Clarifying Schedule 2: The JFSC's proposals for revision of guidance for Article 36 of the Proceeds of Crime Law

The Consultation closes on 30 January 2026 and readers are encouraged to submit their views to the JFSC by that date. In introducing the Consultation, the JFSC has been clear that it welcomes responses and intends to make suitable changes as needs require.

Pursuant to Article 36 of the Proceeds of Crime (Jersey) Law 1999 (“POC Law”), Schedule 2 to the POC Law (“Schedule 2”) specifies the activities and operations which, when conducted as a business, constitute financial services business for the purposes of the POC Law.

Where a person (which may include individuals, businesses, companies, trustees, advisers or other entities) conducts as a business Schedule 2 activities or operations, they will be required to register with the JFSC under the Proceeds of Crime (Supervisory Bodies) (Jersey) Law 2008 (“Supervisory Bodies Law”) and become a ‘supervised person’ subject to the provisions of Jersey’s anti-money laundering, countering the financing of terrorism, and countering proliferation financing (“AML/CFT/CPF”) regime; which includes the POC Law, the Money Laundering (Jersey) Order 2008 and the JFSC’s AML/CFT/CPF Handbook.

The JFSC has stated that the Consultation is a response to industry feedback which indicates that certain aspects of the Existing Guidelines (in particular, the ‘as a business’ test) have proved challenging to apply in practice and have generated significant queries in relation to the scope and application of Schedule 2. In addition, incoming changes to the regulatory regime in Jersey (including the proposed repeal of certain provisions of the Control of Borrowing (Jersey) Order 1958) require updates to the Existing Guidelines.

While the Draft Guidelines do not alter the POC Law or Schedule 2, they introduce a shift in emphasis and methodology. In particular, the JFSC has proposed a more structured gateway-based analysis to Schedule 2, including a reformulation of the ‘conducted as a business’ test and an increased emphasis on the Jersey nexus. These changes will affect how companies, firms and advisers assess whether they, or those they represent, are required to register with the JFSC as a supervised person for the purposes of Schedule 2. The Draft Guidelines will not be retrospective but will fully replace the Existing Guidelines.

SUMMARY OF CONSULTATION

New Gateway Analysis

Under the Existing Guidelines, whether a person is required to register under Schedule 2 is approached in a relatively fluid manner. The Existing Guidelines state that “whether or not an activity is conducted as a business can be a qualitative matter, and thus requires an element of subjective judgement,” further stating that the criteria given in the guidance is neither prescriptive nor exhaustive.

Although the Existing Guidelines do provide a three-limbed approach through their focus on whether the person: (i) conducts relevant activities or operations, (ii) does so ‘as a business’, and (iii) does so for on or behalf of a customer; the Draft Guidelines introduce a reformulated three-gateway framework, which includes:

1.    The Activity Gateway: whether the activity falls within Parts 1-4 of Schedule 2;

2.    The ‘As a Business’ Gateway: whether the activity is conducted on a “business, professional or commercial basis” with the “presence of a customer”; and

3.    The Jersey Nexus Gateway: whether the activity is carried on ‘in or from within Jersey’ or otherwise meets the territorial connection requirements.

The Activity Gateway

The Activity Gateway provides clarity on assessing the actual activity, as defined in Schedule 2, as undertaken in practice rather than a reliance on how activities are structured, labelled or described. Activities must not be disregarded simply because they are considered ancillary, secondary or supportive to the primary purpose of a business or person, which may have been a possible interpretation under the Existing Guidelines.

The ‘As a Business’ Gateway

The most significant change can be seen in the ‘as a business’ requirement. Under the Existing Guidelines, the JFSC adopts a multi-factor indicator approach, including (amongst other factors) whether the person:

·         publicly holds themselves out as carrying on an activity as a business;

·         receives remuneration for that activity (and that remuneration is significant, both within itself and in relation to the person’s total income);

·         undertakes multiple Schedule 2 activities; and/or

·         undertakes the activities or operations for more than one customer.

The Existing Guidelines do not provide an exhaustive list of criteria, with no single factor being determinative, and substantial weight placed on the subjective judgement of the person.

The Draft Guidelines replace this with a two-limbed test, under which an activity will only be regarded as carried on ‘as a business’ where:

a)    it is carried out on “a business, professional or commercial basis”; and

b)    there is “the presence of a customer”.

