Today (Wednesday 27 September), an independent assessment begins of Jersey’s capability to combat financial crime. The assessors are from Moneyval – but what is Moneyval and why is this so important? This blog provides the background information
What is Moneyval and why does it matter?
In a world interconnected by global financial systems, ensuring the integrity of financial transactions is paramount to prevent money laundering and the financing of terrorism.
Moneyval, short for the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, plays a vital role in this endeavour.
In simple terms, Moneyval is an international body that evaluates how well countries or jurisdictions are tackling money laundering and terrorist financing. Here’s why their work matters, how they do it, and what is expected of countries undergoing an assessment.
Moneyval’s work is vital for several reasons:
- Stopping criminal activities: Money laundering enables criminals to legitimize illegally obtained money. By detecting and preventing money laundering, Moneyval helps thwart criminal activities, such as drug trafficking and corruption.
- Countering terrorism: Terrorist organizations often rely on financial networks to fund their operations. All countries, including international finance centres like Jersey, are expected to help identify and eliminate these channels, making it harder for terrorists to finance their activities.
- Maintaining financial stability: Money laundering can undermine the stability of the financial system. By ensuring financial institutions have robust anti-money laundering (AML) and counter-terrorist financing (CFT) measures in place, Moneyval contributes to global financial stability.
- Global cooperation: Moneyval promotes international cooperation among countries to combat money laundering and terrorist financing. This collaboration is essential, as criminals and terrorists frequently operate across borders
How Moneyval assesses jurisdictions
Moneyval evaluates jurisdictions (countries or regions) using a systematic process:
- Mutual evaluations: Moneyval conducts assessments of each jurisdiction, called mutual evaluations. These evaluations involve a comprehensive review of the jurisdiction’s AML and CFT systems, laws, regulations, and their effectiveness.
- Technical compliance: Moneyval assesses whether the jurisdiction’s legal framework complies with international standards, like those set by the Financial Action Task Force (FATF). They examine whether the country has the right laws and regulations in place to provide a toolkit for combatting financial crime.
- Effectiveness evaluation: Moneyval also assesses how well these laws and regulations are implemented in practice. Effectiveness is crucial because having strong laws on paper isn’t enough; they need to work effectively to combat financial crimes.
- Risk-based approach: Moneyval considers the specific risks each jurisdiction faces, as these can vary greatly. For example, a country with a booming tourism industry might have different money laundering risks compared to one heavily dependent on exporting natural resources.
- Peer review: The evaluation process includes a peer review by other member countries, ensuring objectivity and fairness.
What’s happening in Jersey
Moneyval assessors are in Jersey for the next fortnight to conduct the on-site part of the assessment, which will lead to the publication of the mutual evaluation report (MER).
The assessors were invited by Jersey, and this important process is welcomed. It is a health check on the whole of Jersey and is effectively a test of the ongoing work being done to combat financial crime. As a leading global financial centre, the MER will provide evidence that we comply with international standards for combatting financial crime. That will enable us to continue to attract good quality businesses and investors.
For several years, the Government, agencies and industry have been working hard to prepare for the assessment, and are confident that this work will allow us to give a good account of how we measure up against international recommendations.
But the on-site visit ends, the Moneyval assessors will prepare the MER, which will include recommendations of actions that will further improve our AML/CFT processes. Those recommendations are to be expected, as every jurisdiction which is the subject of an assessment always receives them. That report will take five months to draft and finalise, and it will not be until next May that we will know the final result.
Until then, nothing will be said publicly, but work will continue to ensure that Jersey meets international standards for combatting financial crime.