Midshore Consulting Limited (“Midshore”), an award-winning Guernsey-based regulatory consultancy, is pleased to announce the authorisation of Jacobi Bitcoin ETF, a sub-fund of Jacobi Investment Funds PCC Limited, which is Guernsey’s first approved cryptocurrency fund.

Jacobi Bitcoin ETF was authorised by the Guernsey Financial Services Commission (“GFSC”) on 15 October 2021 and is available to institutional investors. The Fund will seek approval from the Financial Conduct Authority in the UK to list on the UK-based arm of the Chicago Board Options Exchange (“Cboe”) at which point it will become the world’s first Tier 1 Exchange Traded Fund (“ETF”).

Midshore has worked with Jacobi Asset Management (“Jacobi”) since early 2021 to design and develop the Fund and its operating model, ensuring that strict Guernsey regulatory requirements have been met. The final product brings together both Guernsey and International service providers ensuring that local requirements are met whilst allowing the flexibility of working with global firms experienced in this type of esoteric asset.

Christopher Jehan, Managing Director of Midshore said: “Having worked alongside Jacobi since the start of the year we are really happy with having reached this stage of regulatory approval. This project required early and frequent engagement with the GFSC and development of a key controls framework to ensure that regulatory requirements were considered at an early stage and kept in mind throughout the project. It is also a great achievement to be able to show that Guernsey is open for financial services products involving crypto assets.”

Jamie Khurshid, CEO of Jacobi said: “We are excited to be launching a new secure, transparent and accessible product to track the performance of Bitcoin. We are de-risking investments in crypto by removing the technology risk associated with the physical asset and the counterparty risk associated with traditional funds or tracker products that are unregulated leveraged debt instruments. We are proud to collaborate with Europe’s leading regulated firms for a truly tier 1 offering to service market demand, subject to the necessary regulated approval. This is an exciting moment for Europe as regulatory approval comes ahead of those waiting for a decision from the U.S. Securities and Exchange Commission.”

Contacts

Christopher Jehan, Midshore Consulting Limited (+44 (0)1481 730733)

christopher@midshoreconsulting.com

Geneva Loader, Jacobi Asset Management (+44 (0)7444 734487)

geneva@jacobiam.com

Official release

Jacobi Asset Management receives approval to launch the world’s first tier one Bitcoin ETF – Jacobi Asset Management (jacobiam.com)

Midshore Consulting Limited (Midshore) are proud to have successfully helped Resolute Capital Partners (RCP), a private equity firm based in the United States, internationalise their offering.

Over the last year Midshore’s team of experts led by Christopher Jehan have worked closely with RCP to determine the best combination of regulation and structuring to suit both the structure and the underlying funds.

The resulting Guernsey feeder funds can now be sold to clients across many international jurisdictions and Midshore continue to work with RCP and its partners using Midshore’s CompassFunds service to identify additional marketing opportunities in further jurisdictions, providing advice on the regulatory and legal requirements of accessing those markets.

Read the full release online at the following link:
Resolute Capital Partners Enlists Midshore Consulting Limited to Help Develop and Implement its New International Feeder Fund (prnewswire.com)

When the new Guernsey AML/CFT Handbook was released by the Guernsey Financial Services Commission everyone started focussing on what they feared – changes requiring more work. However, what they failed to appreciate was that there were also areas that could reduce the work and documentation required to successfully identify and verify the identity of a customer and/or beneficial owner. Here we look at five of those points to make life easier.

1. Change of Address

In the past, many firms have re-verified the address of a natural person where they have moved from one residence to another. This can be time-consuming and also result in a temporary block being placed on the customer’s account.

Section 5.4 of the Handbook allows that where there is ongoing written correspondence at the new address this can be considered verification. As this must involve sending correspondence and receiving response to that correspondence consider sending the customer a letter with a tear-off slip to be signed and returned in a reply-paid envelope.

2. Declassifying PEPs

Less Politically Exposed Persons should mean less high-risk relationships and less work to do on an ongoing basis. Consider reviewing your PEP register, highlighting those former PEPs who have left office and determine what their time period is for declassification.

Even where some have not passed the time period you will be able to note when they can be declassified in the future. Once declassified perform a new relationship risk assessment, which may result in a reduction to their relationship risk rating. For further information see section 8.5.6 of the Handbook.

3. Governments, Supranational Organisations, State-Owned Enterprises & Sovereign Wealth Funds

Sections 7.11.2 and 7.11.3 of the Handbook looks at these structures. Historically many of these structures have been automatically classified as high-risk because one or more directors, trustees or equivalent have been PEPs. This would include structures such as:

• Government Pension Schemes
• Development Finance Institutions
• Sovereign Wealth Funds

Guidance given now indicates that where the PEP has no economic interest in the structure but is merely in the position due to their political role. Also, in many cases, payments will be received from the structure and paid back to the structure with no payments being made to individuals (including the PEPs) and therefore there is minimal risk in abuse of the structure. The Handbook clearly indicates that this should other than high risk, and furthermore many of these government-related structures will end up being low risk.

4. Simplified Customer Due Diligence

Chapter 9 of the Handbook contains the measures on Simplified Customer Due Diligence. These can be important tools in reducing the amount of due diligence required when the relationship risk assessment is low-risk and the customer meets certain other requirements. Important categories (some of which are particularly applicable for clearing banks) include:

• Bailiwick Residents
• Bailiwick Public Authorities
• Guernsey authorised or registered collective investment schemes
• Financial Services Businesses and Prescribed Businesses in low-risk (Appendix C) countries including natural persons authorised to act in respect of the Business

We would recommend specific document checklists for these categories of relationship.

5. Using Receipt of Funds as Verification of Identity

Here, a firm will still need to obtain identification information (e.g. on an application form), however verification of identity can be satisfactorily covered by ensuring:

• All initial and future funds are received from an Appendix C business
• All initial and future funds are come from an account in the name of the customer or beneficial owner
• Payments are only made to an account in the customer’s name or other limited recipients
• No product changes are made that result in receipts from or payments to third parties
• Cash withdrawals (if allowed) can only be made where the customer or beneficial owner is face-to-face, identifiable and the reason for cash withdrawal is verified

Whilst not particularly useful in banking relationships, this may prove adequate in cases such as collective investment schemes which typically only receive money from or pay to the named customer. For further information see section 9.7 of the Handbook.

Conclusion

Whilst not applicable in every business, there are sufficient “breaks” in the Handbook to make identifying and verifying the identity of certain customers and (where applicable) their beneficial owners far more streamlined. We would recommend looking carefully at the Handbook for these simplification measures and applying them where possible.