver supporting Government to oversee the compliance of the finance industry with the various in practical terms, a critical process both for us the kind of development, supervisory and registry
public health requirements, which were essential to shield the Island. and Industry. In 2020, we launched and did much work that fulfil Jersey s unique ambitions to be
of the work on building a new regulatory portal. among the most responsible international finance Aiming to turn a challenge into an opportunity, we added a third important task. We launched an extended We prioritised the user experience in relation to centres in the world.
series of webinars to boost our communication with Industry, not only about Covid-19 but also on our personal questionnaires. We also wanted to lay
various regulatory initiatives. the groundwork for improving other aspects In my opinion, our staff deserve all our gratitude
of our interaction with industry. Once again, we for the way in which they supported each other
We committed as much as possible to delivering on the objectives we set out in our 2020 business plan. got most of what we wanted to do done in 2020 and delivered for Jersey in 2020. We continue in To this end, we devised a new way of conducting examinations: remotely. It might have seemed like a and the launch of the much-improved portal in 2021 to build on what was achieved in 2020.
contradiction in terms but, with Industry s cooperation, we made it work. It meant that we did not early 2021 has illustrated, if it were needed, how
conduct quite as many examinations in 2020 as we would have wished, but we did achieve a very inadequate the earlier portal had been. It was our
substantial portion of our targets. Equally, we did not quite accomplish all our capital programme ongoing engagement with industry and listening
goals, but we pushed most of them close to the year-end target. to their experiences which led us to prioritise this
work and I m very pleased that we did. Martin Moloney
Director General
At the same time, we engaged in a fundamental
restructuring of parts of our IT architecture to Registry prepare for more detailed workflow management
development work in 2021. That work is essential
for us to be able to, in future, test and assess the We remained operational throughout the pandemic. Our Registry never closed its (virtual) doors. Our effectiveness of the supervisory work that we
team worked remotely throughout the year and, as a result, large parts of Jersey s finance industry, do. Unfortunately, such workflow management which rely on our services, were able to work from home. The benefits to the Island, both in terms of its systems can t be bought off the shelf by international reputation for reliability and the income generated for local businesses and families, were regulators; we need to build our own. That is enormous. a daunting task, but as I write we are deeply
engaged, building on the work we completed
The plan for a new Registry system had been in development for many years. The ambition was to have a in 2020.
new online customer account and workflow management system for staff to increase efficiency, provide
new ways to bolster the accuracy of data, and a better user experience for our many Registry users. Once 2020 was also the year in which our supervisors we committed ourselves to the build, we were determined to deliver in 2020, despite the pandemic. benefitted from having a well-developed,
automated risk assessment system to collate and As it happened, at the last minute we had to let the delivery date slip into early 2021. But the system is now assess the data we hold. Once again, this is
launched; all the work has been worth it. The opportunities for trust companies to build out their digital
systems are enhanced. The accuracy of the data we hold will be enhanced. Our agility and capacity to
deal with future market and regulatory developments are greatly strengthened.
Guilding principles and key deliverables
_ 03
03.
Guilding principles These guiding principles and key deliverables are central to all we do...
Guiding principle: Protect the public from conduct risk
Our guiding principles are set out in law and drive our work. The following tables summarise each of the four principles, the main risks and uncertainties Explanation Principal riskuncertaintiess and Kand contrey risk mitigantsols Success measures
that threaten our work, what we do to mitigate those challenges, and the
progress made during 2020 to show that these guiding principles are We reduce risk to the The pace of change Resource and Comprehensive review central to all we do. public by only allowing and innovation in the capability in the JFSC of our authorisations
businesses that meet financial services Supervision team. processes.
high standards to sector may outpace Collaboration internally 862 regulator-to-
operate In the Island. our capacity and and externally to share regulator information
capabilities as an information. exchanges.
effective gatekeeper.
Timely engagement
with Government and Industry on our
regulations.
Guiding principle: Defend Jersey's reputation
We step in when Covid constraints Optimisation of our One of few
Explanation Principal risks and Key risk mitigants Success measures
uncertainties and controls businesses do not have made it harder risk model. jurisdictions to move to meet those high to identify bad actors Formalised remote examinations.
We protect Jersey s The standards within Timely preparation Dedicated webinars standards. and the economic collaboration and Conducted 58 reputation and our regime need to for MONEYVAL for specific sectors on impact of Covid has information sharing examinations across integrity by making stay fit for purpose. assessment in outcomes of NRA. increased prudential with other agencies on 100 businesses.
sure our rules meet Jersey being greylisted 2023 and ongoing Developing an and conduct risk. enforcement matters.
global standards and or blacklisted as a work on the FATF approach to are understood by result of poor Island Recommendations. sustainability
local businesses and assessment. reporting fit for We work to enhance Dishonesty, Reaching the right Feedback from international standard- Work to support Jersey. public knowledge of incompetence and audiences with the investors on changed
Negative media Jersey s National Risk financial products malpractice persist in a right materials. behaviour.
setting organisations. Assessment (NRA).
coverage connected to strengthen their minority of businesses, Issuing regular Producing campaign to financial services in International decisions and ability to particularly at the warnings about scams and associated
Jersey. engagement with spot scams. perimeter of our and unauthorised material for World
supervisors and regulatory remit. businesses. Investor Week 2020. standard setters.
p.20 Supervising with a focus on fighting financial crime p.21 Annual Report 2020
Guiding principle: Facilitate business for Jersey
Explanation Principal risks and Key risk mitigants Success measures
uncertainties and controls
We safeguard the Hardening attitude to Resource and Rapid introduction best economic International Finance capability in JFSC of continuance interests of Jersey by Centres within the EU. Policy and Risk team. provisions for LPs. supporting access to Additional reporting Timely engagement Achieving
markets through our requirements stretch with Government regular reporting policy, registry and the limits of the data on existing and new commitments to key supervisory work. we collect. regimes. partners.
We provide quality Successful information to support continuation of Government policy Registry operations decisions. throughout the
pandemic.
Guiding principle: Fight financial crime
Explanation Principal risks and Key risk mitigants Success measures
uncertainties and controls
We counter financial The growing diversity Acting as first line of 98 businesses
crime through of products and defence through the examined specifically leadership in local and activities in Jersey. Registry and second for AML/CFT international efforts The international client line for regulated compliance.
to develop AML/CFT/ base of many Jersey businesses. Co-authoring FATF CPF standards and by businesses. Additional scrutiny for guidance on
taking robust action The evolving new kinds of business. risk-based supervision against businesses typologies of criminal and participating in that fail to comply with activity. mutual evaluations/ our rules. assessments of other
jurisdictions.
Principal risks
and uncertainties
_ 04
p.24 25
04. Principal risks
and uncertainties
The Covid-19 pandemic that unfolded across the globe in 2020 is one of the most extreme macro-environmental risk events this planet has seen for dec- ades. It has dominated the risk landscape, throwing governments, economies and healthcare systems into crisis. With more than 130 million cases worldwide to date and almost 3 million deaths, the negative impacts are obvious.
However, there have been positive outcomes as well: the international collaboration and scientific innovation needed to deliver new vaccines at record speed, the wholescale evaluation of the way people work and, perhaps most importantly, our level of preparedness for another pandemic.
At the JFSC, we too can draw positives from the way we have responded to Covid-19 and other risks we faced during 2020, as we acknowledge our ability to adapt and succeed in the face of risk and uncertainty.
Covid-19
The pandemic perfectly demonstrates the In October 2020, we issued a joint statement with potential for an event to cut across all types of risk the Government of Jersey to highlight the need for and require a coordinated response on a number robust business continuity planning in the event of fronts. On a macro-environmental level, we have of either a deal or no-deal Brexit, and to provide had to deal with the closure of borders, periods sector- specific guidance for each scenario. In
of lockdown and Jersey s political response to the December 2020, we published a position paper crisis. outlining changes from 1 January 2021 for the
Alternative Investment Fund, Funds Services
At an operational level, we needed to manage Business and Certified Funds Codes. Twice
the risks the virus presented to our organisation, during the year, our Director General attended while maintaining and prioritising the safety and meetings with HM Treasury about Brexit, also wellbeing of our staff, staying open for business, attended by officials from the Guernsey Financial and supporting and monitoring the impact on the Services Commission, and Guernsey and Jersey regulated community. Governments.
Read more about our response to the pandemic Beyond 2020, an ever-evolving risk for Jersey is on page 32. whether the relationship between the Island and
the UK will change as a consequence of the new relationship between the EU and the UK.
Brexit
After undertaking a good deal of preparatory work during 2019, Brexit continued to be a source of risk and uncertainty for the Island, and consequently the JFSC, in 2020. When the UK left the European Union on 31 January 2020 and entered the transitional period, there was little indication of what the outcome of negotiations would be.
p.26 Principal risks and uncertainties p.27 Annual Report 2020
External landscape for International Finance Centres
One of the ongoing battles that Jersey faces is to maintain its reputation as a transparent and well- regulated International Finance Centre (IFC). Increasing scrutiny of tax arrangements, a drive for transparency around beneficial ownership with calls for public registers, and compliance with international standards - particularly around fighting financial crime - mean we need to continuously demonstrate the effectiveness of our regulation. This is one of our biggest challenges; the risk of Jersey being black or greylisted by any international standard setter, such as the Council of Europe or the Financial Action Task Force, would be catastrophically damaging for the jurisdiction s viability.
Although Jersey received an outstanding result in its last MONEYVAL assessment in 2015/16, many jurisdictions are now struggling to meet the new standards in recent assessments. This could, in part, be due to the shift in emphasis from technical compliance to demonstrating effective arrangements for fighting financial crime. If Jersey cannot meet the new standards, it would mean significant damage to its reputation. In 2020, we began an extensive programme of work to strengthen our capability for fighting financial crime. For us, our work in this area will be a permanent focus for our activities and crucial for maintaining Jersey s international reputation for the long term. (See page 38 for more details.)
Jersey s National Risk Assessment for money laundering published in 2020 was the first step in demonstrating that the Island is effective at fighting financial crime. We played a leading role in collecting data for the assessment and also led or participated in the working groups. The assessment now forms a baseline for our understanding of money-laundering risk in the Island; it will be a foundation for our ongoing efforts to fight financial crime.
Technology and innovation in financial services
Whether FinTech, RegTech, or SupTech, the role of technology in financial services globally is rapidly expanding, with the pandemic only accelerating the drive for innovative solutions.
Jersey s financial services sector is no different, as we see from the growing number and variety of technology-based registrations, enquiries and services that we process. For us, the key challenge is keeping up with these innovations and understanding the risks they present. In particular, we need to ensure that businesses delivering these new tech products and services, and the customers using them, also understand the risks and can mitigate them effectively. These new technologies may require new regimes, which we will work with Government to determine. For example, in 2020 we started an initial review for a potential licensing framework for virtual assets and their service providers.
Sandboxes have been another regulatory response to innovation, providing a safe testing environment for businesses and regulators. In response to this fast-changing landscape, we continue to be part of the Global Financial Innovation Network (GFIN), a network of more than 60 international organisations that work together and share experiences of financial innovation. In 2020, we took part in GFIN s cross-border testing initiative for businesses to test their financial products, services, models and regulatory technology in multiple jurisdictions.
Cyber and information security
The risk we face, as an organisation that holds sensitive and commercially valuable data, will always remain high. There is a huge threat of reputational damage to both the JFSC and the Island if we, or indeed a business we regulate, experiences any significant information security event.
The pandemic created an even greater security Operational improvement and
throur operations teat to us and local businesses when wo remote working for a significant e moved resource challenges
proportion of the year. To raise awareness, we
issued a number of warnings during 2020 about There are significant demands on the JFSC to be impersonation and phishing attacks targeting an effective, competitive, leading regulator and Industry and Islanders by using our regulatory Registry. The pressures and costs associated communication channels and our membership with achieving and maintaining this international of the Jersey Fraud Prevention Forum. Equally, we reputation continually evolve.
continued our programme of regular training and
testing, with controlled phishing exercises on all We always seek to deliver efficiencies in the
our employees including our Board members. way we operate and, in 2020, we began our
largest capital expenditure programme to date One of the more troubling risks in 2020 was to modernise our processes and make it easier the dramatic increase in attempts to defraud for our many stakeholders to interact with us. consumers through scam telephone calls, emails Delivering such an ambitious programme in a and fake websites. Lockdown only exacerbated pandemic presented unique challenges for our the problem, with more people at home looking staff, particularly when we were working from for new investments and better rates of return. home and experienced periods of the year when Jersey was not immune to these scams and we we were operating at under capacity - slower proactively issued warnings about clone websites, recruitment being yet another consequence of unauthorised businesses, phishing emails, and the pandemic.
cryptocurrency scams.
p.28 p.29 Annual Report 2020
05.
