FATF delivers good news for Malta but bad news for Gibraltar

 

It was announced yesterday (17 June 2022) that included within the outcomes of the FATF Plenary held between 14 and 17 June are the following:

  • Gibraltar has been added to the FATF ‘grey list’ of jurisdictions under increased monitoring, meaning that it has committed to resolve swiftly identified strategic anti-money laundering and counter terrorist financing (AML/CFT) deficiencies within agreed timeframes and is subject to extra checks. Outgoing FATF president Marcus Pleyer stated that Gibraltar needs to “take a number of steps including focusing on gatekeepers to the financial system in particular gambling operators and lawyers” adding “at the moment, supervisors are not issuing proportionate fines or penalties for money laundering or terrorist financing breaches, supervisors need to start doing that including using financial penalties where appropriate …. this is important because the gambling sector is large in Gibraltar and is aimed at foreign clientele”.

but

  • Malta is no longer under increased monitoring (having been placed on the FATF ‘grey list’ in June last year, as reported by us here), following ‘significant progress’ it has made in addressing the strategic AML/CFT deficiencies previously identified by the FATF and included in its action plan.

Commenting on these changes, FATF has said:

Gibraltar

In June 2022, Gibraltar made a high-level political commitment to work with the FATF and MONEYVAL to strengthen the effectiveness of its AML/CFT regime. Since the adoption of its MER in December 2019, Gibraltar has made progress on a significant number of its MER’s recommended actions, such as completing a new national risk assessment, addressing the technical deficiencies in relation to BO-related record keeping, introducing transparency requirements for nominee shareholders and directors, strengthening the financial intelligence unit, and refining its ML investigation policy in line with risks. Gibraltar should work on implementing its action plan, including by: (1) ensuring that supervisory authorities for non-bank financial institutions and DNFBPs use a range of effective, proportionate, and dissuasive sanctions for AML/CFT breaches; and (2) demonstrating that it is more actively and successfully pursuing final confiscation judgements, through criminal or civil proceedings based on financial investigations.

Malta

The FATF welcomes Malta’s significant progress in improving its AML/CFT regime. Malta has strengthened the effectiveness of its AML/CFT regime to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in June 2021 related to the detection of inaccurate company ownership information and sanctions on gatekeepers who fail to obtain accurate beneficial ownership information, as well as the pursuit of tax-based money laundering cases utilising financial intelligence. Malta is therefore no longer subject to the FATF’s increased monitoring process. Malta should continue to work with MONEYVAL to sustain its improvements in its AML/CFT system.

As a result of the above-mentioned changes, the current list of jurisdictions with strategic deficiencies is set out within the left hand column below.

Jurisdictions with strategic deficiencies  Jurisdiction no longer subject to increased monitoring
Albania
Barbados
Burkina Faso
Cambodia
Cayman Islands
Gibraltar
Haiti
Jamaica
Jordan
Mali
Morocco
Myanmar
Nicaragua
Pakistan
Panama
Philippines
Senegal
South Sudan
Syria
Turkey
Uganda
United Arab Emirates
Yemen
Malta

UPDATE: As subsequently reported by SBC News on 23 June (in an article entitled ‘Gibraltar Commission won’t apply artificially rules to meet FATF demands on tougher gambling sanctions’), Gibraltar’s Chief Commissioner for Gambling, Andrew Lyman has asserted that Gibraltar would not “artificially adapt standards to accommodate enforcement cases”, adding:

…. “there are no fundamental, systemic, AML/TF weaknesses in this jurisdiction and Gibraltar now has a strong AML and TF system which makes the greylisting decision more difficult to cope with ….

This is the shortest action plan for any grey-listed jurisdiction and a different outcome may have been to return Gibraltar to Moneyval enhanced monitoring; as happened with the Isle of Man. Unfortunately, this alternative was not adopted ….

Certainly we present zero risk to the UK, our biggest gambling market, as our UK facing firms are dual regulated, EU business is not conducted from Gibraltar and ROW jurisdictions are protected by our developed regulatory regime, where their domestic digital gambling supervisory regimes are underdeveloped or non-existent ….

I do not see the objective as imposing more sanctions per se, but proving out the overall effectiveness of our regime and imposing sanctions where necessary and in a proportionate manner. There will be those who question whether the Government or its agents in this process could have done better or presented the case better. All I can say is that because of the professionalism of the core team that has worked tirelessly on Moneyval/ FATF issues, Gibraltar is far from bearing the hallmarks of an archetypal ‘grey list’ jurisdiction and is in many respects a flagship jurisdiction for the way it has massively improved its AML and TF systems in a difficult period for all jurisdictions.

I am determined to see a successful outcome in this area over the line, but in a fair and balanced way. This is a mutual evaluation process and we would expect the FATF to be as equally supportive of Gibraltar as we are of it in difficult and challenging circumstances.