Jersey’s government is resisting calls to make certain trusts, from which international criminals can benefit, open to confiscation.
A committee of anti-money laundering (AML) experts from the Council of Europe first raised concerns in an assessment of Jersey’s AML in 2015.
The report said authorities needed more powers to confiscate money that has been given to third parties as gifts, particularly those that were put into trust where the settlor retains a beneficial interest.
Even if it agreed the gift would not be automatically considered “realisable property”, the Moneyval committee said more could be done by the island’s authorities to get the money back.
One method might include examining the settlor’s letter of wishes – the founding document of a trust – for loopholes.
In a consultation published on 27 July 2018, Jersey’s crime strategy group said it did “not consider it appropriate to make inroads into fundamental principles of trust law by seeking to prescribe how much of the trust’s assets a discretionary beneficiary might theoretically be entitled to”.
The group added that letters of wishes are “not absolute, which would make such an exercise in most cases practically very difficult”.
Proposed changes to trust law
Instead, Jersey said it would consider inserting a clawback clause like the one it already uses in cases of drug trafficking.
The proposed change will mean that any gifts made within a period of five years leading to the criminal offence (or the earliest of the offences) may also be caught if a court agrees to take the gift into account.
Jersey wants to hear from the island’s financial services and trust industry whether the measure is effective and proportionate and whether five years is long enough.
It is one of 45 measures the island is consulting on, aimed at improving its anti-money laundering rules. The measures follow guidelines set out by AML body the Financial Action Task Force approach.
The consultation ends on 30 September 2018.