2020 in detail
_ 05
05.1 Delivering against At the start of 2020, we set out of strategic priorities for the subsequent four years, focusing on three core areas to:
our strategic roadmap Build eEmbed riskven mor-focused choices in our worke effective supervision
Strengthen our organisational resilience
While the year was dominated by the Covid-19 pandemic and our ongoing response to it, we still managed to progress our work in these areas, successfully delivering against most of the projects we set ourselves in our business plan for 2020.
Key projects for 2020 Goal Build even Embed Strengthen our Progress in 2020
more effective risk-focused choices organisational
supervision throughout our work resilience
Strengthening our effectiveness at fighting Implement FATF Recommendations and Collated statistical evidence to show our the financial crime threat. deliver effective AML/CFT supervision. effectiveness in fighting financial crime
ahead of MONEYVAL assessment. Carried out an ambitious programme
of financial crime compliance-focused examinations on 98 businesses.
Finalised our contribution to Jersey s first National Risk Assessment for money laundering and delivered subsequent sector-specific webinar series.
Conducted independent review of our authorisations framework and made initial improvements to the way we grant and revoke licences.
Ensuring the continuous improvement of our Enhance the core platform used by our Started work to upgrade platform used workflow management system and digital Supervision team to secure more efficient by our Supervision team to prepare platforms. and effective operations. for recalibration of our supervisory
workflows in 2021.
Implementing and refining our risk model. Updating our Registry.
Implementing a new digital experience platform/online account for regulated persons.
Enable our Supervision team to focus on Rolled out the next phase of our risk
the top priorities. model so all our supervisors can now
capture and monitor risk more effectively.
Establish fully digital registry systems to Implemented new Registry Law and simplify interactions for all customers completed work to deliver first phase of while delivering enhanced intelligence, fully digital Registry and new customer vetting and compliance. account platform myRegistry.
Deploy a refreshed single regulatory Delivered myProfile the first phase engagement platform/portal for of upgrading myJFSC. This allows key interactions and submissions between and principal persons to apply for a no individuals, Industry and the JFSC. objection online and replaces the PQ
portal.
05.2 Responding to
the pandemic 01 58/100
58 examinations on more than 100 businesses
From January 2020, we monitored the spread of Covid-19. We formed a Over the course of the year, we assisted Government with understanding the impact of the pandemic dedicated crisis management team to track outbreak developments closely on lending in Jersey, conducting a review on the banking sector s health in Jersey in terms of liquidity
and capital. During the pandemic, we also supported the establishment of Jersey s first loan guarantee and implement the guidance issued by both Jersey and UK Governments. Our scheme. After rollout in Jersey, it was then adopted in Guernsey, the Isle of Man and Gibraltar.
priority from the start was to keep our people, Industry stakeholders and our
Registry customers safe, while continuing with our operations and staying
open for business. As the Registry
Having comprehensively reviewed and amplified our business continuity plans - and asked Industry to do the same - we moved to full remote working on 23 March, one week ahead of the Government of Jersey enforcing home working. We secured enough equipment for staff to access systems and opened up new communication avenues for team collaboration, which allowed us to stay connected over the coming year. We reviewed, adapted and implemented new working practices so we could continue working as normal, while supporting colleague wellbeing.
As the regulator
As the prospect of the first lockdown loomed, Throughout the pandemic, we continued to
we proactively engaged with the regulated deliver on our regulatory remit. Mindful of the community around their business continuity disruption and extreme pressures on businesses arrangements. With more than 800 financial transitioning to remote working, we immediately services firms looking to us for guidance on how offered Industry a level of flexibility with deadlines to steer their businesses and employees through for their business continuity plans, and regulatory the pandemic, we moved fast. and financial submissions. We also issued
guidance on customer identification, Board
From the outset, we engaged with the resilience and compliance monitoring. Government, Jersey Finance and local trade
bodies to understand their concerns, and issued We were one of very few regulators globally to guidance. We swiftly supported Government continue our examinations programme, moving to with the Business Disruption Scheme and issued a virtual process within four weeks of lockdown. prompt communications to Industry. We also This enabled us to continue delivering a key
took responsibility for administering the Essential component of our supervisory approach. By the Worker Scheme for the Island s financial end of year, we had conducted 58 examinations services industry. on more than 100 businesses.
A key priority for us was to maintain service levels for our significant and diverse Registry
customer base.
Recognising the huge pressures on local companies, we endeavoured to help by waiving late payment fees, extending deadlines and bringing forward a reduction in our annual confirmation fee, which was due in 2022.
The volumes that our small Registry team processed for the first month of lockdown were staggering, given the upheaval of moving to remote working. Between March and April alone, they dealt with more than 25,000 updates to our central registers and a significant number of paper annual returns. We received feedback from Registry users, the Government and Industry about the team s resilience to provide continued unbroken service during an extraordinary time.
That resilience was unwavering throughout the year as the team kept meticulously balancing day- to-day operations with the delivery of the JFSC s largest capital expenditure project to date a fully digital Registry by the end of 2020. This involved migrating our multiple registers to a new system and moving customers and all their data onto myRegistry, our new customer account platform. Not only was this operationally and technically an extremely demanding programme of work, but the team also had to ensure Registry customers came on the journey. This meant executing an extensive engagement and outreach programme of emails, webinars, digital updates, user group meetings
and online training - all while working from home.
Deadlines for the programme were pushed
into 2021 to help businesses prepare and to accommodate Government s change to the effective date for the new Registry Law. While the team undertook final preparation work on the new systems at the end of 2020, they dealt with an 80% increase in service requests and volumes unprecedented levels which continued into
early 2021.
Despite the substantial challenges presented
by the pandemic, we continued to deliver our usual day-to-day regulatory and registry work and made substantial progress with our strategic projects, which are covered later in this annual report.
05.3 Engaging more Our first foray into live webinars Working in the pandemic with our Director General - attracted more
effectively with our than 500 viecusthost2,000 times. These aromer due diligence wed a second wwers, and a further 700 haebinar in early 2021. Our NRA series has been viee just thras vieee ewed morxamples ove sube than 1,800 times and, due tf the far grsequently weatater audience numbers wched the rwo Industry demand, wed livecording. An initial session on e or on demand more have achiee ha e than vved e since
compared to our in-person events. Webinars are now a firm fixture in our engagement.
stakeholders As worganised bthe TOver the course oell as our own online eoronto Centry Jersee.f the yy Finance, local trade bodies and associations, and intear v, wents, JFSC staff also te more than doubled our communications output on our wook part in a number of speaking engaernational groups, including gements ebsite and social
media channels, ensuring our stakeholders were regularly updated. Our dedicated Covid-19 web pages have been visited more than 23,000 times by Industry and the public.
Engagement and outreach with our stakeholders was more Working the Industry, trade bodies and user groups
crucial than ever in 2020.
With a dedicated International and Industry Engagement Coordinator in post from early 2020, our engagement with Industry trade bodies and Jersey Finance has become more focused, with regular participation at meetings, a detailed calendar of activities, website updates, and email exchanges.
For our extensive project work, we set up working groups with both our Registry customers and the regulated community to get their feedback about our online service platforms. This engagement was fundamental to the decisions we made on the development of the new myRegistry and myProfile systems and also allowed us to bring our stakeholders on the journey with us.
Keeping our Registry customers informed
With the closure of our offices from March and our customer service team working from home, it was a challenge, that we overcame, to maintain our usual levels of communication with Registry users. This was particularly the case with the unprecedented volumes of requests and correspondence we received during certain periods of the year and ahead of the move to the new digital Registry.
The team undertook extensive outreach during 2020 to keep customers informed about the impacts of and our response to Covid-19, as well as our targeted engagement campaigns for local companies, and trust company and fund service providers about our new Registry. This involved daily correspondence, calls, digital updates, webinars, and training videos.
Making the switch
Once we had moved to home working, we swiftly adapted to our new online environment and rolled out an extensive webinar programme of live and pre-recorded material. From not having used this communications channel previously, between April and December we hosted in excess of 15 webinars. These spanned technical regulatory sessions, updates on the findings of our virtual examinations, training on our new customer account platforms, and a tailored series of sector-specific webinars focusing on the outcomes of Jersey s first National Risk Assessment for Money Laundering.
05.3
Connecting with our people
2020 allowed us to change the way we interact with our staff. By using a collaboration platform, regular video messaging, virtual conferencing, and moving all our training online, we have become better connected to our colleagues than ever before.
Registry outreach activity
Met with more than 100 trust company business/fund 100 service business service providers in 30+ dedicated
sessions
Released our Zoho collaboration tool, now with 355 registered active users
Published guidance and FAQs on Zoho. Fielded a significant volume of information requests on a daily basis
Facilitated webinars, produced informational animations, dedicated web pages for industry and the public
Hosted webinars with technology service providers where we promoted the API channel
Further outreach activity planned throughout first half of 2021
05.4
Supervising with a Adapting to virtual examinations
focus on fighting As part oeffecframetivwork, we f our prsupervisorse committogramme tanded ttoo become e o undertaking an improve ourven morregulate ory During the ydifferincluding an ambitious prent examinations on 100 businesses, ear, we carried out a togramme ootal of financial f 58 financial crime incrIn 2020, our main, and nowwas noe oeasing number overt being able tcame this by being one oo visit businesses tf examinations. t insignificant, hurf very feo conducw dle t crime compliance-focused reTnumber oxo eaminations wxplain our nef webinars and published feedback on erw appre conducoach tted revieo Industryemows. 75% otely., and also f these
the on-site element of our reviews. However, to share our programme findings, we delivered a jurisdictions to move to remote examinations. our website. We did identify a trend of
This meant a comprehensive revision of our repeat findings so will keep this under review as processes and timetable, as well as issuing part of our ongoing examination programmes interim guidance to Industry. for 2021.
Tackling the financial crime threat
One of our core focuses in 2020 was to strengthen We engaged regulatory consultant Helen Hatton our effectiveness at fighting financial crime and to lead Industry working groups to assess the
play our part in securing the best MONEYVAL risks of current exemptions, which will likely assessment possible for Jersey, now scheduled result in changes to existing legislation and our
for the first half of 2023. regulatory framework in 2022. We also asked
Industry for feedback on proposed changes to the To fulfil our commitment, 2020 marked the AML/CFT Handbooks so we can align our regime cementing of a major programme of work - the with the FATF Recommendations. These changes Financial Crime Prevention Capability Programme. come into effect in 2021.
Designed to review and improve every aspect of
our work to fight financial crime, it covers the skills To ensure key members of staff are appropriately of our people, the legislation and arrangements trained in financial crime matters, we developed an we have in place, and the systems to collate data e-learning module for all staff and an intermediate on how effectively we respond. It has the single level in-house training programme covering topics aim of making us a valuable part of Jersey s fight including sanctions, bribery and corruption, KYC against financial crime so we maintain the Island s and customer due diligence.
reputation as an IFC.
We started a targeted and extensive programme During 2020, we restructured this programme of Industry engagement focusing on financial around three key areas: preparing for our crime and specific areas of risk. We set up MONEYVAL inspection, ensuring we remain dedicated pages on our website to upskill Industry technically compliant, and demonstrating we are and make them aware of what they need to be
an effective regulator. In pursuit of the latter, in focusing on to ensure they are compliant.
2020 we undertook a detailed review of our current
supervisory effectiveness, which resulted in some National Risk Assessment
recommendations that we will implement in 2021. A significant element of our work to fight
To supplement this work, we made improvements financial crime over the past few years has
to the way we collect and report on data. We also been our contribution to Jersey s first National upgraded the work management system used by Risk Assessment (NRA) for money laundering. our Enforcement team to ensure that they This work culminated at the end of September can capture elements of financial crime data when the Government of Jersey published the more efficiently. assessment. It documented what we already
recognised to be the potential risks, threats and Towards the end of the year, we engaged with the vulnerabilities facing the Island, and we were Government and other local agencies on the new already focusing our resources in these areas. framework for Jersey s Financial Crime Strategy,
coordinating our approach to financial crime Following the publication, we hosted a series of at an island-wide level. We also worked closely webinars, led by our International and Industry with the Government on a number of legislative Engagement Coordinator, to cover the amendments which include the Money findings and recommendations of the
Laundering Order and virtual asset Government s report. During the year, we also service providers. supported Government to finalise the NRA on
terrorist financing to be published in early 2021.
Authorisations in 2020
01
Compliance Monitoring 11 Procedures
Thematic
02
JersePrivThematicaty e 22were sent were Subjec6t
of which
Fund
questionnaires to examinations
03
Entity Specific 11 04Financial Crime 30
Improving how we licence businesses
During the year, we commissioned an independent review of our authorisations framework the
way we grant and revoke licences for businesses and individuals. Our decision to do this was driven by our commitment to continually improve how we operate. We recognise the need to adapt our approach to keep up with the changes we are making to how we supervise, and the changes we are seeing in innovation in the finance industry. These improvements form part of our wider programme of organisational improvements set out in our four-year strategic roadmap. The review made some positive recommendations, which we have already started to action and will continue to do throughout 2021 to bring us in line with best international practices.
