JERSEY Law and Practice Contributed by: Christopher Griffin, Sophie Hancock, Tshogofatso Dhlamini, Rachael Barber, David Patterson and Mike Kushner, Carey Olsen
Regulated businesses (including those that are subject to supervised AML regulation – for example, VASPs) are required to apply systems and controls that effectively combat financial crime risk. The consequence of this regulatory regime is that, in practice, the crime of fraud ( dol ) is rarely charged in the financial services con - text (there are no criminal cases of fraud (dol) in the context of fintech). Equally, while contrac - tual claims based on fraud ( dol ) do come before the Jersey courts from time to time, it is rare for these cases to arise in the context of financial services. 12.2 Areas of Regulatory Focus The regulator will be concerned where fraud occurs inside a regulated business (eg, where an employee of a regulated business has used their position to perpetrate a fraud) and where the regulated business has been the victim of fraud. Both situations could mean that there has been a failure of systems and controls within the regulated business and both situations have the potential to jeopardise Jersey’s reputation as a safe and reliable jurisdiction for financial services and fintech. As such, the regulator would want to understand whether systems and controls have failed and – if so – why have they failed and what will be done to ensure that such failure does not occur in future.
When a fraud has taken place, the regulator will usually place emphasis on whether customers have been adversely affected and – if so – how that will be remediated. Equally, given that the principal element of fraud ( dol ) is dishonesty, the regulator will be concerned about determining whether the incident places in issue the fitness and propriety of a regulated business or any per - son working within a regulated business. 12.3 Responsibility for Losses The situations in – and the extent to – which a fintech service provider would be held respon - sible for losses suffered by a customer will be determined by the liability provisions set out in the agreement between the service provider and the customer. It is not possible for the service provider to exclude liability for its own fraud (including a fraud perpetrated by its employees or agents). It is possible, in certain circumstanc - es, for the service provided to exclude liability for losses suffered by a customer that were caused by a fraud perpetrated by an external party.
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