Both elements must be satisfied in order for the person to be considered to be carrying on an activity ‘as a business’. This new wording in the Draft Guidelines suggests a preference for a more focussed and uniform approach to determining whether a person is in scope of Schedule 2 (with the “subjective” wording noticeably not present in the Draft Guidelines).

With this in mind, the amendments in the Draft Guidelines do raise some questions as to whether the JFSC intends to widen the scope of Schedule 2 registration further than it currently sits. Departing somewhat from the Existing Guidelines, the Draft Guidelines place increased emphasis on the substance and context of the activity, rather than its “frequency, form or how it is described”.

To illustrate, the indicative factors listed in the Existing Guidelines suggest a more holistic approach, with factors such as holding oneself out as performing certain activities, performing them in a repetitive manner or for multiple people, and performing multiple Schedule 2 activities being suggested as helpful indicators that a person is in scope (with a lack of these factors suggesting the opposite).

However, the Draft Guidelines imply a wider approach where it says “a single transaction may be conducted as a business. The absence of repetition does not, by itself, exclude an activity from being considered business in nature” (2.3.8) and that a person “should assess all of their activities and must not disregard activities simply because they are considered ancillary, secondary or supportive to the primary business” (2.2.1.3). This revised wording suggests a broader interpretation, perhaps bringing in persons that would not have previously considered themselves to be in scope, such as companies performing a one-off activity which is ancillary to their primary business or professionals providing services other than on a commercial basis. The clarification for activities such as lending or trading securities for family or friends also appears to widen the potential need for registration.

Furthermore, the distinction between “business”, “professional” or “commercial” activities suggests each is an independent basis on which an activity may be regarded as carrying on an activity “as a business”; and in the case of activities being carried out on a “professional” basis that this may extend the scope beyond what is envisaged in the Existing Guidelines (such as where professional services are provided for no or little remuneration). As the explicit reference to remuneration in the Existing Guidelines has been removed in the Draft Guidelines, further clarification from the JFSC as to what constitutes the “presence of a customer” would be welcome.

The Draft Guidelines also reference new activities, which are neither referenced in the Existing Guidelines nor the POC Law or Schedule 2 itself, such as the reference to executor services being in scope in section 3.22.

The Jersey Nexus Gateway

The Draft Guidelines also provide clarity that a Schedule 2 activity is only one that is conducted ‘in or from within Jersey’. Given the relatively few references to Jersey territorial considerations under the Existing Guidelines, it was perhaps not clear that a Jersey nexus was (and remains) a core consideration for whether an activity is in scope for the POC Law and Supervisory Bodies Law. The Draft Guidelines bring this consideration to the forefront, including it as a new ‘Jersey Nexus Gateway’. The JFSC has also chosen to annex its existing guidance on the meaning of ‘in or from within Jersey’ to the Draft Guidelines, such that the existing considerations for whether an activity is being performed ‘in or from within Jersey’ will not change, but rather suggests an attempt to clarify those requirements and their application across different companies and industries by incorporating them directly into the Draft Guidelines. This ‘one-stop-shop’ approach can be seen throughout the Draft Guidelines, with definitions, forms, references and guidance being incorporated, linked or annexed directly in the Draft Guidelines.

The Draft Guidelines also highlight that registration is required where a Jersey incorporated company (or person whose registered office is in Jersey) undertakes those activities elsewhere in the world (2.4.4).

Conclusion

Overall, the Draft Guidelines aim to provide a clearer and better structured approach to interpreting Schedule 2 supervision and registration. This restructuring of the guidelines suggests a deliberate attempt by the JFSC to respond to industry feedback and clarify the guidance to create a simpler and more uniform system across different companies and industries. However, it should be noted that even where amendments seem minor, this may in practice represent a shift in the type and form of activities that will be brought into scope within the Schedule 2 regime. It is recommended that when the Draft Guidelines are finalised and introduced, persons and companies undertake a renewed exercise in determining whether they remain within scope of Schedule 2 (or are now potentially included within scope), to ensure full compliance with the law. The Draft Guidelines make it clear that reconsidering and reassessing whether activities are caught is an obligation and one which must be ongoing, especially where there are trigger events.

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