Authorisations in 2020
Applications successfully processed 309 Applications still pending at end of 2020 49
05.5 Taking action to Taking action against misconduct
protect the public During 2020, wthe Island. Wto 2019. This crucial inte issued ve identified seelligence rarious wveral instances oarnings teceived mainly fro the public. f scam acom the Stattivity and unauthorised businesses operating in es of Jersey Police's Joint Financial Crimes
The number of suspicious activity reports we handled during the year increased by a quarter, compared Unit helps us to take action against compliance failings in our regulated community and therefore protect
the public.
In June, we imposed our second civil financial penalty. The £115,575 fine was for local trust company business Equity Trust Limited, which negligently breached our Codes. The business agreed to settle with us, consequently qualifying for a reduced penalty.
In September, we published the conclusions of our investigation into Lumiere Wealth Limited, the Jersey-
based financial services business that went into liquidation in October 2016 with millions of pounds of Reducing the risk to local investors is one of our key responsibilities and we investor losses. Our investigation was put on hold while the criminal investigation and subsequent trial of
care very much that the Jersey public understands the potential risks, as well the business former managing director were concluded. We assisted Jersey law enforcement agencies as the opportunities, involved in making investment decisions. with the criminal case and engaged with investors about the findings of our own case.
Our work to educate the public and enforce compliance with our regulatory
regime increased in 2020 as we handled the most enforcement cases in our
22-year history. Enforcement activity during 2020
Raising awareness during uncertainty 2017 2018 2019 2020
Live cases 106 134 97 158 In times osee trends of economic uncertaintyf increases in fraud, scams and poor pr, such as Covid-19 or the financial crash oofessional conduct within the finance industry. Bf 2007/8, we do unfortunately y Cases carried over from previous year 42 57 65 61
regularly raising awareness, we endeavour to make sure members of the public are fully informed before New cases during the year 64 77 83 97 they part with their money. It is impossible for any regulator to prevent every single case of investors losing
their savings, but we can and do regularly highlight the risks. Cases closed during the year 49 69 97 119
Cases carried over to following year 57 65 51 39 Throughout 2020, we shared warnings about Covid-19-related scams through our work as a member of
the Jersey Fraud Prevention Forum. Collaborating with other local agencies, we delivered two targeted Requests for assistance from overseas regulators 3 9 5 12 public awareness campaigns with newsletters sent to all Island homes, radio commercials, webinars and Formal notices 105 131 129 80
social media video messages specifically focusing on what residents should do to stay alert and protect
themselves while at home during lockdown. As a result, we witnessed a 144% spike in visits to the Forum s - Compelling individuals to attend an interview 14 26 18 13 website during the year. Public statements 9 9 5 10
We also took part in the fourth World Investor Week, a global public awareness initiative supported by - Restricting individuals from working in finance industry 3 4 1 2 more than 90 jurisdictions, which promotes investor education and protection. Tailoring our campaign to Calls to whistleblowing line 28 33 26 36 warn Islanders to be cautious when considering making or changing investments during the uncertain
economic climate, we shared educational videos and information on our website, social media channels - Led to active investigations 8 18 16 18 and in the local media. All our activities were designed to re-emphasise the basics of investing and to
educate Islanders about mis-selling, financial grooming and virtual currencies. Suspicious activity reports* 192 160 372 472
Increase in suspicious activity reports 21 -17% 233% 127%
* We continued to see an increase in suspicious activity reports in 2020. We can attribute this rise to the revamped triage process that was introduced in 2018 between the States of Jersey Police s Financial Intelligence Unit, the Economic Crime and Confiscation Unit and the JFSC. We now have access to all SARs which puts our Supervision and Enforcement teams in a more informed position.
05.6
Building our Using data to fight financial crime
understanding of risk A focus for our work on understanding risk has been how wneed for us tof financial crime risk to develop a model that pro help refine our own assessment ooduces results that will pass scrutinf risk, using the data cape assess financial crime risk, in particular the y by MONEYVtured in our model. The AL.
Since its publication in September 2020, we have used the National Risk Assessment s island-wide view results are comparable, indicating that our methodologies are on track.
In 2020, we continued to collect supervisory risk data from Industry, as we did for the two previous years. 2019 s data is already being used by our supervisors to determine and tailor their oversight activities.
Embedding risk-based choices in our work is one of the three strategic priorities we set ourselves to achieve by 2023. 2020 was about driving this work forward so we capture and monitor risk more effectively.
Regulators around the world are using risk to prioritise their work and to demonstrate their effectiveness. We are no exception.
Having successfully developed and launched a new risk model in 2019, we continue to progress our approach to risk-based supervision. This tool informs how we allocate our finite supervisory resources to supervise the Island s financial services industry.
Honing our risk model
Throughout 2020, we continued to develop the sophistication of our risk model, building on its initial functionality. By the end of the year, our supervisors had used the model to complete almost 800 individual risk assessments on businesses, negative and positive, cementing its place as a key tool for building our understanding of risk.
Thanks to supervisors now having wider access to the model from all areas of our supervisory case management system, they can input greater and richer data. This is producing not only a more detailed picture of the risks our regulated businesses present, but also of the success level of their remediation plans to reduce risk. On a wider note, the data we have so far captured in our risk assessments can be aggregated to build our understanding of risk across Industry sectors. All this data will be critical for telling a positive story internationally about Jersey s finance industry and how effectively we are supervising it.
In the latter half of 2020, we started the next phase of work on the model to introduce automated and data-led risk assessments. This will help us identify risks that we may not previously have done.
05.7 Helping to build Evolving our regulatory framework for sustainable finance
regulatory and Wintsustainable finance rconsulting with Industry on our pre arernational dee committved telopments. Oo maintaining high regulation globallyver roposals tecent y, and in particular acregulatears, wo enhance vory standare have seen a number oarious codes ods and constantly monitoss the Eurf pracopean Union. In June, wf ambitious changes ttice and the Jerseor domestic and y Prive began o ate registry standards Ftbusinesses marko imprund Guide tove consumer pro maketing ine it clear what rovtestments that appear morection. This work is in requirements theresponse te are en e for sustainable finance In the Island and vironmentally and socially focused than o growing international concern about
they really are, and changes to international regulation. We will continue with this work in 2021.
Collaborating on innovation
Contributing internationally
Scanning the digital horizon
As a result of international developments relating to virtual assets and their service providers, we reviewed Although a significant proportion of our international engagement was curtailed by the pandemic, the regulatory landscape in 2020 to enable us to produce and develop a concise regime for these activi-
JFSC staff still represented the organisation and the Island on the global stage, albeit virtually. ties. In September, we were engaged by the Government of Jersey to join a working group to consider next
steps in this space, which will come to fruition in 2021.
Our Director General, Martin Moloney, continued his work with the International Organisation of Securities
Commissions on exchange traded funds and took part in numerous international webinars, discussing In July, we published our report into the viability of a shared know your customer utility and indicated our the risks arising from Covid-19. support to the financial services industry in the development of such a tool in the Island. We were hugely
grateful to the broad range of Industry representatives who gave their time and ideas to contribute to this Our Chief Adviser of Financial Crime, Hamish Armstrong, co-led a FATF project to develop a global work and we are enthusiastic about working with Industry to help them develop any potential utility in the
approach to risk-based supervision. This entailed working with supervisors from around the world to future, while remaining committed to high standards of compliance outcomes to maintain Jersey s strong understand their requirements and formulate guidance to support them. Despite the pandemic, this international reputation.
guidance was still published on time in March 2021. As part of this work with FATF, Hamish Armstrong also
co-chaired an online forum attended by more than 700 supervisors in May and provided content for their
online training initiative, launched in 2020.
On another note, we were delighted that two further members of our staff completed their FATF training and are now qualified FATF assessors. Our three assessors will participate respectively in the 2021 evaluations of Liechtenstein, France and Croatia.
On behalf of the JFSC, Hamish Armstrong also continued to actively engage with MONEYVAL, by virtually JFSC Innovation Hub unique enquiries attending working group meetings and plenaries, providing comments, on behalf of Jersey, on evaluations
of Georgia and Slovakia, acting as independent reviewer of the Croatia assessment and technical adviser
on the follow-up report for Malta.
70 A critical component of our enforcement work and investigations is collaborating effectively with
regulators and law enforcement agencies in other jurisdictions. In 2020, we received double the number 60 of requests from overseas counterparts for assistance with their investigations, compared to the previous
year. We also attended two Crown Dependencies enforcement meetings. 50
40 Registry
Neither our international Registry engagement nor our ambitious digital programme stopped because 30 of Covid-19. Registrar Julian Lamb upheld his commitments virtually as a member of various Boards,
20 including the International Association of Commercial Administrators (IACA) and the European Business
Registry Association (EBRA). In particular, he had responsibility for leading the beneficial ownership and 10 control working group for Europe.
0
16 18 27 54 72
Closer to home, we again achieved a positive review of our central registers by the UK and Jersey
Governments. This recognises that our registers are accurate, timely and adequate, which satisfies the 2016 2017 2018 2019 2020
Exchange of Notes signed in 2016 (the Notes). By complying with the requirements of the Notes we are
upholding our exemplary standards on corporate transparency.
In July, we supported the Government to introduce a statutory regime to allow non-Jersey limited partnerships to migrate into Jersey.
48 49
With businesses working from home in 2020, we saw a distinct move towards increased digitisation and automation
Proposed types of activity by enquiry
6 11
8 19
RegTech / SupTech
Crypto and token issues
Alternative banking services and payments
29 Pandemic management
Other 20
Regulated business (funds and investment businesses)
Crowdfunding 4 3
Research
Supporting businesses with FinTech
With businesses working from home in 2020, we saw a distinct move towards increased digitisation and automation. FinTech enquiries to our Innovation Hub increased by nearly a quarter, with us helping 74 businesses with their queries about developing innovation, navigating Jersey s regulatory regime, and leveraging technology to meet their regulatory obligations.
Domestically, even though we could not uphold our commitment to attend Digital Jersey s Hub in person on a monthly basis due to Covid-19 restrictions, we remained committed to supporting members via video calls and taking part in the first virtual Tech Week.
Internationally, we remained a committed member of the Global Financial Innovation Network and supported the launch of the 2020 cross-border application process. This created an environment for businesses to trial their innovative products and services in multiple jurisdictions. We did this alongside more than 20 other regulators across five continents.
05.8 Building better Upgrading our online regulatory services
processes mIn our 2020 business plan, wIndustry tmakengayPre our dealings with Industry morgement with rofileo interact with us and pregulated stake committeholders.ovide information. The primary drive efficient so wed to automating more can impre oovf our pre our manaer wocesses tas, and continues tgement oo makf data and our e it easier for o be, to
By the end of the year, we successfully completed the first phase of upgrading myJFSC our existing regulatory portal. This involved updating the old platform that key and principal persons used to manage and update their personal information with us via a personal questionnaire (PQ). We launched myProfile in November, the new online self-service account which replaced the PQ portal and allows individuals to apply for a no objection to their role in financial services.
In 2021, we will expand the online services we offer and modify how Industry submits data to us. So far, this initial upgrade has halved the time it takes for applications to be processed.
Moving to a fully digital Registry
We will continue to work with Industry to review our online services, making improvements to user Our work in 2020 radically transformed the Registry, turning it into a modern, fully digital and customer- experience with the end goal of having one platform for our regulatory interactions.
centric service environment. Using best-in-class registry technology, we streamlined and moved all of our
services online, making it simpler and more efficient for our customers to interact and share information
with us. At the same time, this allowed us to enhance our capabilities to combat financial crime and Digital outsourcing notifications
therefore maintain Jersey s leading reputation for its registers. In June, we rolled out an online platform for businesses to submit their outsourcing notifications to us. The move to digital has made it easier for firms to provide this information and supporting documents.
One of the biggest projects we have ever delivered, this programme of work was in response to a new law,
which requires us to collect more information for our central registers to meet international standards. This will be one of the services that we will review, improve and move to the new myJFSC in 2021. To achieve this, we overhauled and futureproofed our systems, and replaced our online platform, Easy
Company Registry, with myRegistry - a new state-of-the-art online account where customers to manage
their own information.
Assessing our financial resilience
A key digital enabler was the delivery of an application programming interface (API) channel. This allows
high-volume filing trust company and fund services businesses to integrate seamlessly with our systems,
streamlining processes with direct information updates. Behind the scenes, we are also delivering Ensuring our finances are stable and sustainable is a priority for us. We made a commitment to review enhanced vetting and compliance functions to further develop our capabilities to combat financial crime. how we control our costs and manage our finances and we started this work during 2020. Part of this
review involved discussing our fee structures with Industry and Registry customers. We engaged with This was the first phase of the programme, with the rest being delivered throughout 2021. both audiences through open consultation and user group discussions. We will publish the findings of
this review in 2021.
