Amid mounting expectation of treaty breakthrough, Commission again removes Gibraltar from high-risk list

The European Commission has removed Gibraltar from its list of high-risk jurisdictions with strategic deficiencies in their systems to combat money laundering and the financing of terrorism.

The Commission’s updated list was published on Tuesday against the backdrop of mounting expectation that negotiators for a UK/EU treaty on Gibraltar are poised to announce a breakthrough in the prolonged talks.

On Tuesday night, despite fevered speculation, there was no official public confirmation of any imminent announcement.

From the outset, ministers and officials in all negotiating camps – the UK and Gibraltar, Spain and the European Commission – have remained tight-lipped about the content and progress of the talks, reflecting their technical complexity and the political sensitivities involved for all parties.

The Commission’s announcement on the updated list of high-risk jurisdictions is unrelated to the treaty negotiation but, for Gibraltar and the UK, is a welcome reaffirmation of a position Brussels officials had already expressed in 2024.

The Commission had tried to delist Gibraltar last year after the Financial Action Task Force, the global money laundering and terrorist financing watchdog, removed the Rock from its own “grey list” of high-risk jurisdictions following a lengthy evaluation process and intense work here across key areas of Gibraltar’s economy.

But the decision was blocked by the European Parliament following the intervention of Spanish right-wing MEPs including the PP hawk Jose Manuel Garcia-Margallo, who at the time was an MEP.

Earlier this year, the Commission said it had noted the concerns raised by MEPs but that its position on Gibraltar remained unchanged.

On Tuesday, in a legal instrument known as a delegated regulation, the Commission maintained that stance in clear terms.

“The FATF removed Gibraltar from its list in February 2024,” the regulation states.

“The Commission, as a founding member of the FATF, was closely involved in the process of de-listing Gibraltar within the FATF.”

“Following the FATF onsite visit in December 2023, the FATF concluded that all the shortcomings with regard to its FATF Action Plan had been addressed.”

“No additional EU benchmarks were required for Gibraltar since the Commission had assessed that the FATF Action Plan was sufficiently comprehensive in view of the EU delisting criteria.”

“This is why, as per the Commission’s methodology for the identification of high-risk third countries, the Commission proposed to delist Gibraltar.”

“The territory has made significant progress to improve its AML/CFT regime, notably on the supervision of the financial and non-financial sectors and on confiscation.”

In a footnote to the document, the Commission noted that its position was “without prejudice to the legal position of the Kingdom of Spain with regard to sovereignty and jurisdiction in respect of Gibraltar.”

The Commission’s updated high-risk list is not just about Gibraltar.

It removes other countries including Barbados, Jamaica, Panama, the Philippines, Senegal, Uganda, and the United Arab Emirates, and adds Algeria, Angola, Côte d'Ivoire, Kenya, Laos, Lebanon, Monaco, Namibia, Nepal and Venezuela.

Before it can enter into force, the European Parliament and the European Council must scrutinise the updated list and voice no objections to it.

This must happen within one month, though there is scope to extend that period for another month.

That sets the stage for a potential re-run of the last vote in the European Parliament.

Already last January the PP, a member of the largest voting bloc in the parliament, said “only extraordinary political pressure” could prevent the Commission from attempting to delist Gibraltar again.

The PP called on the Spanish Government to “mobilise” to prevent Gibraltar being removed.

But on Tuesday, having again removed Gibraltar, the Commission urged MEPs to back the updated list.

“Identifying and listing high-risk jurisdictions remains a crucial tool to safeguard the integrity of the EU’s financial system,” Maria Luís Albuquerque, Commissioner for Financial Services and the Savings and Investments Union said.

“Following a thorough technical assessment and after listening carefully to the concerns expressed around its last proposal, the Commission has now presented an update to the EU list which reiterates our strong commitment to aligning with international standards, particularly those set by the FATF.”

“We trust that the co-legislators will move swiftly to endorse this important step."

Reacting to the development, Nigel Feetham, the Minister for Justice, Trade and Industry, said: “The Commission’s proposal reflects Gibraltar’s clear technical compliance and our unwavering determination to uphold the integrity of our financial system.”

“It is a just recognition for the continued work Gibraltar has been doing, not only to meet but to exceed international expectations.”