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Anti-Money Laundering
Anti-money laundering and combating the financing of terrorism
The main legislation governing the prevention of money laundering is laid down in the Criminal Justice Act 1995 - now called the Crime (Money Laundering and Proceeds) Act 2007, the Drug Trafficking Act 1995 and the Terrorism Act 2005.
Collectively, this legislation implements the Third European Union Directive on money laundering. In addition, the extensive Anti-Money Laundering Guidance Notes, issued by the FSC, provide practical guidance on the legislation and the duties of financial institutions.
The principal offences under the legislation are “Assisting”, “Acquisition, possession or use”, “Concealing or transferring”, “Tipping off” and “Failing to disclose”, which all apply to individuals (rather than the companies they might be working for) and can have significant penalties. Defences can include prior disclosure to an “appropriate person” or proof that the individual didn’t know, nor should have.
The legislation requires those in “relevant financial business” to have procedures in place as regards identification, record-keeping, reporting and whatever else might “forestall and prevent” money laundering, as well as to train its staff in those procedures and anti-money laundering generally.
For a person wanting to do business in Gibraltar, this most typically means being able to provide documentary evidence as to physical identity, address and source of funds (initially and on an ongoing basis).
For a company this would include proof of incorporation and registered office as well as similar requirements to evidence source of funds applied and to provide details on its controllers and owners. The extent of evidence and documentation required will depend on the Gibraltar businesses’ own risk assessment on a case-by-case basis, but it nevertheless needs to be appreciated that all relevant financial businesses in Gibraltar are subject to minimum legal and regulatory requirements.
Doing business in Gibraltar is therefore taken as seriously as in any other well-regulated jurisdiction. There should be nothing in the verification process that would concern a legitimate individual or business.
It is interesting to note that Gibraltar’s anti-money laundering regime was judged more robust than that of the UK in a number of areas, “even taking into account the different risks posed by the business." (FSC press release re Statutory Review Report January 2005).
In a recent report, the Financial Action Task Force (FATF) has endorsed the anti-money laundering regime in place in Gibraltar. The FATF concluded that "Gibraltar has in place a robust arsenal of legislation, regulations and administrative practices to counter money laundering. The authorities clearly demonstrate the political will to ensure that their financial institutions and associated professionals maximise their defences against money laundering, and co-operate effectively in international investigations into criminal funds. Gibraltar is close to complete adherence with the FATF 40 + 9 Recommendations." (FATF Mutual Evaluation Report 2001 et seq).