Redesigning our approach to day-to-day supervision Improving our website
To achieve our aim of becoming even more effective supervisors, we have looked closely at the way we
supervise, particularly the processes and technology that we use. When we launched our new website in December 2019, we made a commitment to make regular
improvements to its functionality and usability. In late 2020, we redesigned the news and events pages of 2020 was the start of this journey, which will culminate in 2023 with completely re-structured work the site and began development work to hone the search function. These changes will be delivered in the management systems. This is no small project but it will lead to us having a more consistent approach first half of 2021 with the sole aim of making it easier for users to find the information they are looking for.
to the way we supervise and how supervisors engage with the businesses they oversee.
Over the 12 months, we undertook preparatory work to upgrade the core platform that our Supervision team uses day to day. We started making incremental changes to streamline systems so we reduce administrative tasks for supervisors. While strong foundations were laid in 2020, more detailed and expansive work will begin in 2021 to enable more services to move to our upgraded myJFSC platform.
Another significant step during the year was the further development of our risk model, which we initially deployed for supervisors in 2019. You can read more about this work on page 44.
To support the upgrade of our systems and digital platforms, we have put a number of our staff through LEAN process improvement training. This will help us to continually streamline processes and achieve efficiencies for both us and businesses.
Companies incorporated
2020 2019
749 809 686
881
195 287
620 331
245 529
2018 2017
502 629
844
887
2 hour fast track
1 day 400
314
2 day
3 day 507 257 561 214
5 day
Types of actions
Period 2019 2020
Companies incorporated 2,622 2,710 Companies dissolved 2,370 1,615 Total live entities 57,062 58,819 Total registrations 3,508 3,606
Total dissolutions 2,617 1,835 Changes to beneficial owners/controllers 47,819 44,121 Beneficial owners/controllers records 410,930 455,051 Total actions 407,298 438,073
Developing our people Recruiting in a pandemicLike most activities, our approach to recruitment had to completely change in 2020, as we trialed new
ways of attracting and onboarding new talent. Our recruitment campaigns incorporated video clips of our people working from home to show the human side of the organisation. We hosted virtual coffee mornings with recruiting teams and webinars with line managers and members of HR so candidates could get a flavour of what it is like to work at the JFSC before applying. All interviews were conducted over Zoom and we adapted every aspect of our onboarding procedures, including digitising our induction programme, to successfully get 50 new joiners up to speed over the course of the year.
We continually seek to improve what we offer our people and the investment we make in them. We know how important employee engagement is to the JFSC s success and we work hard to ensure that it is an inspiring and inclusive place to work, where staff are recognised and valued for their contributions. For this reason, in 2021 we will focus on delivering a new, all-encompassing people strategy for the organisation.
Adapting to home working
Looking back at 2020, we thank everyone at the JFSC for the resilience, commitment and perseverance that they demonstrated during an extremely challenging period for all, both professionally and personally.
For the majority of the year, almost our entire workforce was based at home. This not only posed unique challenges but also presented opportunities for our people. Thanks to technology and the support we gave one another, we were able to adapt and overcome adversity. The experience has changed the way we work for the better and for the future.
Average headcount across divisions
Supervision Enforcement Registry
60 16 15
50New joiners Lmilestong serviceones 5(15-25+ Years) Intpr27omoernal motionsves and Aqualificationschie18ved P18olicy Operations43 Tota1l 5 avera1ge
Focusing on learning and development
As we were based from home for the majority of the year, we had to completely redesign our training programmes for staff. This involved delivering everything online via live webinars and pre-recorded video content. In total, we provided more than 50 in-house training sessions, ranging from specific technical learning to our bespoke toolkit for managers.
To facilitate our online programme, we rolled out a tailored learning management system, which includes a foundation level AML course which everyone on our workforce must complete. In April, we launched our intermediate level and advanced financial crime prevention training framework. Thanks to this digital approach to learning, we now have a comprehensive library of workshops, briefings and modules for staff to access as and when they need to.
We know that our success relies on continually investing in our people and we are passionate about supporting their development, at every stage of their careers. Over the course of the year, we celebrated 27 colleagues as they moved internally to new roles or secured promotions. A further 18 achieved qualification success, including one staff member qualifying as an FATF assessor.
Coaching remains a hugely important element of our organisational culture. We were therefore delighted to retain our status as an approved ILM Centre following an assessment by the Institute of Leadership and Management in June.
Career development
2020 was the first year we put our accelerated career development framework into practice, with a cohort of five successful candidates starting on their journeys to develop their skills, which aim to complement our organisational needs for the future. On successful completion of their respective programmes in the coming years, we will have grown our own subject matter experts and developed further expertise in Fintech, financial crime, compliance, and FATF assessments.
JFSC Academy
The pandemic did not prevent us from progressing with our ambition of launching the JFSC Academy, which we fulfilled at the end of 2020.
We have a blended approach to learning because we understand that one size does not fit all. The Academy encompasses all of the learning and development opportunities we offer; it allows us to prioritise our staff s development needs while helping them to achieve their full potential through on-the-job training, relevant courses and qualifications, and internal and external secondments.
In 2020, we also reinstated our graduate programme with the recruitment of four successful applicants.
Celebrating success
In March, we were delighted to scoop two awards at the Citywealth Powerwomen Awards for 2020. Our Director of Supervision, Jill Britton, was named Woman of the Year for Government, Regulatory and Non-Profit Organisations and the JFSC picked up silver for Company of the Year in the
same category.
Prioritising health and wellbeing
On-the-job training with E-learning sessions an assigned buddy
Financial support when In-house ILM-approved studying for professional courses
qualifications
Never was it more important to focus on the mental health and wellbeing of our people than in 2020. The challenges faced by our workforce due to the pandemic were not unique to us but we wanted our
response to be.
As our usual engagement activities were not possible, we had to get more creative and thoughtful with the way we motivated colleagues and showed our appreciation for their efforts and sacrifices. Faced with countless logistical hurdles, we managed to ensure that staff had all the resources they needed to work from home, by delivering computing and desk equipment and surprise gifts as tokens of our thanks. We set up dedicated channels on Microsoft Teams to support colleagues and share ideas for managing workload and professional/personal boundaries.
Financial crime Job shadowing
training framework
Like other organisations, we were unable to see colleagues in person, so we hosted weekly online get- togethers, including a virtual pizza-making night for our Christmas social. Conscious of the pressures staff were facing, we organised online mindfulness, yoga, Pilates and fitness sessions, as well as physio webinars to remind everyone about good desk-based posture. We also offered annual memberships to the wellbeing app Headspace and Jersey Zoo, which was a JFSC chosen charity for 2020.
79% of staff surveyed said they received quality and timely communications during the pandemic, with the regular videos, briefings and updates we shared. Their feedback supports this: JFSC supportive in the crisis , That staff wellbeing is very important and the JFSC prioritises the wellbeing of its staff while carrying on business as usual very effectively .
Manager toolkit Development days sessions
Committing to environmental, social and governance
principles (ESG)
Promoting diversity and inclusion
Being a good corporate citizen and socially responsible are intrinsic to who
we are, both for the JFSC as an organisation and for the people we employ. Wthat is fair and fre approach recruitment three from discrimination. Wough a diverse lens. Our aim is te demonstrate this thro crough veate an enarious staff acvironment for our people tivities, forums and We are conscious of the impact we make environmentally and socially, and we proactive policies, and by supporting initiatives such as Government s Back to Work and Advance Plus
champion making positive contributions to our local community and the schemes, which help people with different employment needs to find work.
wider environment. In 2020, with the appointment of Diane Maxwell as Director of Policy, we are proud that the female-to- male ratio of our Executive team reached 50:50. 57% of our workforce and 30% of our non-executive
Commission Board is female. During the year, our female leaders gave talks and shared blogs with our staff, made editorial contributions for local publications, and took part in public speaking engagements
to open debate about diversity and inclusion (D&I) in financial services.
Already mentioned in this annual report is the work we are doing, as a regulator, to evolve our regulatory
framework for sustainable investments (see page 47). Below we show our strong commitment, as an In September, we organised our first dedicated month of activities to celebrate D&I at the JFSC. Events employer, to environmental and social issues. The separate section dedicated to Governance on page 64 included live webinars with high-profile local journalist and D&I campaigner Gary Burgess and JFSC is a clear articulation of the importance we place on the strength of our governance framework. Commissioner Tracy Garrad, who is an active D&I sponsor in her role as CEO of AXA Health.
Becoming a more sustainable organisation
Educating young islanders about financial literacy
Reducing the JFSC's environmental impact
We are committed to becoming a more sustainable organisation and minimising our environmental impact. The pandemic has accelerated this in many respects, but we recognise that some of our impacts have shifted from the office to people s homes, for example energy and waste.
In 2020, we reduced our carbon footprint by operating a zero printing policy while working from home and, of course, we completely stopped business travel. When we do print, 10p from every ream used goes to support Jersey Zoo and, in future, we will continue to hold and attend virtual meetings where appropriate instead of travelling,
so we keep reducing our emissions.
For many years, the JFSC has made environmental issues a priority. We have made small but important changes in the office, such as switching to light-saving LED bulbs, ensuring lights and equipment are turned off at the end of the day,
and using recycled paper for printing and recycling bins for waste.
After more than a year of remote working, we are
looking to change our office environment so that An often unsung area of our work is our education programme. Our Policy team has devised and delivers staff have more flexibility. Sustainability and energy annually courses in financial literacy to meet the Jersey PSHE Curriculum for students aged between 11 efficiency will be central to our plans for this and 18 years across the majority of local secondary schools.
refurbishment work.
In 2020, as we were not able to go into schools, we adapted the programme and provided digital content Encouraging our people to live sustainably to teachers so they can deliver classes at their convenience.
Even though we were not working together in
the office during 2020, colleagues still kept green
initiatives high on their agenda. Despite activities
being limited due to the Covid-19 restrictions, we
arranged socially distanced beach cleans and held Making a difference
a vegetable growing competition to encourage
staff to live more sustainably.
2020 was an incredibly difficult year for so many. Irrespective of their own challenges, our staff made it
a priority to continue to support local charities and initiatives. While fundraising efforts were definitely We continue to give every member of staff a not straightforward, we still managed to raise much-needed funds for the four local causes we refillable water bottle to cut back on plastic use chose to help in 2020. Through online giving, colleagues donated in excess of £8,000 to Jersey
and we have introduced a Bicycle Employee Alzheimer s Association, Jersey Hospice Care, Jersey Zoo and Macmillan Jersey.
Benefit Scheme to support and encourage staff
to buy a bike, so they travel by two wheels rather Thanks to our corporate social responsibility policy, than four. staff can dedicate up to two days every year to
volunteer for their chosen charitable causes or environmental projects.
Finance and resources
_ 06
Finance and resources As in 2019, in£0.2m comparvestigation and litigation costs wed to the prior year. ere below the historical average, as appeals remained at
a low level and current cases did not require significant third-party costs. Associated costs reduced by
As many organisations will have experienced, operating costs in 2020 were strongly influenced by Covid-19 and a number of initiatives proved considerably more challenging to deliver than initially scheduled in the 2020 business plan. As a consequence, operating costs were £2.0m lower than budget, mainly as a result of lower staff costs through slower recruitment and a temporary slow-down of project work in the first half of the year.
Capital expenditure
In 2020, we recorded a surplus of £2.4m (2019: £0.3m). Our surplus was £2.1m higher than 2019 due to
a £3.4m increase in total income, which followed regulatory fee increases and a change in our retained Our review and enhancement of project The net book value of fixed assets increased to portion of the annual return fee (refer to Note 5 of our accounts). This was partially offset by a £1.3m governance at the start of 2020 provided a solid £8.5m by the end of the year (2019: £6.9 million) increase in operating expenses, principally due to higher utilisation of professional services (£0.8m) and foundation to launch our significant capital with annual depreciation and amortisation
an increase in staff costs (£0.5m). investment programme, but compressed the time increasing to £1.6m (2019: £1.4m).
frames for completing the associated work.
We had budgeted to break even in 2020 but lower than planned expenditure in a number of areas partly Our focus on these strategically important
due to Covid-19 and the unbudgeted changes in the annual return fee gave rise to the £2.4m surplus. As initiatives also resulted in a slower rate of
a result, our reserves increased to £9.1m, although this remains below our current target of £10m. expenditure on other, lower priority investments. As a result, the total capital investment of £3.1m
was lower than originally planned, although £0.2m higher than 2019.
Income
Total income in the year reached £22.8m (2019: following (i) an underlying increase in the annual
£19.4m) following increases in both regulatory and return fee and (ii) a one-off increase in the Financial position and forward look
registry fee income. proportion of the fees retained by us, following
changes to the capital funding agreement with Our financial reserves improved during 2020 A key objective of the review is to deliver a balance Regulatory fee income rose by £1.4m as a result Government. The volume of annual returns to £9.1 million (2019: £6.7 million). However, they sheet that will enable us to:
of fee increases to fund our largest ever capital received was broadly consistent with the remain below our current target level of £10 million,
investment programme and further develop our prior year. which equates to six months operating expenses operate without loss of quality through an capability to combat the threat of financial crime. and one year of average litigation costs. adverse event; and
Registry fee income increased by £1.7m continue to provide regulatory and registry
One of our strategic priorities is to strengthen our services that make Jersey globally competitive, organisational resilience. During the course of while affording a good level of protection for 2020, we started work on our financial resilience Islanders.
review to ensure that our finances remain stable
and sustainable in the future. The scope of this The review will be finalised in 2021 and published Operating costs work includes a full review of our cost controls and to Industry, providing the context for our future
approach to financial management, and further fee basis discussions.
