Jersey: A Fortnight To Go: Are You Ready For The Criminal Finances Act 2017?

Last Updated: 21 September 2017
Article by Nick Williams

Most Read Contributor in Jersey, August 2019

In preparation for the UK's Criminal Finances Act 2017, and in particular the new corporate criminal offence of failing to prevent the facilitation of tax evasion which comes into effect on 30 September 2017, long-awaited guidance has been issued by the UK Government. The Guidance relates to the measures that corporations must put in place in order to demonstrate that they have "reasonable prevention procedures", and which would amount to a complete defence in the event that an "associated person" of the corporation (e.g. employee, contractor or subsidiary/parent providing services to the corporation) were, in the course of his/her employment/contract, to facilitate a third party in evading tax.

The main aim of the Guidance, is to 'help relevant bodies understand the types of processes and procedures that can be put in place to prevent associated persons from criminally facilitating tax evasion'. The Guidance is not prescriptive and is only intended to be illustrative. Departing from the suggested procedures within the Guidance does not automatically mean that a corporation's stance in this area is deficient. Equally, simply complying with the Guidance does not amount to a safe-harbour, making a relevant body immune from prosecution.

The Guidance, should therefore be considered in a risk-based and proportionate way taking into account the size, nature and complexity of the relevant body; what is reasonable for a small business may not be reasonable for a large business. Offshore financial services businesses will automatically be considered high risk, and so corporations in this area should look to adopt an inclusive approach and to err on the side of caution. The procedures adopted should also be constantly kept under review – what was considered reasonable at one time will change as time passes on.

The onus will remain on the corporation where it seeks to rely on the defence of having 'reasonable prevention procedures' in place to prove this. Ultimately it will be the Courts who will determine this question having taken into account the unique facts and circumstances of the particular case. Making sure that all steps have been properly recorded and documented is, therefore, very important.

Recap of the offences under the Act

There are two offences that a relevant body can commit under the Act; the failure to prevent the facilitation of UK tax evasion; and the failure to prevent the facilitation of foreign tax evasion (the Offences). For further information on this please see our earlier briefing 'Facilitation of tax evasion: A new corporate offence'.

The Offences essentially reverse the normal burden of proof. Thus, corporate culpability will be assumed, unless the corporation can demonstrate that it had reasonable prevention procedures.

As a precursor, it is necessary for the prosecution to demonstrate that there has been underlying tax evasion by a tax payer and criminal facilitation of that tax evasion by the employee/contractor/subsidiary/parent. A formal conviction is not required in either case, only an indication that such a conviction would have been achieved if a prosecution had been brought.

Culpability for the UK tax evasion offence extends to any corporation anywhere in the world. So it has particular resonance offshore. Businesses will not be immune because of their location. The foreign tax evasion offence extends to any corporation that has a nexus with the UK (e.g. they have a UK branch or the offence takes place in the UK). So, again, it is potentially highly relevant.

What could amount to 'reasonable prevention procedures'

'Prevention procedures' are defined in the Guidance to mean both formal policies adopted by a corporation and practical steps taken to implement, enforcement and monitor those policies.

The Guidance suggests that procedures put in place by corporations should be informed by the following six principles:

  1. Ensuring that a corporation is able to accurately assess the extent of its exposure to risk in this area, and that any risk assessment is documented and kept under review.
  2. Ensuring that a corporation's risk-based prevention procedures are proportionate based upon the nature, scale and complexity of the corporation's activities.
  3. Fostering a culture within the corporation that facilitating tax evasion is not acceptable nor tolerated.
  4. Ensuring that a corporation applies due diligence procedures that are appropriate and risk based so as to mitigate identified risks.
  5. Ensuring that a corporation's prevention policies and procedures are communicated, embedded and fully understood throughout the entire organisation which includes ensuring that adequate training is regularly provided.
  6. Ensuring that the preventative procedures are constantly monitored and improved as and when necessary in light of new developments.

Whilst this is helpful, it is still generalised and high level. The question is what this means in practice for financial services businesses in Jersey and throughout the offshore world. In this regard, it may be prudent to consider the following:

  1. Proportionality – as stated above, most financial services businesses in Jersey will be considered higher risk. This development cannot, therefore, be ignored. Advance planning is important, as HMRC will take into account procedures that were planned at the time any facilitation of tax evasion takes place (as well as those actually in place).
  2. Culture – management should be visibly and tangibly engaged in this issue. Directors/partners should lead on both the communication and endorsement of the corporation's stance, as well as the development of new procedures. Now is the time to ensure your board is aware of, and progressing, the new requirements and that this is filtering down to others in your organisation.
  3. Risk assessment and due diligence – corporations may wish to consider inter alia: (i) adequacy of resourcing/funding applied to this area; (ii) whether they have the right people with the right experience to deal with these new challenges; and (iii) the sources of information being used to assess risk in this area.

    The spotlight should also be focused at an early stage on the profile of the business. Management should "sit at the desks" of their employees to consider areas of weakness that might be exploited and particular products/services that could be open to abuse. Finally, in terms of ongoing risk assessment and due diligence the message coming across loud and clear is that so long as the risks of facilitating tax evasion are properly assessed, new procedures can form part of the broader package of financial crime prevention procedures a corporation may have. However, existing procedures must only be a springboard, they must not be a substitute. Paying lip service to the new obligations (e.g. nominally including the work "tax" without substantive assessment and change) will not suffice. That is perhaps the biggest trap for well-run organisations, who may feel that they already have all bases covered.
  4. Communication and training – again, this can be incorporated into existing financial crime prevention training, although if an area is at particular risk then businesses may wish to consider bespoke training. Do your employees understand how tax evasion can take place, and how it might be facilitated? Are they aware of the warning signs, and do they know how to seek help and report concerns? Do they understand the corporation's policies in this area, why they are needed, and what the potential penalties are for both them and the corporation?

All of the above should be monitored and reviewed, with improvements made where necessary.


The Offences will have been on the radar of Jersey businesses for many months now, as the Act followed the well-trodden path from consultation to legislation. However, now that they are about to become a reality they merit immediate action.

Financial services businesses in Jersey will likely already adhere to many of the underlying principles and conduct themselves in accordance with best practice generally. The existing suite of regulatory requirements demands as such.

Nevertheless, the introduction of the Offences and the Guidance does mean that all financial services businesses are expected to have, and be able to demonstrate that they have, reasonable prevention procedures in place.

If your business has not yet grasped the nettle, between now and 30 September is an ideal opportunity to take the necessary steps.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions