Although only publicly issued now, these breaches occurred while Garfield Bennett Trust Company Limited (GBTCL) acted as a designated service provider for certain Jersey private funds between October 2020 and March 2022. The contraventions related to both the Trust Company Business Code of Practice and the AML/CFT codes of practice in place at the time.
A designated service provider (DSP) of a Jersey Private Fund (JPF) plays a crucial role in ensuring the fund is compliant with regulatory requirements. A DSP is responsible for due diligence on the JPF and that the JPF complies with anti-money laundering (AML), countering the financing of terrorism (CFT) and countering of proliferation financing (CPF) requirements.
This public statement (and related civil penalty levied on GBTCL) serves as a timely reminder to service providers of the importance of operating the procedures relating to a JPF in accordance with the relevant rules. This case underscores the regulator’s focus on maintaining Jersey’s reputation as a well-regulated international finance centre, especially given the updates to the JPF regime effective August 6, 2025, which enhance flexibility but also increase compliance demands on DSPs.
Since the JPF regime was launched in 2017 (itself a codification of earlier legacy regulatory categories) there have been a number of improvements and regulatory clarifications, including amendments to the JPF Guide in July 2024 as well as the significant further amendments in August 2025. Important guidance was also issued in 2021 as part of a thematic review of JPFs.
Background on GBTCL and Regulatory Context
As a DSP, GBTCL is responsible for ensuring compliance with anti-money laundering/countering the financing of terrorism/proliferation financing (AML/CFT) standards, including conducting due diligence on fund promoters and investors. The JFSC’s investigation, prompted by concerns and a review by a regulatory consultant, focused on the adequacy of GBTCL’s corporate governance arrangements and financial crime controls.
Detailed Procedural Deficiencies
The JFSC statement identifies several areas where GBTCL fell short of regulatory expectations, highlighting systemic weaknesses in its operations as a DSP. For example:
Inadequate Risk Assessments:
GBTCL failed to conduct and record adequate business risk assessments (BRA) and customer risk assessments for the funds at onboarding and throughout the relevant period (October 2020 to March 2022).
Management of Conflicts of Interest:
Significant conflicts of interest were present from the start of GBTCL’s relationship with the Funds but were either not recorded in a timely manner or not considered at all. These conflicts were not effectively managed, and the financial crime risks associated with them were neither properly considered nor understood
Unusual Fee Arrangements:
GBTCL failed to recognise an unusual arrangement and assess whether the flow of funds presented potential financial crime risks.
Corporate Governance and Financial Crime Controls:
Serious findings indicated deficiencies, including inadequate oversight by the board, lack of robust internal controls, and insufficient empowerment of the money laundering compliance officer (MLCO).
Key Areas for Service Providers to Focus On
Based on the JFSC’s findings, service providers, especially those acting as DSPs, should prioritize the following areas to ensure compliance and avoid similar enforcement actions:
Robust Risk Assessment Processes:
Service providers must conduct thorough and ongoing business risk assessments (BRA) and customer due diligence (CDD), including enhanced due diligence (EDD) when necessary, to identify and mitigate financial crime risks. This includes reassessing risks in response to changes in investment strategies, such as shifts to high-risk assets like cryptocurrency, to ensure alignment with the AML/CFT/CPF Handbook. Regular updates to risk assessments are crucial to address evolving threats and maintain regulatory compliance.
Effective Conflict of Interest Management:
Establish and maintain clear policies for identifying, recording, and managing conflicts of interest in a timely and effective manner. Ensure that financial crime risks arising from such conflicts are thoroughly assessed and addressed, with board-level discussions and documentation to demonstrate compliance. This aligns with the JFSC’s expectation for robust governance and transparency in managing potential conflicts, as outlined in its guidance on enforcement powers.
Monitoring and Recognising Unusual Transactions:
Implement strong oversight mechanisms to identify and evaluate unusual fee arrangements or fund flows, such as retrocession fees, and assess their potential implications for financial crime, including money laundering, terrorist financing, and proliferation financing. This requires robust transaction monitoring systems and regular training for staff to recognize red flags, ensuring adherence to the AML/CFT/CPF Codes of Practice and preventing regulatory breaches.
Strengthening Corporate Governance and Compliance:
Enhance corporate governance frameworks and financial crime control systems to comply with the AML/CFT/CPF Handbook, AML/CFT/CPF Codes of Practice, and other relevant regulations. This includes appointing and empowering a competent MLCO, ensuring board-level oversight of compliance, and maintaining robust internal controls. The JFSC’s findings underscore the importance of these measures to safeguard against financial crime and maintain Jersey’s regulatory standards.
Proactive Regulatory Engagement:
Voluntarily engage regulatory consultants or conduct internal reviews when concerns arise to ensure compliance with the Regulatory Framework and prevent enforcement actions. This proactive approach can help identify and rectify issues before they escalate, aligning with the JFSC’s preference for remedial action through supervisory processes, as noted in its enforcement guidance.
Adoption of Appropriate Policies:
Policies relating to JPF activity should: explain what a JPF is and the laws governing the formation of a JPF; cover the requirements set out in the JPF Guide; explain what constitutes a professional or eligible investor; set out that retail investors were not permitted to invest in a JPF and investors must meet the eligibility criteria set out in the JPF Guide; and set out the roles and responsibilities of the service provider as DSP.
Implications for the Industry
The JFSC’s action against GBTCL serves as a cautionary tale for Jersey’s financial services sector, particularly as DSPs begin to operate under the updated JPF regime effective August 6, 2025. The removal of the 50-investor cap and other flexibilities may increase the scale and complexity of JPFs, necessitating stronger compliance frameworks. Now is a prudent time to re-assess risk management and governance practices, ensuring they meet the regulator’s expectations and protect Jersey’s reputation as a leading international finance centre. This may well be combined with alterations to JPF structures to take advantage of the new regime.
How Appleby can help
The JFSC’s statement on GBTCL underscores the critical importance of vigilance, transparency, and adherence to AML/CFT/C/PF standards. By addressing the identified procedural deficiencies and focusing on the outlined areas, service providers can mitigate financial crime risks and strengthen compliance.
Appleby’s Funds team has many years of experience advising on the formation, operation and administration of funds in Jersey and the related legal obligations. Alongside that pragmatic legal advice, Appleby Regulatory Consulting (ARC) in Jersey offers practical advice to clients faced with new, unfamiliar, confusing and time-consuming regulatory obligations. Find out more: bit.ly/412N2Hh
Please reach out to your usual Appleby contact.