Total operating expenditure increased by £1.3m (7%) to £20.4m. consideration of our reserves policy.
Staff costs are the most significant item of expenditure, representing two-thirds of our cost base. Costs
increased by £0.5m (4%) compared to 2019, driven by a 5% increase in the average number of full-time employees to 151. Our 2020 plans targeted a larger increase in headcount, however this was not fully
achieved as a result of a period of slower recruitment during the initial stages of Covid-19 lockdown
restrictions. Despite inflationary pressures, average costs per head continue to reduce year on year.
Professional services costs principally comprised IT technical specialists and were largely temporary in nature. Associated costs saw a marked increase of £0.8 million in the year as a result of the ongoing design and development of our core systems, including the new Registry system to deliver the Island s commitment to increased public access to registry data. Capital investments in prior years continued to drive increases in the annual depreciation charge, which rose by £0.3m to £1.6m in 2020.
Governance
_ 07
Governance Delegation of powers
Our Board delegates its powers to the Director General and the Executive team, where possible, to ensure that the JFSC can act and respond without undue delay. However, in some areas the power of the Commissioners to delegate is restricted by legislation. For example, the Board acts in a similar manner to a tribunal in relation to contested enforcement cases. Consequently, our Board is more involved in some areas of detail than the Board of a listed or private company. We have published a full explanation about the Delegation of Powers on our website jerseyfsc.org
Constitution
The JFSC is a statutory body established under Article 2 of the Financial Servic-
es Commission (Jersey) Law 1998 (FSC(J)L) which provides that the JFSC shall Composition of the board and appointment of Commissioners
be governed by a Board of Commissioners comprising persons with financial
Our Board currently consists of the Chair, Deputy Chair and seven other Commissioners, including the services experience, regular users of such services and persons representing Director General. A third of the Commission Board is female. All of the Commissioners are considered to
the public interest. be independent, with the exception of the Director General.
Accountability arrangements
We are an independent body, accountable to the public through the Island s elected representatives, namely the Chief Minister and the States of Jersey. The relationship with ministers is set out in a Memorandum of Understanding to ensure our independence, whilst facilitating effective dialogue and working practices. Article 12 of the Commission Law provides that the Chief Minister may give the JFSC general directions, subject to significant safeguards.
In 2017, an Article 12 Direction was issued in order for the Exchange of Information on Beneficial Ownership (BO) agreement with the UK to be implemented to allow the Island s Joint Financial Crimes Unit (JFCU) to access to the JFSC s relevant information and databases on Beneficial Ownership.
We produce an annual business plan and separately an annual report to inform members of the States Assembly and other stakeholders. We consult extensively on all proposals to create or amend laws and regulations, and provide feedback to explain how we have taken responses into account.
Governance arrangements
Our Board believes that high-quality, effective governance arrangements are essential for well-run organisations. As there are no comprehensive codes or standards for the governance of a financial services regulator, our Board believes that the UK Corporate Governance Code (Code) is an appropriate benchmark.
We comply with the vast majority of the high-level principles in the Code, where they can be applied to the JFSC. For example, there is a clear division of responsibility between the Chair and the Director General, no individual has unfettered power of decision-making, and there are transparent procedures for the appointment and re-appointment of Commissioners.
Board members as at 31 December 2020
Mark Hoban Chair and Chair of the Nominations Committee
Mark Hoban was appointed Chair of the JFSC in April 2020, after joining the Board of Commissioners in December 2018. Mark is also the Chair of Flood Re, a specialist reinsurer, and Pay.UK, which manages the UK s retail inter-bank payment infrastructure. He
is also on the Bank of England s Enforcement Decision Making Committee. Mark was an MP from 2001-2015, during which time he was a UK Government Minister. He is a fellow of the Chartered Institute of Accountants.
Ian Wright Deputy Chair
Ian Wright joined the Board in 2012 and was reappointed for a further four-year term in 2017. He assumed the role of Deputy Chair in November 2018.
Ian is a Member of the Institute of Chartered Accountants in England and Wales (ICAEW), a Director and Chairman of the Audit Committee of Henderson Diversified Income Trust plc, a member of the Audit Committee of the Government of Jersey and a Police Officer in the parish of St Brelade, Jersey. He retired as Senior Partner at Price waterhouseCoopers (PWC) in 2007.
Simon Morris
Simon Morris joined the Board of Commissioners in 2015 and was reappointed for a second term in January 2020. Simon has been
a partner of London law firm CMS since 1988 during which time he has represented firms in over 400 regulatory and disciplinary proceedings brought by UK and overseas regulators. He is author of Financial Services: Regulating Investment Business (Oxford UP), and is a member of the City of London Law Society Regulatory Committee.
Monique O'Keefe
A member of the Board since December 2018, Monique O'Keefe was appointed as Deputy Chair in April 2021 and is one of our on- island Commissioners. With 20 years experience in finance and law, Monique is co-founder of investment consultancy business, Kairos Wealth Limited. She is also a non-executive director of a private equity fund, a London-listed property fund and a hedge fund. Prior to moving to Jersey, she worked for Goldman Sachs and Merrill Lynch. She began her career as a lawyer in Australia, before moving to London to work for Clifford Chance.
Matt Palmer Chair of the Audit Committee
Matt Palmer joined the Board of Commissioners in 2020. An experienced audit committee chair and former auditor, he brings more than 20 years of experience in financial services both in Jersey and internationally. Matt is a specialist in quantitative risk management, with a particular focus on operations, technology and cyber-security risk. A director of boutique risk advisory firm Cyberclaria and adviser to start-ups across risk and capital markets, he is involved in the UK Fintech sector and Jersey s digital economy.
Tracy Garrad Chair of the Risk Committee
Tracy Garrad has been a Commissioner since February 2019. Currently the CEO of AXA Health, she was formerly CEO of HSBC Channel Islands and Isle of Man and the first female CEO to lead First Direct. Her career spans nearly 35 years in banking and non-financial services. She has experience across a broad
spectrum of international markets and regulatory regimes, spanning the Channel Islands, the UK, Europe and the Middle East.
Peter Pichler
Peter Pichler is serving his second term as a Commissioner, after joining the Board in 2015. Peter has had an international career in financial services with experience of a wide range of jurisdictions, both onshore and offshore. His most recent role was as Chief Operating Officer and Finance Director of Mourant Ozannes,
one of the largest offshore law firms. Previously he was CEO of Deutsche Bank Offshore. He has been a director and chairman of the audit committee of a FTSE-350 company and he is a Chartered Accountant.
Annamaria Koerling Chair of the Remuneration Committee
Board changes in 2020
A Commissioner since September 2017, Annamaria Koerling has
a career in wealth management spanning more than 25 years. Lord Eatwell retired as Chair of the JFSC in April 2020 and was succeeded by Mark Hoban.
Annamaria is a Chartered Wealth Manager and a Fellow of the
Securities Institute. She has held senior roles at Cazenove, Merrill Commissioners Whelan and Ruetimann retired in June and September, respectively having completed Lynch, C Hoare & Co and Schroders. She is Chair of Praesdium, a two terms of service.
Luxembourg private equity manager, and is on the oversight board
of Hymans Robertson, a UK-based pension fund consultant. She is Mindful that Commissioner Wright was due to retire in April 2021, the Board ran a recruitment campaign a Fellow Commoner of Queens College Cambridge. in 2020 for a Commissioner with the appropriate degree of knowledge and experience to chair the Audit
Committee. The Board then worked within the Jersey Appointments Commission guidelines to progress the search. Matt Palmer was appointed as a Commissioner in September 2020.
Board meetings and attendance Covid-19
Our Board met seven times during 2020 to consider strategy, risk and regular business. From April 2020, Commissioners closely supported the Director General to keep the JFSC operating as usual during the in light of the pandemic, the Board met virtually. Our Board also met several times to review and consider pandemic. They attended catch-up meetings and provided advice to assist the Director General in enforcement settlement cases and contested matters. navigating the unprecedented situation in which the world found itself.
In addition, Commissioners and the Executive team met for a virtual strategy day and participated in Commissioners continued to remain engaged in JFSC matters and attended all meetings virtually as virtual events with fellow regulators, Industry representatives and Government ministers. they would have done under usual circumstances, despite the impact of the pandemic.
Regular discussions took place over the year with Government on significant financial services matters, Conscious of the need for Jersey to provide a united response to Covid-19, the Chair and Director General the NRA, planning for the MONEYVAL assessment and Brexit preparations. engaged with the Government and Jersey Finance during 2020 to ensure that the Island remained
resilient throughout.
Board members always carefully consider the potential for conflicts of interest to arise and excuse themselves if any perceived or actual conflicts are identified.
The table shows the number of meetings attended by Commissioners against the number of meetings they were eligible to attend:
Board activity
Our Board maintains overall responsibility for the JFSC s governance, setting its strategic aims and supporting their implementation by the Executive leadership team, and holding the Executive accountable, within the scope of the FSC(J)L, for the powers granted to the JFSC under that Law. The Board also oversees the running of the Board Committees.
Board meetings and attendance
Our Board plays a key role in listening to Industry to understand current trends and international
developments. An independent stakeholder engagement survey was conducted in 2020 to inform the
Board of improvements that could be made to our interaction with Industry. The Board fully supports Commissioners Board Audit Remuneration Risk LPC strategic engagement with Industry bodies.
Lord Eatwell (Chair) - retired April 2020 2/2 1/1 A number of presentations were made to the Board by the Executive during 2020 about how we Mark Hoban (Chair) 7/7 1/1* 2/2* supervise businesses, in particular the various financial sectors we oversee, policy development, and
Registry matters. The Board has particular responsibility for the use of the JFSC s enforcement powers. Ian Wright ( Deputy Chair) 7/7 3/3
Monique O'Keefe 7/7 4/4 The Board worked closely with the Executive Board during 2020 in order to progress the JFSC s Strategic Simon Morris 7/7 2/2** Roadmap. This required a number of detailed Project Initiation documents being carefully considered and
approved by the Board before any major projects and capex spend could progress, including the Registry Tracy Garrad 7/7 4/4 Programme, Risk Model Phase II, Portal Project and Supervision Business Transformation project.
Annamaria Koerling 7/7 4/4
Peter Pichler 7/7 5/5 4/4 The Board monitored the JFSC s preparations for the forthcoming MONEYVAL assessment by means
of regular updates from the Executive regarding the JFSC s Financial Crime Prevention Capability
Matt Palmer 3/3 2/2 2/2 Programme.
Cyril Whelan - retired April 2020 2/2 2/2 1/1
Markus Ruetimann 4/4 2/2 Martin Moloney (Director General) 7/7 5/5 4/4 4/4 1/1
Enforcement matters
* Note Mark Hoban left the Risk Committee on his appointment as Chair in April 2020 and joined the The Board spent significant time on a number of enforcement matters that arose through the application Remuneration Committee in September 2020 of the JFSC s decision-making process and civil financial penalty cases. Such cases tend to be highly ** Simon Morris joined the Audit Committee in September 2020 complex and involve the actions of regulated persons over a considerable period of time.
Board effectiveness review Remuneration Committee
An external Board evaluation, undertaken independently by Satori, helped the new Chair to assess what The Remuneration Committee is responsible for keeping under review the fees paid to the Chair and improvements could be made to Commission Board activity, effectiveness and composition. other Commissioners and the pay and bonus arrangements for the Director General and JFSC staff.
The Committee oversees the bonus structure and its alignment to the JFSC s performance
The terms of reference for all Board Committees were revised during 2020 to ensure that they fell in line, management framework.
where appropriate, with guidance issued by the Chartered Governance Institute.
The Committee paid close attention to staff working conditions and welfare during 2020, in response to the Covid-19 pandemic.
Nomination Committee
The Nomination Committee was formed in September 2020. Its first task was to review the composition
of skills on the Commission Board and succession planning, for both the Board and the Executive team. Risk Committee
This includes maintaining an appropriate balance of on- and off-Island Commissioners.
While responsibility for risk and risk management remains with the full Board, the Risk Committee The Nomination Committee reviews the structure, size and composition (including the skills, knowledge, oversees and guides the Executive Risk Committee as the JFSC further develops its risk-based experience and diversity) required of the Board. It makes recommendations to the Board for any changes. supervision strategy (and its management of operational risk). The Risk Committee advises and partners Creating an inclusive environment where all types of diversity are valued is important to the JFSC. with the Executive in fulfilling the Executive s accountability to the Board regarding risk management.
