Financial Action Task Force adds Gibraltar to its grey list

Gibraltar has been placed on the Financial Action Task Force’s (FATF) grey list, the intergovernmental dirty money watchdog announced on Friday, 17 June.

It means the British Overseas Territory, like other greylisted jurisdictions, faces increased monitoring and is actively working with the FATF to address strategic deficiencies to counter money laundering, terrorist financing and proliferation financing.

Gibraltar joins another 22 jurisdictions the FATF deems to have “strategic deficiencies” and therefore require increased monitoring.

These include the likes of Haiti, Panama, Yemen, Syria and Pakistan. Gibraltar was the only new jurisdiction added to the list at the FAFT’s plenary in the German capital, Berlin.

The Paris-based organisation wants Gibraltar to implement an action plan, including by:

• Ensuring that supervisory authorities for non-bank financial institutions and DNFBPs (designated non-financial businesses and professions) use a range of effective, proportionate, and dissuasive sanctions for AML/CFT (anti-money laundering/combating the financing of terrorism) breaches.

• Demonstrating that it is more actively and successfully pursuing final confiscation judgements, through criminal or civil proceedings based on financial investigations.

FATF president Marcus Pleyer said Gibraltar needs to focus on the “gatekeepers to the financial system, including gambling operators and lawyers”.

He added that, at the moment, those overseeing this area were not “issuing proportionate fines or penalties for laundering or terrorist financing breaches”.

“Supervisors need to start doing that, including using financial penalties where appropriate. This is important as the gambling sector in Gibraltar is large and is aimed at foreign clientele,” Pleyer stated.

The likes of bet365, Tombola, BetVictor, Betfred, William Hill and 888 all have operations on the peninsula at the southern tip of Spain.

Gibraltar is currently consulting on a draft bill to overhaul the Gambling Act 2005 with an array of regulatory objectives, including the “preservation of confidence in gambling markets”.

A statement issued by the Gibraltar government in the wake of the greylisting said the jurisdiction is committed to complying with the FATF’s action plan “in the shortest possible timeframe”.

The government said the two points – “pursuing regulatory sanctions” and “pursuing final confiscation judgements” – need to be completed by May 2023.

“HM Government of Gibraltar fully accepts this action plan as identified by the FATF and is committed, at the highest political level, to show full compliance within the timescale given.”

Authorities on the Rock were keen to point out these two recommended actions were a significant reduction on the 78 in the Mutual Evaluation Report published by MONEYVAL, a committee of experts on the evaluation of AML and CFT.

Yet being added to the watchdog’s grey list results in an average hit of 7.6% to GDP, suggests the International Monetary Fund.

Gibraltar will hope it can repeat what Iceland and Malta did by extricating itself from the list within 12 months, thus minimising the damage to its economy and reputation.

In fact, Malta was taken off the list on Friday, nearly a year after the FAFT found deficiencies around fighting tax evasion and the listing of ultimate beneficiary owners.

It was the first time an EU member state had been greylisted and was a huge blow to the 27-member bloc.

The Philippines – one of Asia’s largest land-based gaming destinations and a country which also licenses igaming – remains on the list after being added in June 2021.

One aspect singled out by the FATF was that the Philippines demonstrates that supervisors are using AML/CFT controls to “mitigate risks associated with casino junkets”.