CRIMINAL FINANCES ACT OFFENCES - YOUR JERSEY LEGAL RIGHTS … OR NOT

Posted on December 05, 2017
Written by Matthew Jowitt

A LOOPHOLE in Jersey law seems likely to mean that the Island’s financial services providers have less protection against arrest and removal to face criminal charges in the United Kingdom than almost anyone else on the planet. Matthew Jowitt explains why

Criminal Finances Act 2017

The recently enacted UK Criminal Finances Act 2017 creates a raft of anti-tax evasion offences which the new Act says can be committed through actions taken in Jersey by Jersey residents.

There’s nothing new about countries other than the UK asking Jersey to hand over suspected offenders. It’s called extradition. But the underlying safeguard – not least against tyrannical or oppressive foreign laws – has always been the principle of dual-criminality: the alleged foreign criminal conduct would also have to be criminal conduct applying the law of Jersey if the conduct had occurred in Jersey.

No dual-criminality? No extradition.

Next stop: the Old Bailey

But where it’s the UK asking for someone in Jersey to be handed over for trial in a UK criminal court a different process exists, for which dual-criminality does not appear to be necessary.

For the last 170 years, Jersey and the UK have shared a simple process created by the Indictable Offences Act 1848 for ensuring that alleged offenders in either place who are wanted for trial in the other are easily arrested and removed.

Where an English offence is alleged to have been committed by someone in Jersey, an English Magistrate issues an arrest warrant, which is brought to Jersey and ‘backed for execution’ in the Island by the Jersey Magistrate. Assuming the police know where on the rock the suspect is they can put him on the next plane to Gatwick.

The only precondition to a Jersey Magistrate backing an English arrest warrant in this way is that the English offence must be ‘indictable’ – in practice that means it’s punishable with more than 12 months’ imprisonment – but only that it is indictable, (or so the 1848 Act appears to provide), applying the criminal law of England, not the criminal law of Jersey.

 

Victorian procedure meets modern law

The 1848 Act harks back to a simpler age, when so much of Jersey’s then fast-evolving criminal law borrowed and followed English criminal law. Much of what was considered criminal in English law was also criminal under Jersey law, albeit known by a different, usually French, name.
It is still the case today that if the Indictable Offences Act insisted on dual-criminality in the same way that extradition law does, then the test would be satisfied in almost every instance – the conduct, had it occurred in the Island, would be just as criminal here as in England.

 

Unexplained Wealth Orders and Tax Evasion – no Jersey safeguards?

But the 2017 Act, when read with the 1848 Act, appears to mark a radical departure. The Act supplements the existing UK Proceeds of Crime Act by empowering the English High Court to make Unexplained Wealth Orders, (UWOs), against anyone wherever in the world they reside – that includes Jersey trustees, bankers and other financial service providers.

The 2017 Act does not make it an offence to fail to respond to the demands of a UWO, it simply provides that where no response is provided the property is presumed to be tainted and thus can be forfeited.

But if a Jersey resident decides to comply with a UWO, the Act creates criminal offences punishable with up to two years imprisonment, (and thus ‘indictable’ for the purposes of an arrest warrant under the 1848 Act), of knowingly or recklessly making a false or misleading statement in the process.

The 2017 Act also creates new offences against corporate and partnership entities wherever in the world they are situated – including Jersey entities – of failing to prevent the facilitation of tax offences by third parties who have a particular connection to the entity. These ‘failure to prevent’ offences effectively fix the corporate entity with criminal responsibility for the acts of the third party where the corporate entity cannot show that it had in place reasonable prevention procedures or that it was not reasonable to expect it to have prevention procedures in place.

Both the UWO and failing to prevent offences are ‘indictable’ in the UK.

There is no equivalent UWO regime in Jersey law, and it is not obvious that any offences are known to Jersey law of knowingly or recklessly making false or misleading statements in response to a UWO or something similar. Equally it is not obvious that any equivalent Jersey offence exists of failing to prevent the facilitation of tax evasion offences by third parties.

Yet the effect of the 1848 Act appears to be that a Jersey resident can nonetheless be arrested in Jersey and sent in police custody for trial in a UK criminal court for such conduct when that conduct does not appear to be remotely criminal under the law of the Island.

 

Safeguards for other international finance centres?

By contrast, and leaving aside the other Crown Dependencies, (which also use the 1848 Act backed-warrant system), residents of almost every other jurisdiction in the world will enjoy the dual-criminality protection for which extradition principles provide – if their countries do not have equivalent EWO and failure-to-prevent-facilitation offences then it would seem likely that no UK request for their extradition, or their arrest under a European arrest warrant, could succeed.

It remains to be seen whether this apparent anomaly does arise on a proper construction of the 1848 Act and, if it does, whether it will be challenged in and scrutinised by the Island’s courts. It has the potential at least to represent an unprecedented surrender by Jersey to the exorbitant criminal laws of another jurisdiction.

It would also deprive Jersey financial services providers of the legal safeguards enjoyed by their competitors in other countries.

 

Matthew Jowitt can be contacted on 01534 481809

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