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FATF signals progress as Gibraltar tackles ‘grey list’ action points

Photo by Eyleen Gomez.

The Financial Action Task Force, the global money laundering and terrorist financing watchdog, signalled progress on Friday in Gibraltar’s work to be removed from the organisation’s ‘grey list’ of high-risk countries.

In an update following a plenary meeting in Paris, the FATF said Gibraltar had taken steps to strengthen the effectiveness of its regime to tackle money laundering and terrorist financing.

It said Gibraltar had shown that supervisory bodies in sectors such as gaming, law, real estate and company management had demonstrated effective action to tackle breaches of rules on anti-money laundering and combating the financing of terrorism [AML/CFT].

But the FATF also said Gibraltar should continue work to show it can pursue confiscation judgments “commensurate with the risk and context of Gibraltar”.

Speaking at a press conference on Friday afternoon, FATF President T. Raja Kumar said “we are seeing improvements” and that Gibraltar, "has made progress in its action plan”.

“But there are remaining deficiencies and it should continue addressing these deficiencies, including advancing its criminal cases and civil recovery matters to achieve more final confiscation judgments, and also pursuing asset recovery in line with its risk and context.”

Mr Raja Kumar, however, would not be drawn on how close Gibraltar was to resolving any outstanding issues or how soon it could be removed from the grey list.

“Gibraltar knows what he needs to do,” he told reporters.

“It's clear to them that they have to continue addressing the key deficiencies that remain.”

“And as I mentioned, these are really in terms of pursuing asset recovery in line with its risk and context, and importantly, also advancing its criminal cases and civil recovery matters to achieve more final confiscation judgments.

“So these are some of the key deficiencies that remain and, again, how fast Gibraltar takes to address this is really within Gibraltar's control.”

“But I urge Gibraltar to essentially press on to fully implement and address these remaining action items.”

Gibraltar was placed on the FATF list in June 2022 following a MONEYVAL mutual evaluation report that contained 78 recommended actions.

Gibraltar had complied with all but two of those actions and, while disappointed with the FATF’s decision, agreed an action plan to address the outstanding points by May this year.

In June last year, the FATF said Gibraltar should ensure that supervisory authorities for non-bank financial institutions and designated non-financial businesses and professions used a range of effective, proportionate, and dissuasive sanctions for AML/CFT breaches.

It also wanted to see Gibraltar demonstrate “…that it is more actively and successfully pursuing final confiscation judgements, through criminal or civil proceedings based on financial investigations.”

In its update on Gibraltar published on Friday, the FATF indicated one of those points had been addressed.

“Since June 2022, when Gibraltar made a high-level political commitment to work with the FATF and MONEYVAL to strengthen the effectiveness of its AML/CFT regime, Gibraltar has taken steps to do so, including by demonstrating that the supervisors for trust and company service providers, lawyers, gaming businesses, real estate agents, and other nonbank entities are now using a range of effective, proportionate, and dissuasive sanctions for AML/CFT breaches, specifically by taking more enforcement actions, imposing financial penalties, and publishing the results of cases, where appropriate,” the FATF said in the update to the grey list.

“Gibraltar should continue to work on implementing its action plan to address its strategic deficiencies, including by showing that it is able to pursue more final confiscation judgments commensurate with the risk and context of Gibraltar.”

At the time Gibraltar was grey listed by the FATF, the Gibraltar Government said the issues identified would be addressed through an action plan that would be completed by May this year, the shortest possible time for removal from the list.

On Friday, No.6 Convent Place said the FATF update indicated “substantive progress” toward Gibraltar’s removal from the grey list.

“In effect, this means that the original action plan consisting of two points has now been reduced to one, being the pursuit of more final confiscations,” No.6 said in a statement.

“The Gibraltar authorities will next report on further progress this coming May 2023, which is in accordance with the timeframe set by the FATF.”

“HM Government of Gibraltar continues to work closely with the FATF and is proud of the relationship that it has with this international standard setting body.”

“The Government commends the good work of its regulatory authorities and law enforcement agencies as they work to meet the requirements of the action plan.”

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