Jersey regulator confirms changes to reliance and MLCO rules from 31 October

Why it matters to AML professionals

Reliance lets firms avoid repeating customer due diligence, but the relying firm usually keeps responsibility if the checks were poor. A risk-based approach means compliance teams must decide which reliance arrangements are higher risk and what extra steps they take, and record that reasoning. Firms that decide not to appoint an MLCO still need someone monitoring compliance.

Red flags in this case

• A relied-upon third party that cannot produce identity evidence promptly when asked
• Reliance arrangements with introducers in higher-risk jurisdictions or sectors supported only by a written assurance
• Customer files where due diligence was obtained through reliance but key ownership information is missing
• No named person or function monitoring AML compliance in a firm that has not appointed an MLCO

If this landed in your queue

1. List the firm's reliance arrangements and rate each as lower or higher risk
2. For higher-risk arrangements, set and record additional steps, such as sample testing of the third party's files
3. Check that identity evidence obtained through reliance can be produced within the expected time
4. If no MLCO is appointed, confirm the alternative compliance monitoring arrangements and notification to the JFSC

Key terms

Reliance

When a firm uses customer due diligence already carried out by another regulated party instead of repeating it.

MLCO

Money Laundering Compliance Officer, the person responsible for monitoring a firm's compliance with AML requirements.

Interview angle

What are the risks of relying on a third party's customer due diligence?

Mention that responsibility usually stays with the relying firm, the need to assess the third party's standards, get documents promptly, and apply extra checks for higher-risk arrangements.