1. The JFSC have issued their 2014 Summary Findings following its 2013 On-Site Visit Examination Programme.
2. The Introduction, scope, process and overview is outlined below

Introduction, scope, process and overview

1. Introduction
2. This paper sets out the summary findings arising from the Jersey Financial Services Commission’s (the “Commission”) programme of on-site examinations as part of its supervision of trust company businesses.
3. As noted in previously published Summary Findings papers, the purpose of an on-site examination is to assess a business in terms of its compliance with the legislative and regulatory framework, i.e. Laws, Orders and Codes of Practice for Trust Company Business (the “TCB Codes”) and the Handbook for the Prevention and Detection of Money Laundering and the Financing of Terrorism for Financial Services Business Regulated under the Regulatory Laws (the “AMI/CFT Handbook”).
4. The objective in publishing summary findings from a programme of on-site examinations is to share common findings in order to assist individual trust company businesses in reviewing and upgrading their own internal systems, controls and practices for the purpose of fulfilling the requirements of the regulatory framework.
5. As noted in the Commission’s Business Plan for 2014, the Commission plans to undertake a comprehensive review of its supervisory processes when supervising regulated entities to identify opportunities to improve effectiveness for both the Commission and regulated businesses.

Scope

1. The Commission undertook a wide range of Supervision, Themed and tailored on-site examinations during 2013. The overview of examinations is set out under section 4.2 of this report.
2. The principal theme for 2013 was the “Key Person Function” examination. This focused on the roles, duties and responsibilities of the key persons as defined under Article 2 of the Financial Services (Jersey) Law 1998 (the “FS(J)L”), namely the Compliance Officer, Money Laundering Compliance Officer (“MICO”) and the Money Laundering Reporting Officer (the “MLRO”).
3. In addition, a number of tailored examinations were adopted to review a more targeted area of businesses, such as the assessment for Class N business . The Commission also undertook cross divisional examinations involving trust company business and other Divisions. This bespoke approach to the multiple licence categories held by businesses has become necessary to enable the Commission to pool relevant resources to obtain a greater level of understanding of the overall operations of the business. The Commission has a further number of joint examinations scheduled for 2014 with the Funds Division.
4. Feedback relating to the examination of the Class G  sector is to be published in a separate Summary Findings report.

1. As in previous years, businesses were selected on the basis of their risk rating and their past examination history. Each business selected for an on-site examination was asked to complete a self-assessment questionnaire, covering a range of questions, depending on the theme or type of the examination. Responses to the questionnaire were analysed, areas of potential interest and concern were identified, and then prioritised for closer scrutiny during the examination.
2. Generally, on-site examinations encompassed an assessment of parts of the businesses’ policies and procedures in relation to the specific areas being examined. Commission officers reviewed the corporate governance framework, including minutes of the board and its delegated committees and, on a sample basis, systems and controls and customer records maintained by the business.
3. Discussions were held during the on-site examination with the board, management and staff in customer facing roles, the key person roles and additional compliance supporting roles.
4. The Commission favours a “no surprises” policy in its approach to examinations, with open dialogue with individuals within the business during the examination comprising a large component of the process.
5. The outcome of the assessment against the relevant legislative and regulatory framework was then communicated to the board and compliance personnel at the close-out meeting, following which, the Commission issued its report.
6. Thereafter, the remediation of recommendations made in the Commission’s report by the business is monitored by the Commission under the Post Examination Monitoring Schedule (the “PEMS”).

Overview

1. A total of 48 on-site examinations were conducted during 2013, compared with 57 in 2012. The Commission aims to conduct approximately 50 Trust Company Business examinations each year, prioritised according to the degree of risk and additional factors, such as a themed follow-up examination.
2. This number is invariably influenced by the level of resource required to heighten supervise any business where significant remediation is required. Therefore, the number of examinations conducted will usually fluctuate year on year.
3. Of the 48 on-site examinations conducted in 2013, 16 comprised supervision examinations and 32 were themed examinations.
4. The overall split of the examinations is set out as follows:
5. Supervision Examinations 16 Key Person Functions 12 Tailored or bespoke examinations 14 Class G Sector 6 Total Themed Examinations 32 Total Examinations 48
6. The action taken by the Commission as a result of the on-site examination programme was dependent on the materiality of the findings and is summarised below:
7. No formal monitoring may include a summary of observations arising from the examination process, which essentially represents a best practice approach where the business is already largely compliant. Observations may be either communicated in a letter, where there is no formal monitoring, or included in the last section of the examination report, following the formal findings, conclusions and recommendations, which are subject to PEMS.

READ THE REPORT – http://www.jerseyfsc.org/pdf/TCB-2013-examination-feedback-May-2014.pdf