For the fiduciary industry, this means that pursuant to The Financial Services (Jersey) Law 1998 (and related Financial Services Orders) (together the FSL) only TSPs who are “fit and proper” with adequate systems and resources to provide a fiduciary service which reflects Jersey’s high standards, are licensed and thus legally permitted to provide such services.
WHAT ARE THE CRITERIA FOR RECEIVING A LICENCE?
The FSL and the Code of Practice for Trust Company Business (the Code) set the minimum requirements for obtaining a licence. These include specific provisions such as:
Suitable and sufficiently independent individuals (who are resident in the Bailiwick) must direct the business of trust company business licensees (the “four or six eyes” rule);
- Knowledge and expertise to undertake and fulfil their duties;
- Licensees must have staff of adequate number, skills, knowledge and expertise to undertake and fulfil their duties;
- Licensees must always maintain adequate liquidity and an appropriate capital base;
- Licensees must be appropriately insured; and Licensees must at all times comply with the principles of conduct of finance business and all rules, codes, guidance, principles and instructions issued from time to time under the FSL or other applicable laws.
On a more general level, the Code also specifies that all business must be conducted in a prudent manner and run with “integrity and skill” run by “fit and proper” persons. In deciding what is “fit and proper”, the JFSC will consider factors such as the licensees’:
- Probity, competence, experience and soundness of judgement in relation to their responsibilities; Diligence;
- Potential conflicts of interest;
- Qualifications and evidence of continuing professional development;
- Knowledge of their legal and professional obligations; Compliance with, and policies and procedures for dealing with, client due diligence and financial crime, sanctions and anti-terrorism legislation;
Previous conduct and history – including evidence of committing any legal, regulatory or dishonesty offences within the Bailiwick or worldwide.
To maintain their licence, TSPs must of course continue to meet the criteria outlined above. In addition, there are various other laws and regulations with which they must always comply including, by way of example, not only the Trusts (Jersey) Law 1984 (as amended) and the FSL but extensive financial crime and anti-terrorist legislation, such as the Proceeds of Crime (Jersey) Law 1999 and the Money Laundering Order 2008.
In respect of maintaining their “fit and proper” status, licensed TSPs should also have regard to the Code which, although not a statement of the law, attempts to establish “sound principles for the conduct of trust company business”. The Code sets out seven headline basic principles (such as acting with integrity and with adequate resources) and then elaborates with details of expected behaviour to support these principles – for example, to evidence the basic fiduciary principle of treating the interests of beneficiaries as paramount, TSPs are expected to agree clear fee structures, notify clients that they are licensed and transfer any trusteeship in a timely manner.
From a practical perspective, licensed TSPs are also subject to onsite inspections, and must also routinely correspond with the JFSC to, for example, submit audited financial statements or update them of significant changes to their business (such as notifying them of acquisitions of significant shareholdings, or changes to directors or others exercising managerial functions – which may include consultants).