The Nomination Committee oversees the recruitment process for Commissioners and the appointment The main focus of the Risk Committee s work in 2020 was the launch of the JFSC s risk model and of the Director General s direct reports to ensure it is in accordance with the Jersey Appointments governance; developing the format for operational risk reporting; and considering the development of Commission s guidelines. risk appetite statements.
Audit Committee
The Audit Committee s principal activities are to monitor internal financial control systems and to work with the Executive and the external auditors to ensure the quality of the management financial reports and the annual accounts.
The Committee reviewed the management accounts, annual capital and revenue budgets, and the draft annual reports and accounts. It recommended the annual report and accounts and the auditor's letter of representation to the Board for its approval. It reconsidered the appointment and independence of the auditors and reviewed their reports at the completion of their audit work. The Committee discussed in detail a number of accounting issues, including sums retained from the annual return fees not claimed by Government.
Legal Proceedings Committee
The Legal Proceedings Committee's terms of The Committee considers whether the JFSC will reference are set out on the website. Its role is initiate or defend any legal proceedings arising to bring skills and experience to legal matters from any law under which the JFSC has statutory and potential litigation arising from enforcement powers. The Committee takes into account cases. potential legal costs when making decisions.
The Committee met once during 2020.
Commissioner remuneration Responsibility for annual report and accounts
Commissioners receive a fixed annual amount. No additional amounts are paid for participating This annual report and accounts comply with the requirement in the FSC(J)L to produce an annual report or chairing sub-committees, dealing with enforcement cases or attending to other matters. to the Chief Minister and to be presented to the Members of the States no later than seven months after
the end of the financial year.
Fees paid to Commissioners were not increased in 2020.
The statutory obligations on the Commissioners are not extensive, requiring only that the annual accounts are prepared in accordance with generally accepted accounting principles and show a true and
fair view of the surplus or deficit for the period and state of affairs at the period end. The Commissioners have elected to prepare the financial statements in accordance with Financial Reporting Standard 102
Fees paid to Commissioners during the year (FRS102), the Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland.
Taking into account general practice, the Commissioners confirm that they are responsible for:
2020 2019
£ £ keeping adequate accounting records sufficient to show the financial position within a
reasonable period of time;
Mark Hoban (Chair - Appointed April 2020) 115,269 36,500
safeguarding the assets and for taking reasonable steps for the prevention and detection
Lord Eatwell of Stratton St. Margaret (Retired as Chair 22 April 2020) 45,962 150,000 of fraud and other irregularities;
Martin Maloney (Appointed 28 February 2019) - see below preparing the financial statements in accordance with applicable laws and regulations;
selecting suitable accounting policies and applying them consistently;
Cyril Whelan (Retired June 2020) 13,000 26,000
making judgments and accounting estimates that are reasonable and prudent;
Ian Wright ( Deputy Chair) 33,350 33,350
preparing the accounts on a going concern basis unless it is inappropriate to presume
Peter Pichler 26,000 26,000 that the JFSC will continue in business.
Simon Morris 36,500 36,500
The Commissioners have considered the financial statements on pages 85-88 and are satisfied that they Markus Ruetimann (Retired September 2020) 25,597 36,500 show a true and fair view of the deficit for the year and the JFSC s financial position at 31 December 2020.
Annamaria Koerling 36,500 36,500
Monique O'Keefe 26,000 26,000 The Commissioners have considered the annual report and, taken as a whole, confirm that they believe
the it is fair, balanced and understandable.
Tracy Garrad 36,500 33,458
Matt Palmer 8,667 - For and on behalf of the Board of Commissioners
403,345 440,808
L Roe Commission Secretary
6 May 2021
Director General remuneration PO Box 267
14-18 Castle Street
Martin Moloney was not paid any fees in his capacity as a Commissioner but rather was paid as an St Helier
Executive Director in his capacity as Director General. For 2020, he received £300,958 (2019: £241,324 Jersey
pro rata) which comprises fixed remuneration: £261,362 (2019: £257,500) and variable remuneration: Channel Islands
Our Board
£39,596 (2019: £23,185). JE4 8TP
ABDO LLP (Auditors uditors) undertook the annual audit as approved by the Audit Committee in November 2019. reaffirmed its commitment to
being best in class ...
p.76 p.77 Annual Report 2020
08.
Independent auditor s report to the Chief
Minister of the
States of Jersey
_ 08
p.78 Independent auditor's report p.79 Annual Report 2020
08.
Independent auditor s Conclusions relating to going concern
report to the Chief In auditing the financial statconcluded that the Commissionersthe going concern basis of accounting in the ements, w use oe haf ve used including implied r and for the reasonableness oecasted operational costs and tf strevess tenue grest owth rated scenarios esting es preparation of the financial statements is used by management; and
Minister of the apprassessment oadopopriatt the going concern basis oe. Our ef the JFSC valuation os ability tf the Commissionersf accounting o continue to Restatvieements. w of disclosures made in the financial included:
States of Jersey rRegoing concern assessment threliability oview and challenge of underlying data, challenging of management ough s f key Based on the work wharor colleca period oelating tve not identified antivo ef at least 12 months frelyvents or conditions that, individually , may cast significant doube hay matve performed, werial uncertainties om when the t on the e
evaluation of management's methods to
assess going concern, evaluating the JFSC s ability to continue as a going concern for management assumptions and consideration financial statements are authorised for issue.
of management s plans for future action;
Our responsibilities, and the responsibilities of the Review and challenge of management s Commissioners with respect to going concern, are
forecasts (including stress-tested forecasts) described in the relevant sections of this report. Opinion through assessment of key assumptions
We have audited the financial statements of In our opinion the financial statements:
the JFSC for the year ended 31 December 2020
which comprise the income and expenditure give a true and fair view of the state of affairs Overview
account, the statement of financial position, the of the Jersey Financial Services Commission
statement of changes in accumulated reserves, (the JFSC) as at 31 December 2020 and the statement of cash flows and notes to the surplus for the year then ended;
financial statements, including a summary of
significant accounting policies. The financial have been properly prepared in accordance
reporting framework that has been applied in their with United Kingdom Generally Key audit matters 2020 2019 preparation is applicable law and United Kingdom Accepted Accounting Practice; and
Accounting Standards, including Financial Income recognition
Reporting Standard 102 The Financial Reporting have been prepared in accordance with existence including cut-off
Standard applicable in the UK and Republic of the requirements of the Financial Services
Ireland (United Kingdom Generally Accepted Commission (Jersey) Law 1998.
Accounting Practice). Completeness of income
Annual return fee surplus
Basis for opinion Annual return fee surplus is no longer considered to be a KAM
due to it not representing a heightened audit risk. This is a
We conducted our audit in accordance with in 2007 to audit the financial statements result of changes in the agreement with the States of Jersey in International Standards on Auditing (UK) (ISAs for the year ending 31 December 2007 and relation to Annual Return Fee Surplus eliminating the need for (UK)) and applicable law. Our responsibilities under subsequent financial periods. The period of total management judgment and estimates that underpinned this those standards are further described in the uninterrupted engagement including retenders risk in the prior year.
auditor s responsibilities for the audit of the and reappointments is 14 years, covering the years
financial statements section of our report. We ending 31 December 2007 to 31 December 2020.
believe that the audit evidence we have obtained We remain independent of the JFSC in accordance Materiality Financial statements as a whole
is sufficient and appropriate to provide a basis for with the ethical requirements that are relevant
our opinion. Our audit opinion is consistent with to our audit of the financial statements in the £348,700 (2019: £315,000) based on 1.75% (2019: 1.75%) of the additional report to the Audit Committee. UK, including the FRC s Ethical Standard, and we average income over a three-year period.
have fulfilled our other ethical responsibilities in
Independence accordance with these requirements. The non-
Following the recommendation of the audit audit services prohibited by that standard were
committee, we were appointed by the JFSC not provided to the JFSC.
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the JFSC s activities and the overall control environment. Based on this understanding we assessed those aspects of the JFSC s transactions and balances which were most likely to give rise to a material misstatement in the financial statements and designed and performed audit procedures in response to that assessed risk. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Commissioners that may have represented a risk of material misstatement.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter How the scope of our audit
addressed the key audit matter
Income recognition existence For regulatory fees, we reconciled the revenue in the including cut-off financial statements to system-generated reports
containing details of the licences held. We tested
these reports through performing walkthroughs Revenue consists of regulatory and registry fees, of the relevant systems and performing sample
for which annual fees run from different dates testing of line items within the reports.
throughout the year depending on the specific fee.
Because there is a judgement involved in the timing We also tested on a sample basis that regulatory
of recognition and the amount to recognise, there fees had been calculated in accordance with fee
is a risk that revenue recognition policies are not notices published by the JFSC, agreed to payment appropriate, revenues do not exist, or that revenue received, and recognised in the appropriate period. may be incorrectly recorded in the wrong year,
resulting in a misstatement of revenue. We recalculated deferred income to check it
had been correctly accounted for in accordance Details of the accounting policies applied during the with the JFSC s accounting policies, and that the
year are given in note 1 to the financial statements appropriate proportion of fees had been deferred in and details of regulatory and registry fee income accordance with those policies.
are given in notes 4 and 5 to the financial
statements respectively. For registry fees, we tested on a sample basis
that fees had been calculated in accordance with fee notices published by the JFSC and agreed to payment received.
We recalculated annual return income based on the number of registered companies, by reference to published annual return rates and the number of registered entities.
We tested a sample of registry fee invoices and receipts processed specifically around year-end to check the related income had been recognised in the appropriate period.
Key observation:
Based on the work performed, nothing has come to our attention which would suggest that revenue has been recognised inappropriately or that it has not been presented in accordance with the JFSC s revenue recognition accounting policy and the accounting standards.
Completeness of income We tested the completeness of regulatory and
registry income throughout the year by selecting Given the number of income streams and the a sample of businesses from the regulatory and ad-hoc nature of some of these fees, there is a registry department systems, independent of the risk that certain fees had not been billed to the finance function, and agreeing these to supporting customer, or that the income had been recognised fee income, checking that the fees had been
in the incorrect period due to billing taking place recognised in the appropriate period.
significantly later than it should have.
We checked for any gaps in the Financing
Details of the accounting policies applied during the Statement numbers, which are expected to be year are given in note 1 to the financial statements sequential. We reviewed a sample of post year-end and details of regulatory and registry fee receipts and invoices to check that the related income are given in notes 4 and 5 to the financial income had been recognised in the appropriate statements respectively. period.
Key observation:
Based on the work performed, nothing has come to our attention which would suggest that revenue has been recognised inappropriately or that it has not been presented in accordance with the JFSC s revenue recognition accounting policy and the accounting standards.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent
of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
2020 2019
£ £
Materiality 348,700 315,000 Basis for determining materiality 1.75% of average income over a three-year period. Rationale for the benchmark applied We used income as a benchmark as this is the
primary Key Performance Indicator used to address the performance of the business by
the Commissioners.
Performance materiality 254,500 230,000
Basis for determining performance 73% of materiality has been applied for materiality determining performance materiality.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £17,400 (2019:£16,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Other information Our audit procedures were designed to respond to risks of material misstatement in the financial
statements, recognising that the risk of not detecting a material misstatement due to fraud is higher The Commissioners are responsible for the other information. The other information comprises the than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, information included in the annual report other than the financial statements and our auditor s report for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit thereon. Our opinion on the financial statements does not cover the other information and, except to procedures performed and the further removed non-compliance with laws and regulations is from the the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion events and transactions reflected in the financial statements, the less likely we are to become aware of it.
thereon. Our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained A further description of our responsibilities is available on the Financial Reporting Council s website at: in the course of the audit, or otherwise appears to be materially misstated. If we identify such material www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor s report.
inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required
to report that fact.
Use of our report
We have nothing to report in this regard.
This report is made solely to the Chief Minister of the States of Jersey in accordance with Article 21(3)
of the Financial Services Commission (Jersey) Law 1998. Our audit work has been undertaken so that
we might state to the Chief Minister those matters we are required to state to the Chief Minister in an
auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Chief Minister, the JSFC and the Commissioners of the Responsibilities of Commissioners JFSC as a body for our audit work, for this report, or for the opinions we have formed.
As explained more fully in the annual report, the Commissioners of the JFSC are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Commissioners determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Neil Dimes (Senior Statutory Auditor)
In preparing the financial statements, the Commissioners are responsible for assessing the JSFC s ability For and on behalf of BDO LLP, Statutory Auditor to continue as a going concern, disclosing, as applicable, matters related to going concern and using the Bristol
going concern basis of accounting unless the Commissioners either intend to liquidate the JSFC or to 7 May 2021
cease operations, or have no realistic alternative but to do so.
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:
We obtained an understanding of the legal and regulatory frameworks that are applicable to the JFSC. These include but are not limited to compliance with the Financial Services Commission (Jersey) Law 1998.
We assessed compliance with the these laws and regulations through enquiry with management and the Audit Committee and review of board meeting minutes.
