Gibraltar needs to invest more efforts in identifying, investigating and prosecuting money laundering and in the confiscation of proceeds of crime

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The authorities of the British Overseas Territory of Gibraltar has been called to advance their tools and mechanism used in combating money laundering and financing terrorism. The call was made in a report that makes a comprehensive assessment of the effectiveness of Gibraltar’s anti-money laundering and countering the financing of terrorism system and its level of compliance with the recommendations of the Financial Action Task Force (FATF) published on February 12, 2020, by the Council of Europe’s anti-money laundering body MONEYVAL. The report MONEYVAL acknowledges that the authorities have a varied understanding of money laundering and financing of terrorism risks but the jurisdiction’s overall understanding of the money laundering and financing of terrorism risks is affected by several shortcomings related to the National Risk Assessment and in particular by insufficient analysis of the cross-border threat which Gibraltar faces as an international financial center.
Law enforcement authorities demonstrated a good understanding of the potential financing of terrorism that may occur in an international financial center such as Gibraltar. However, the relative lack of suspicious transactions reports related to the financing of terrorism – considered against the backdrop of transactions that the financial institutions carried out with conflict zones and high-risk jurisdictions – raises concerns as to whether the absence of any prosecutions for terrorist financing is in line with the jurisdiction’s risk profile. The report also reflects that obligations are being implemented to some extent by reporting entities such as financial institutions and designated non-financial businesses and professions (DNFBPs). MONEYVAL noted that the supervisory authorities apply licensing and screening measures to prevent criminals and their associates from abusing financial institutions and DNFBPs. Although the competent authorities apply a risk-based approach in carrying out their supervision, further improvements are needed in this area. Sanctions for non-compliance with anti-money laundering and counter-terrorist financing requirements are not considered proportionate and dissuasive.

Finally, the report notes that Gibraltar legislation sets out a comprehensive framework for international co-operation, which enables the authorities to provide assistance, with generally positive feedback from international partners. Based on the results of its evaluation, MONEYVAL decided to apply its enhanced follow-up procedure and invited Gibraltar to report back at its first plenary in 2021.