MONEYVAL's 2015 inspection of Jersey's anti-money laundering regime and its subsequent report issued in May 2016 has encouraged Jersey legislators and regulators to actively prosecute more financial crime and, in particular, introduce a non-conviction-based confiscation regime to apply in parallel with the conviction-based system. The Draft Forfeiture of Assets (Civil Proceedings) Jersey Law 2011 (the draft law) is a paradigm shift in regulatory approach to achieve the objectives set by MONEYVAL. The draft law replaces and extends the current Proceeds of Crime (Cash Seizure) (Jersey) Law 2008 (the Cash Seizure Law) and applies to both cash and property held in bank accounts.
The draft law broadly provides for three procedural tracks by which civil forfeiture might be sought by:
- preserving the existing procedure for tainted cash under the Cash Seizure Law;
- creating a procedure for the forfeiture of property in bank accounts which have been subject to a no consent by the relevant police authority for 12 months; and
- creating a procedure for the forfeiture of property in bank accounts which is suspected to be the proceeds of unlawful conduct or intended to be used for such conduct.
Running in parallel to the three procedural tracks is the introduction of the concept of a civil forfeiture investigation and the grant of investigative powers to the attorney general, or an authorised officer acting with the attorney general's consent, for use in respect of such investigations. A civil forfeiture investigation extends to both proceedings under the draft law and non-conviction-based proceedings:
- brought under legislation in force in any country or territory other than Jersey;
- relating to the forfeiture of property in Jersey; or
- brought by a court of that country or territory.
The investigation must be in relation to one or all of the following matters:
- the question of whether any property is tainted property;
- the identity or suspected unlawful conduct of any person which holds property that is suspected of being tainted property, or to whom such property belongs; and
- the extent or whereabouts of such property.
The investigative powers that may be sought in connection with a civil forfeiture investigation are wide and include production orders and disclosure orders.
Forfeiture Banks should be aware of the newly introduced forfeiture of tainted property regime which enables the attorney general to issue a notice on the holder of an account held at a bank in Jersey. The procedure for the forfeiture of tainted property differs depending on whether a consent request has been made in relation to the account in question and may give rise to orders either under:
- the summary forfeiture procedure; or
- a property restraint order.
Summary forfeiture procedure If a consent request has been filed, notice must be served by the attorney general on the holder of the bank account in Jersey. If the account holder fails to attend the court hearing required by the notice, their property may be forfeited without further notice.
Property restraint orders If a consent request has not been filed but the attorney general has reasonable grounds to believe that property held in any bank account is tainted property, the attorney general may apply for a restraint order which prohibits the withdrawal, transfer or payment out of the bank account of the property or part of the property specified in the application.
Property which is specified in a restraint order is to be vested in the viscount from the date specified in the order. From that date the viscount will take possession of and – in accordance with directions from the court – manage or deal with that property.
If it can be proven that any actions of the viscount or attorney general in respect of the subject of a property restraint order were in bad faith, the person to which the property belongs may apply to the court for compensation.
Investigation The draft law enables the attorney general – or an authorised officer acting with the attorney general's consent – to obtain orders requiring banks to undertake account monitoring and provide customer information in the course of a civil forfeiture investigation.
The account monitoring orders that can be applied for under the draft law are broad in scope, with Article 23(6) of the draft law setting out that the specified bank must:
(a) for the period specified in the order;
(b) in the manner so specified; and
(c) at or by a time so specified and at a place so specified,
provide information of the specified description to a police officer named in the order.
Banks and their employees should also be aware of the consequences of failing to comply with an account monitoring order. Article 23(7) of the draft law clarifies that:
A person failing to comply with a requirement imposed by an account monitoring order shall be guilty of an offence and liable to imprisonment for a term of 6 months and to a fine, but it shall be a defence for a person charged with an offence under this Article to prove that –
(a) the information sought was not in the person's possession; or
(b) it was not reasonably practicable for the person to comply with the order.
It is also likely that banks will be affected by the introduction of customer information orders under the draft law. 'Customer information' is broadly defined and includes:
- information as to whether a business relationship exists or has existed between a bank and a particular person;
- a customer's:
- account number;
- full name;
- date of birth; and
- address or former address;
- the date on which a business relationship between a bank and a customer begins or ends;
- any evidence of a customer's identity obtained by a bank in pursuance of, or for the purposes of, any legislation relating to money laundering;
- any evidence otherwise known by the bank as to the source of any of customer funds held by that bank; and
- the identity of any person sharing an account with a customer.
Pursuant to a successfully obtained customer information order, the bank must provide the customer information:
(a) in such manner and within such time as the order may specify; and
(b) notwithstanding any obligation as to secrecy or other restriction upon the disclosure of information imposed by any enactment or contract or otherwise.
In a similar vein to account monitoring orders, banks and their employees should be aware of the consequences of failing to comply with an customer information order. Article 23(6) of the draft law states:
A person failing to comply with a requirement imposed by a customer information order shall be guilty of an offence and liable to imprisonment for a term of 6 months and to a fine, but it shall be a defence for a person charged with an offence under this Article to prove that –
(a) the customer information was not in the person's possession; or
(b) it was not reasonably practicable for the person to comply with the order.
The draft law is a broad and powerful tool for financial crime investigators and prosecutors in Jersey. Given the breadth of the investigatory tools and the scope for a summary forfeiture procedure, it is likely that the draft law will be used regularly once it comes into force.
Banks should take note of the direct impact that the draft law may have on their businesses and start thinking about the introduction of relevant systems, policies and procedures in order to ensure that they can readily comply with any civil forfeiture investigation orders that may be made against them.
For further information on this topic please contact Nicola Roberts or Leon Hurd at Ogier by telephone (+44 1534 514 000) or email ([email protected] or [email protected]). The Ogier website can be accessed at www.ogier.com.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
