Small States and Territories Working Group meets in Gibraltar to advance financial crime guidance

Officials from the Small States and Territories Working Group (STWG) met in Gibraltar this week to progress work on updated guidance for proliferation financing (PF) and terrorist financing (TF).

The meeting forms part of an ongoing project jointly led by Gibraltar and the Isle of Man on proliferation financing, and by Jersey on terrorist financing. The guidance aims to support small jurisdictions in strengthening their response to financial crime threats.

The STWG was established on the margins of MONEYVAL meetings at the Council of Europe to promote cooperation and the exchange of expertise among small jurisdictions. Its first major project resulted in the “Monaco Paper” on terrorist financing, which was endorsed by MONEYVAL in July 2018.

In mid-2024, the working group agreed to undertake two further projects: a new paper on proliferation financing led by Gibraltar and the Isle of Man, and an update of the terrorist financing guidance by Jersey.

Proliferation financing refers to the raising, movement or use of funds and resources to support the proliferation of weapons of mass destruction. Although often associated with larger economies, smaller jurisdictions are exposed to distinct risks through their financial systems, trade links and limited institutional capacity. This makes them potentially vulnerable to exploitation by proliferators through financial centres, maritime registries or global trade networks.

The new guidance paper provides a structured framework for small states and territories to identify, assess and mitigate proliferation financing risks in line with Financial Action Task Force (FATF) Recommendations. It draws on data analysis, technical input, and the shared experiences of STWG members, which include Andorra, Gibraltar, Guernsey, the Holy See/Vatican City, Isle of Man, Jersey, Liechtenstein, Malta, Monaco and San Marino.

Opening the two-day meeting, the Minister for Justice, Nigel Feetham, welcomed delegates and praised the group’s collaborative efforts.

“The Small States and Territories Working Group is an example of how smaller jurisdictions, when working together, can deliver high-quality contributions to the global AML/CFT/CPF framework,” he said.

“I am delighted that, despite our size, we have been able to draw on local talent and expertise from the GFIU and GFSC in such a specialised field. Gibraltar is proud to support this important initiative, which not only strengthens our understanding of risks to our finance centre but also contributes to our efforts in combatting TF and PF.”

Edgar Lopez, Director of the Gibraltar Financial Intelligence Unit and coordinator of the proliferation financing project, said: “This has been a team effort on a very complex topic in an increasingly complex world. Understanding proliferation financing risks is not easy, but by combining our knowledge and experience, we’ve created something that others can build upon.”

“We now have a clearer understanding not only of Gibraltar’s exposure, but also of the wider regional and international risks.”

Working sessions during the event focused on finalising the draft PF and TF guidance, with input from subject matter experts supporting the working group.

The STWG continues to serve as a platform for capacity building, peer learning and technical cooperation, helping small jurisdictions remain active participants in international efforts to combat financial crime and threats to global security.