We assessed the susceptibility of the JFSC s financial statements to material misstatement, including how fraud might occur. In addressing the risk of fraud, including management override of controls, we have performed journals testing based on a set of fraud risk criteria and verifying the business rationale. Fraud risk in revenue was tested substantively involving sample testing of transactions both throughout the year and at year-end to verify both existence of the transactions recognised and completeness of amounts reported.
p.84 p.85 Annual Report 2020
09.
Financial statements
_ 09
Financial statements
Income and expenditure account Statement of financial position as at 31 December 2019 For the year ended 31 December 2020
2020 2019 2020 2020 2019 2019 Note £'000 £'000 Note £'000 £'000 £'000 £'000
Regulatory income Fixed assets
Regulatory fee income 4 15,866 14,428 Intangible assets 9 7,770 6,086 Registry fee income 5 6,130 4,429 Tangible fixed assets 10 689 844
8,459 6,930 Total regulatory income 21,996 18,857
Current assets
Other income 6 738 447
Trade receivables 614 417
Interest income 24 60
Sundry debtors 165 52
Total income 22,758 19,364 Prepayments 1,097 1,128
Cash and bank balances 11 12,136 11,404
Expenses
14,012 13,001 Staff costs 7 (13,343) (12,811)
Computer systems (1,530) (1,498) Total assets 22,471 19,931 Premises costs (895) (869)
Creditors - amounts falling due within one year
Professional services (1,701) (937)
Fee income received in advance 6,943 6,583
Investigation and litigation (54) (215)
Creditors 12 3,745 6,133
Other operating costs (1,000) (822)
Provisions 13 48 157
Depreciation, amortisation and impairments (1,617) (1,356)
10,736 12,873 Staff learning and development (182) (275)
Travel costs (33) (243) Total assets less current liabilities 11,735 7,058
Total expenses (20,355) (19,026) Creditors - amounts falling due after more than one year
Fee income received in advance 188 -
Surplus for the year 8 2,403 338
Creditors 12 2,004 -
Provisions 13 448 366
2,640 366 All the items dealt with in arriving at the net surplus relate to continuing operations. Net assets 9,095 6,692 There are no recognised gains and losses in the current and preceding year other than those included in the net Represented by
surplus above, therefore no separate statement of other comprehensive income and expenditure has been presented.
Accumulated reserves 9,095 6,692
The notes on pages 89 to 101 form an integral part of the financial statements.
The financial statements on pages 86 to 101 were approved by the Board of Commissioners on 6 May 2021 The notes on pages 89 to 101 form an integral part of the financial statements. and signed on its behalf by:
Mark Hoban Martin Moloney Chair Director General
Statement of changes in accumulated reserves Notes to the
Accumulated reserv£'000es financial statements
Balance at 1 January 2019 6,354 For the year ended 31 December 2020 Surplus for the year 338
Balance at 31 December 2019 6,692
Balance at 1 January 2020 6,692
Surplus for the year 2,403
Balance at 31 December 2020 9,095 01. Significant accounting policies
Basis of preparation
The financial statements have been prepared in accordance with FRS 102, the Financial Reporting Standard applicable in the United Kingdom and the Republic of Ireland.
Statement of cash flows
For the year ended 31 December 2020 The financial statements are prepared on a going concern basis, under the historical cost convention.
The significant accounting policies applied in the preparation of the financial statements are set out
2020 2019 below. These policies have been consistently applied to both accounting years presented.
Notes £'000 £'000
The JFSC is a statutory body established under Article 2 of the Financial Services Commission (Jersey)
Cash flows from operating activities Law 1998. The JFSC s registered address is Jersey Financial Services Commission, PO Box 267, 14-18
Castle Street, JE4 8TP.
Surplus for the year 2,403 338
Interest receivable (24) (60) The financial statements contain information about the JFSC as an individual entity, and do not include Depreciation, amortisation and impairment charges 9,10 1,617 1,356 consolidated financial information as the parent of a group. The JFSC is exempt from the requirement to
prepare consolidated financial statements because the inclusion of its subsidiary is not material for the Utilisation of provision (110) (62) purpose of giving a true and fair view.
Movements in provisions 83 75
Deferred rental incentive (26) (26)
(Increase)/decrease in debtors and prepayments (279) (7)
Income
Increase/(decrease) in income received in advance 548 680
Increase/(decrease) in creditors (358) 2,503 Income is accounted for on an accruals basis. Civil penalties are recognised when the penalty Net cash generated from operating activities 3,854 4,797 has been agreed with the regulated entity and
Regulatory and Registry annual fees received are where it has the ability to settle the amount
Cash flows from investing activities recognised as income on a straight-line basis involved. Income from civil penalties is deferred
over the relevant period. Annual registry fees and is released to income in the year in which the Interest received 24 60
and revenue from the operation of the Island s amount of fees to be paid by industry is reduced Purchases of tangible and intangible fixed assets 9,10 (3,146) (2,968) registers include only the share of that income due to the penalty having been received.
Net cash used in investing activities (3,122) (2,908) attributable to the JFSC.
Recoveries of enforcement costs are accounted Net increase in cash and cash equivalents 732 1,889 Annual return fees are deferred in the first for only when they have been agreed with the
instance and released to income in the period in regulated entity or awarded by the Royal Court Cash and cash equivalents at 1 January 11,404 9,515 which the related costs are incurred. and it has become virtually certain that they will be received.
Cash and cash equivalents at 31 December 11 12,136 11,404 Amounts received from the Government of
Cash and cash equivalents consist of: Jersey in the form of grants and other financial Interest received on bank deposits is accrued
assistance are recognised when the Commission on a time basis by reference to the principal Cash at bank and in hand 132 297 has satisfied all of the conditions necessary for outstanding and the effective interest rate Short-term deposits 12,004 11,107 the funds to be released. Amounts received are applicable. Sundry income is recognised
recognised as income in the period in which the on receipt.
Cash and cash equivalents 11 12,136 11,404
related costs are incurred or in the periods in
which any related fixed asset is depreciated
or impaired.
The notes on pages 89 to 101 form an integral part of the financial statements.
Expenses Intangible assets
All expenses are accounted for on an accruals basis. Intangible assets are stated at historical cost less Gains and losses on disposal of intangible assets
accumulated amortisation and any impairment are determined by comparing any proceeds with losses. Historical cost includes expenditure that their carrying amount and are recognised in the
is directly attributable to the development of the income and expenditure account.
Foreign currency intangible asset. Subsequent maintenance and
support costs are charged to the income and In the requirements gathering phase of an internal Foreign currency balances are translated to date of the transaction. Profits and losses on expenditure account during the period in which systems development project, it is not possible to Sterling at the rate of exchange ruling on the foreign exchange are included in the income and they are incurred. demonstrate that the project will generate future last business day in the financial period. Foreign expenditure account. economic benefits and hence all expenditure currency transactions are translated into Amortisation of intangible assets is calculated so is recognised as an expense when incurred. Sterling at the rate of exchange ruling on the as to write off their cost on a straight-line basis Systems developments are recognised as fixed
over their expected useful lives. assets from the development phase of a project if, and only if, certain specific criteria are met in order
The estimated useful lives used for this purpose to demonstrate the system will generate probable are: future economic benefits and that its cost can be
Investigation and litigation costs reliably measured. If it is not possible to distinguish Computer software Up to 7 years between the requirements gathering phase and
Investigation and litigation costs are recognised as incurred. No provision is made for the cost of the development phase, the expenditure is treated completing current work unless a present obligation exists at the balance sheet date. as if it were all incurred in the requirements
The cost of computer software in respect of major gathering phase only.
systems is capitalised within intangible assets. All
other computer software costs are expensed as
incurred. Computer systems under development
Cash and bank balances are not amortised until the system has been
completed and is ready for use.
Cash and bank balances comprise cash in hand, deposits and other short-term liquid investments that
are readily convertible to a known amount of cash, are subject to an insignificant risk of changes in value, controlled by the organisation and to which the organisation attaches equitable ownership.
Impairment
Assets that are subject to depreciation and and supervisory income are separately identifiable Government registers amortisation are assessed at each reporting and assets are allocated between these cash
date to determine whether there is any indication flows based on their operational application.
An intangible asset is recognised in relation to the cost of design, development and operation of that the assets are impaired. Where there is
Government registers on an accruals basis, provided such costs are contractually recoverable. an indication that an asset may be impaired, Non-financial assets that have been previously
the carrying value of the asset is tested for impaired are reviewed at each reporting date to impairment. An impairment loss is recognised for assess whether there is any indication that the
the amount by which the asset s carrying amount impairment losses recognised in prior periods may
exceeds its recoverable amount. The recoverable no longer exist or may have decreased. Tangible fixed assets amount is the higher of an asset's fair value less
costs to sell and value in use. For the purposes
Fixed assets are stated at historical cost less The estimated useful lives used for this purpose of assessing impairment, assets are grouped at
accumulated depreciation and any impairment are: the lowest levels for which there are separately
losses. Historical cost includes expenditure that identifiable cash flows. Cash flows from registry
is directly attributable to bringing the asset to Motor vehicles 3 years
the location and condition necessary for it to be Office furniture, fittings
capable of operating in the manner intended and equipment 3 to 5 years
by management.
Computer equipment 3 to 5 years Leases
Repairs and maintenance costs are charged to Leasehold improvements Over the lease period
the income and expenditure account during the Rent payable under operating leases is charged For leases entered into after the date of adoption period in which they are incurred. Gains and losses on disposals of fixed assets are to the income and expenditure account on a of FRS 102, lease incentives received to enter into
determined by comparing the proceeds with the straight-line basis over the term of the lease. operating lease agreements are released to the Depreciation of fixed assets is calculated so as to carrying amount and are recognised in the income income and expenditure account over the full term write off their cost less estimated residual value on and expenditure account. The JFSC has taken advantage of the exemption of the lease.
a straight-line basis over their expected available on transition to FRS 102, which allows
useful lives. lease incentives on leases entered into before the
date of transition to continue to be released to the
income and expenditure account on a straight-line
basis over the period to the first lease break.
Pension costs Provision for premises reinstatement
The balance of the provision for premises reinstatement has been determined based on the applicable The costs of defined contribution pension schemes are accounted for on an accruals basis. The costs square footage of leased premises and the rate per square foot for such reinstatement works published
of annual contributions payable to defined benefit schemes operated by the Government of Jersey are by the Royal Institute of Chartered Surveyors. The provision is adjusted annually based on movements in accounted for on an accruals basis because the JFSC is unable to obtain the information necessary to the published rate per square foot. This represents management s best estimate regarding the expected apply defined benefit scheme accounting (see note 16). future cash flows related to these costs. The balance is discounted if the effect would be material.
Useful lives and residual values
Annual leave pay accrual Fixed assets are depreciated over their expected useful lives, taking into account residual values where
appropriate. The actual lives and residual values are assessed annually and may vary depending on a A liability is recognised to the extent of any untaken annual leave entitlement which has accrued at number of factors. In reassessing useful lives and residual values, a wide range of factors are taken into the balance sheet date and can be carried forward to future periods. The liability is measured at the account. Changes in these assessments are accounted for prospectively and therefore only have a undiscounted cost of untaken annual leave that has accrued up to the balance sheet date. financial effect on current and future periods.
b) Going concern
Provision for long leave entitlements
Governments and corporates have been taking extraordinary measures to deal with the threat to Provision is made for the accrued entitlements to long leave as at the balance sheet date, even when life posed by Covid-19. Governments have found it necessary to provide finance for a wide range
such entitlements may not yet have vested. The provision is increased each year as additional entitle- of businesses that have ceased trading or had their trading prospects significantly impaired. Many ments are earned. The provision is decreased when long leave entitlements are taken and when such businesses have closed and may not be capable of being restarted, leading to impairments and write entitlements expire. offs. The JFSC has to keep operating, subject to constraints, including staff working from home.
The provision represents management s best estimate of the amounts expected to be paid out, taking The Board reviews in detail plans put into place by the executive to manage current operations together into account long leave entitlements that may be lost when an employee leaves the employment of the with revised cash flow and net income forecasts. The Board notes that its 2021 income may be reduced JFSC. The provision is discounted if the effect would be material. due to lower levels of transaction fees from Jersey financial services business and that in the medium
term it may be exposed to reduced annual fees from companies and regulated entities should such businesses be forced to close permanently. However, it believes that any such reductions will be manageable by reducing activity levels or deferring expenditure.
Provision for premises reinstatement
The Board has therefore concluded that there are no material uncertainties that may cast significant Provision is made for the expected costs of costs of reinstatement and discount rates where doubt on the ability of the JFSC to continue as a going concern.
reinstating office premises to their original applicable. The provision will be reduced when
condition upon the termination of existing related costs are incurred in future periods.
lease agreements. The balance represents Provisions for premises reinstatement costs are
management s best estimate of amounts to be discounted if the effect would be material. 03. Taxation
paid for reinstatement. The provision is assessed
each year based on changes in the expected The JFSC is exempt from the provisions of the Income Tax (Jersey) Law 1961, as amended.
