The global organization dedicated to combating money laundering, the Financial Action Task Force (FATF), has advised Gibraltar to continue addressing its strategic deficiencies, emphasizing that “all deadlines have now expired.”
The FATF has acknowledged the advancements made by the British Overseas Territory in its anti-money laundering and counter-terrorism financing (AML/CTF) system, including the strengthening of enforcement measures through the implementation of financial sanctions and the disclosure of cases.
The FATF maintains a register of jurisdictions under heightened supervision, commonly referred to as the “grey list.”
Since Gibraltar was included on the list by the FATF plenary in June 2022, it has implemented various measures to enhance the effectiveness of its AML/CTF framework.
Following Gibraltar’s inclusion on the list, the FATF formulated an action plan for the territory, establishing a completion target of May 2023.
The organization stated at the time that Gibraltar’s status as a prominent gambling center was a significant factor in its decision. Specifically, the FATF criticized the government for its shortcomings in “imposing adequate penalties for AML violations.”
However, the organization emphasized that all deadlines have now elapsed after a year of being on the list.
As a result, the Financial Action Task Force on Money Laundering (FATF) encouraged Gibraltar to “move ahead as quickly as possible” with the implementation of its action plan to address its ongoing strategic shortcomings.
The agency stated: “Gibraltar should continue to work on implementing its action plan to address its strategic shortcomings, including demonstrating its ability to pursue more comparable final forfeiture judgments in line with Gibraltar’s risks and context.”
The most recent update on Malta’s progress in addressing its anti-money laundering/counter-terrorism financing weaknesses was released at the end of the FATF’s third plenary session on Friday, led by T Raja Kumar.
Gibraltar’s response to the FATF
Following the release of the FATF plenary session results, the Gibraltar government responded to the news that the territory would remain on the list. It highlighted that there was only one issue that required action and reaffirmed its commitment to the process.
The government stated: “The Government of Gibraltar acknowledges the latest update on our jurisdiction issued by the FATF on 23 June.”
“Considering that there is only one significant action point remaining to be addressed, the Government will continue its tireless efforts to complete its action plan as soon as possible.
“The Government is fully dedicated to this process and all regulators and other authorities will continue to collaborate with the FATF to demonstrate our compliance with the action plan.”
The Financial Action Task Force (FATF) convened its plenary session in February, where it recognized Gibraltar’s political dedication to collaborating with international organizations. Nevertheless, despite acknowledging progress, the absence of action on seizure orders resulted in the territory’s continued presence on the list.
Inclusion on the grey list will have repercussions for businesses operating in Gibraltar, particularly affecting the jurisdiction’s substantial gaming sector. Gibraltar enterprises will face heightened regulatory oversight from both domestic and foreign entities, leading to increased compliance expenses.
Another consequence of being on the list is the amplified difficulty in accessing financial and banking services, as certain organizations will be reluctant to engage in business with companies located in grey-listed nations. This makes it more challenging to establish bank accounts, secure credit lines, or access any other form of financial assistance.
The FATF’s decision to maintain Gibraltar on the list has drawn criticism from the territory’s opposition party, the center-right Gibraltar Social Democratic Party (GSD).
The party characterized the government’s response to the FATF as “lackadaisical,” due to its lack of specifics regarding a plan for achieving removal from the list.
Roy Clinton, the GSD’s shadow minister for financial services and gambling, criticized the incumbent minister for exhibiting excessive optimism.
Gibraltars Minister of Financial Services, Albert Isola, remains optimistic about delisting, but he recognizes growing dissatisfaction as the initial hope has not materialized.
In fact, the government announced in June 2022 that it would show compliance “within a specific timeframe,” and it’s been a considerable period since then.
The minister should be aware that our financial services sector is experiencing the disgrace of being classified as a high-risk area, alongside nations such as Congo and Haiti.
With the Financial Action Task Force on Money Laundering (FATF) deadline having passed, Roy Clinton has urged the minister to provide a statement in Parliament detailing what “practical and immediate actions” are being taken to fulfill the agency’s demands.
“They truly should be more discerning.”
Following an intervention by the GSD, the government rejected accusations of the party engaging in political maneuvering. In an official statement, the government asserted that the opposition “gave in to the allure of politicizing the ongoing endeavors to remove Gibraltar from the FATF grey list.”
“Roy Clinton’s statement reeks of political opportunism,” Minister Albert Isola countered Clinton’s criticism. “Despite the opposition’s attempts to weaken our efforts, the government remains firmly dedicated to achieving delisting and restoring our jurisdiction’s standing.
“It is unfortunate that the opposition has abandoned their previous responsible approach in exchange for a false political gain. They truly should be more discerning.”
Despite the GSD opposition’s altered viewpoint, I still propose a private meeting to provide them with a concise summary of the current circumstances.
While we acknowledge the professional efforts of regulatory bodies and law enforcement in addressing FATF mandates, I am optimistic that we will be removed from the list shortly.
Malta’s Journey
Gibraltar is not the first international gambling center to be included on the FATF list. In June 2021, the organization added Malta due to “strategic shortcomings” in the island nation’s anti-money laundering/counter-terrorism financing framework.
Following Malta’s inclusion on the list, the working group presented the country with a three-part “action plan” to address outstanding issues.
These actions included verifying the accuracy of ownership details, clarifying the role of the island’s Financial Intelligence Unit (FIU), and enhancing the FIU’s focus on money laundering and tax avoidance.
By February 2022, the FATF declared that Malta had “significantly completed its action plan” and implemented a series of reforms before being removed from the list four months later.
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