04. Regulatory fee income
02. a) Critical accounting judgements and key sources of estimation uncertainty
Estimates and judgements are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances. 2020 2019 £'000 £'000
Banking 2,098 1,817 Key accounting estimates and assumptions Funds 6,974 6,499
Insurance business 956 863 Management is required to make estimates and assumptions concerning the future. The resulting
accounting estimates may not equal the actual outcomes. The estimates and assumptions that have a General insurance mediation 173 149 significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within Investment business 1,416 1,404 the next financial year are outlined below.
Trust companies 3,418 2,935 Provision for long leave entitlements Designated non-financial businesses and professions 776 711 The balance of the provision for long leave has been determined based on a range of estimates regarding Recognised auditors 29 30 the probability that the related leave entitlement will vest and be taken. This represents management s Money service business 26 20
best estimate regarding the expected future cash flows related to long leave entitlements.
15,866 14,428
05. Registry fee income 06. Other income
Registry fees arise from the operation of the Companies Registry, the Business Names Registry,
the Registry of Limited Partnerships, the Registry of Limited Liability Partnerships, and the Security
Interests Register. 2020 2019 Registry fees include annual return fees. The amount of the annual return fees payable to the Registry £'000 £'000
includes amounts collected on behalf of and remitted to the Government of Jersey. Investigation and litigation recoveries 10 240 In 2020 the annual return fees increased from £200 to £225. The portion of the total annual return Financial contribution income* 702 195
fee retained and recognised by the JFSC was £110, and the remaining £115 collected on behalf of the Sundry income 26 12 Government of Jersey. The increase in the annual return fee resulted in an increase in fees attributable to
738 447 the JFSC of £0.8m in 2020.
In previous years, a portion of registry fees received was segregated and used for certain current and * See note 12 for further information. future enhancements to the Registry and its systems. This capital funding mechanism came to an end in
2020, resulting in a temporary increase in fees attributable to the JFSC of £1.1m in 2020.
From 1 January 2021, the annual return fee remains at £225, with the Government portion increasing to
£145 following introduction of the Financial Services (Disclosure and Provision of Information) (Jersey) Law 07. Staff costs 2020. As a result, the JFSC has decided to temporarily reduce its portion of these fees to £80 of the total
£225 for 2021.
2020 2019 £'000 £'000
2020 2019 Staff salaries 10,920 10,453 £'000 £'000 Commissioners' fees 403 404 Social security contributions 550 503
Total annual fees collected 7,873 7,004
Pension contributions 826 837
Permanent health and medical insurance 435 422 This is apportioned as follows:
Other staff costs 144 152 Collected on behalf of Government of Jersey 3,925 3,889
Long leave provision 19 32 Collected by the JFSC 3,948 2,011
Annual leave pay accrual 46 8 Segregated portion as agreed with
the Government of Jersey* - 1,104 13,343 12,811
7,873 7,004
The average number of staff employed during the year was 151 (2019: 144). Annual return fee income collected by the JFSC 3,948 2,011
Other Registry income 2,182 2,418
Total Registry income 6,130 4,429
* See note 12 for further information. 08. Surplus for the year
2020 2019 Surplus for the year is stated after including the below: The number of annual returns received during the year was:
Annual returns received 34,130 33,818
2020 2019 £'000 £'000
Amortisation of intangible assets (note 9) (1,272) (1,083) Depreciation of tangible fixed assets (note 10) (345) (272) Research and development costs not capitalised (36) - Foreign exchange differences (10) 15 Operating lease expenditure (578) (566) Contributions to employee pension schemes (note 16) (826) (837)
Audit fees (53) (45) Non-audit services (3) (4)
09. Intangible assets 11. Cash and bank balances
Computer systems Computer 2020 2019 under development systems Total
£'000 £'000 £'000 £'000 £'000
Current accounts 131 296 Cost
Deposit accounts 12,004 11,107 Balance at 1 January 2020 1,950 9,139 11,089
Petty cash 1 1 Additions 2,973 5 2,978
Completed computer systems (795) 795 - Cash and cash equivalents at bank 12,136 11,404 Transfer to tangible fixed assets (22) - (22)
At 31 December 2020 4,106 9,939 14,045 In order to mitigate the credit risk, these deposit accounts are maintained with five different banks.
Amortisation
Balance at 1 January 2020 - (5,003) (5,003)
Charge for the year - (1,272) (1,272)
At 31 December 2020 - (6,275) (6,275)
12. Creditors
Net book value at 31 December 2020 4,106 3,664 7,770
Net book value at 31 December 2019 1,950 4,136 6,086 2020 2019 £'000 £'000
Trade creditors 2,024 1,640 The principal expenditure during the year related to investment in our enhanced Registry systems Accruals 1,010 787 (£1,447,400), implementing other key strategic workstreams (£1,322,720), and other operational Deferred rental incentive 36 62 initiatives (£208,106). Deferred Industry fees* 126 381 Deferred Beneficial Ownership contribution - 162
10. Tangible fixed assets Deferred Registry fees** 2,283 2,823 Sundry creditors 270 278
5,749 6,133
Office furniture, Leasehold Computer Motor
fittings & equipment improvements equipment vehicles Total
Falling due within one year 3,745 6,133 £'000 £'000 £'000 £'000 £'000 Falling due after more than one year 2,004 -
Cost
Balance at 1 January 2020 640 311 1,838 13 2,802 5,749 6,133 Additions 1 - 167 - 168
Transfer from intangible assets - - 22 - 22
At 31 December 2020 641 311 2,027 13 2,992 * Deferred industry fees arise from civil penalties received during the year. The Law requires the amount
to be credited to Industry by way of reductions in the Industry fees that would otherwise be charged in
future years.
Accumulated depreciation
Balance at 1 January 2020 (581) (163) (1,203) (11) (1,958) **It was agreed with the Government of Jersey that a portion of the additional registry fees charged from
2017 to 2019 be segregated and used for certain current and future enhancements to the Registry and its
Charge for the year (23) (60) (260) (2) (345) systems. In 2020 it was confirmed the segregated amount should be utilised for 2020 Registry projects
At 31 December 2020 (604) (223) (1,463) (13) (2,303) and for start-up costs of the MONEYVAL AML inspection unit. As a result, £540,000 has been recognised
as financial contribution income in 2020 as an offset to the charges associated with running the unit,
and £2,282,665 is carried forward to be released over the useful life of the Registry system, in line with
Net book value at 31 December 2020 37 88 564 - 689 amortisation charges. No further unallocated segregated funds under this arrangement remain.
Net book value at 31 December 2019 59 148 635 2 844
13. Provisions for liabilities 14. Commitments under operating leases
The JFSC had minimum lease payments under non-cancellable operating leases as set out below:
Provision for Reinstatement 2020 2019
long leave provision Total
£'000 £'000 £'000 £'000 £'000
Not later than one year 601 592 Balance at 1 January 2019 229 281 510
Later than one year but not later than five years 248 834 Amounts provided for during the year 51 44 95
Reversal of unused provision (20) - (20) 849 1,426 Utilised during the year (62) - (62)
Balance at 31 December 2019 198 325 523 Rentals payable under this operating lease are subject to periodic review and are based on market rates.
The most recent rent review was agreed during 2020 and the resulting rental increase was effective from
Amounts provided for during the year 20 81 101 May 2019. The next rent review is due to commence in 2022.
Reversal of unused provision (18) - (18)
Utilised during the year (110) - (110)
Balance at 31 December 2020 90 406 496
Falling due within one year 48 - 48
Falling due after more than one year 42 406 448 15. Financial instruments
90 406 496 Our financial instruments are analysed as follows:
Provision for long leave 2020 2019 The provision for long leave relates to the expected cost of long leave entitlements that have accrued up £'000 £'000 to the date of the statement of financial position. Long leave entitlements may continue to accrue up to Financial assets
June 2043 if all vesting conditions are satisfied up to that period.
Financial assets measured at amortised cost 12,915 11,873 Provision for premises reinstatement Financial liabilities
The provision relates to the expected costs of reinstatement of office premises to their original condition Financial liabilities measured at amortised cost (2,294) (2,080) on termination of premises leases. The balance at year-end has been determined based on a guideline
rate of £20 per square foot (2019: £16 per square foot) as determined by the Royal Institute of Chartered
Surveyors. The provision is adjusted annually based on movements in the guideline rate. Financial assets measured at amortised cost comprise cash and bank balances, trade receivables
and sundry debtors.
Financial liabilities measured at amortised cost comprise trade creditors and sundry creditors.
p.100 Financial statements p.101 Annual Report 2020
09.
- Pension costs 18. Subsidiary undertakings
JFSC 2012 Staff Pension Scheme At 31 December 2020, the JFSC had an interest in one wholly owned subsidiary company. Further details
are outlined below:
In 2012, the JFSC closed the JFSC s Staff Pension Scheme and replaced it with a new defined contribution
scheme, the JFSC 2012 Staff Pension Scheme. The new scheme is open to staff whose initial employment
by the JFSC occurred after 1 January 1999. Members interests in the previous scheme were automatically
transferred to the JFSC 2012 Staff Pension Scheme. All transfers of interests were completed in 2013. Name: JFSC Property Holdings No.1 Limited The JFSC 2012 Staff Pension Scheme s assets are held separately from those of the JFSC, under the care Country of incorporation: Jersey
of an independent trustee.
% of shares held: 100%
Salaries and emoluments include pension contributions for staff to the schemes of £796,433 (2019:
£809,501). Contribution rates have remained unchanged. Aggregate contributions decreased due to Principal activity: Property lease holding
changes in membership numbers and ages.
JFSC Property Holdings No.1 Limited entered into an agreement on behalf of the JFSC to lease the JFSC s Public Employees Contributory Retirement Scheme office premises. All expenditure incurred by the Company is borne by the JFSC. The Company has no
assets or liabilities and therefore has not been consolidated in the financial statements.
Staff employed by the JFSC before 1 January The JFSC is unable to identify its share of the
1999 are members of the Public Employees underlying assets and liabilities of PECRS in Contributory Retirement Scheme (PECRS) which accordance with FRS 102 (Section 28) and
is a final salary scheme. The assets are held accordingly accounts for contributions to the separately from those of the Government of scheme as contributions to a defined
Jersey. Contribution rates are determined by an contribution scheme.
independent qualified actuary, so as to spread
the costs of providing benefits over the members The most recent published actuarial valuation expected service lives. being as at 31 December 2018, which reported a
deficit of £1.1 million. No account has been taken of Pension contributions for staff to this scheme the JFSC s potential share of this deficit because amounted to £29,341 (2019: £27,054). The average the scheme is accounted for as if it is a defined contribution rate paid by the JFSC during the year contribution scheme.
was 14.0% (2019: 14.4%) of salary. The contribution
rate has not been changed following the actuarial Copies of the latest annual accounts for the valuation because the valuation is within the scheme, and for the Government of Jersey, may be funding parameters specified in the obtained from the Treasury and Exchequer, 19-21 related regulations. Broad Street, St Helier, JE2 3RR.
- Related party transactions
Transactions and balances arising in the normal course of operations
The JFSC has been established in law as an independent financial services regulator and as such the Government of Jersey is not a related party.
Remuneration of key management personnel
Key management personnel includes the Commissioners, the Director General and Executive Directors who together have authority and responsibility for planning, directing and controlling the activities of the JFSC. Total remuneration paid to members of key management personnel during the year was £1.5 million (2019: £1.9 million).
Remuneration of Commissioners
Remuneration of the Commissioners and the Director General is set out on page 74 of this annual report. There were no other transactions with key management personnel other than reimbursement of expenses incurred for JFSC purposes.
Appendix
_ 10
Appendix
Senior leadership
Martin Moloney As at 30 April 2021 Director General
Jill Britton Diane Maxwell Kerry Petulla John Gavey Julian Lamb
Director of Supervision Director of Policy Acting Director Chief Operating Officer Director of Registry
of Enforcement
Sarah Kittleson David Porter Hamish Armstrong Lizzy Roe Dennis Dixon Daniel Wilson
Director of Supervisory Chief Adviser, Conduct Chief Adviser, Commission Secretary General Counsel Director of Finance and Engagement and Prudential Financial Crime Operational Improvement
Notes
We find ourselves Intassociaternational red or an acegulattivory bodies with which the JFSC is either e member: in a strong position
- Full member of: to exit these
IntGrIntoup oernational Organizernational Association of International Finance Centration of Insurance Supervisors (IAIS) f Securities Commission (IOSCO) e Supervisors (GIFCS) turbulent times
Global Financial Innovation Network (GFiN)
and support the
- Participates fully in the processes, and is subject to the procedures, of: Island and
CommittTerrorism (MONEYVee of Experts on the EAL) valuation of Anti-Money Laundering Measures and the Financing of Industry as we
- Participates in the work of the following through membership of GIFCS: build back better
Basel Committee on Banking Supervision (BCBS)
Financial Action Task Force (FATF).
108