MONEYVAL experts say Gibraltar must do more to combat money laundering and terrorism financing
13 Feb 2020

Gibraltar must do more to combat money laundering and terrorism financing, according to a detailed report by a team of international experts who identified fundamental “shortcomings” in compliance with international standards, even while acknowledging that key supervisors here have “a robust understanding” of the risks and requirements.

The 250-page report by the Council of Europe’s anti-money laundering body MONEYVAL called on authorities here to better use the tools and mechanisms at their disposal to fight transnational crime.

While Gibraltar’s legislative framework provided “a solid basis” to detect, investigate and prosecute these types of offences, the experts found insufficient evidence to demonstrate proactive, successful action leading to prosecutions in line with the scale of international business that moves through the Rock’s financial institutions.

Despite this underlying conclusion, the MONEYVAL team said Gibraltar’s authorities cooperated fully and efficiently with law enforcement agencies in other countries including Spain, “with generally positive feedback from international partners”.

Their report outlined numerous case studies of international cooperation with other countries in investigations ranging from terrorism to money laundering and organised crime.

But throughout the document, the experts also noted a relative absence of investigations initiated by Gibraltar into how the Rock might be exploited by criminals and terrorists in other countries, with most of the cases reviewed involving domestic offences.

They also found that while law enforcement agencies and supervisory bodies including the Gibraltar Financial Intelligence Unit, the Gibraltar Financial Services Commission and the Gibraltar Gambling Commission had a solid grasp of the risks for Gibraltar, this was not always evident in the different sectors that make up the Rock’s financial services industry.

The experts further found that Gibraltar’s National Risk Assessment, a document prepared to identify the principal risks for this jurisdiction, was weakened by several shortfalls, including “…underestimating the cross-border threat which Gibraltar faces as an international financial centre.”

Among other key findings, the report said:

– While the Gibraltar Financial Intelligence Unit had increased its capacities in recent years, it would benefit from more resources;

– The Gibraltar Financial Intelligence Unit’s products were used by law enforcement agencies “only to a limited extent and therefore did not have a significant impact upon developing investigations”;

– The suspicious transactions reports which the Gibraltar Financial Intelligence Unit received from private sector entities “are not of sufficient quality” to assist them in performing their functions;

– Financial investigations were conducted regularly but were often limited to providing further evidence in support of the prosecution of domestic crime;

– Parallel financial investigations targeting money laundering were not pursued in cases where the associated offences occurred outside Gibraltar, thus not reflecting the risks to Gibraltar in its role as a financial centre;

– Although confiscation of the proceeds of crime was a policy objective, it had not been effectively pursued and the amounts seized were low;

– The risk related to cross-border transportation of cash was “insufficiently understood” and explanations about the volume of cash transactions were “not convincing”;

– Although there was “satisfactory” understanding of the risks of money laundering among private sector entities, the risk of terrorist financing “is not properly understood”.

While the MONEYVAL evaluators acknowledged the work done by authorities in Gibraltar to establish an effective legal and cooperative framework to tackle transnational crime, they were clear that much more needed to be done.

“The report recognises improvements in the legal framework which now provides a solid basis for the authorities to detect, investigate and prosecute money laundering and financing of terrorism,” MONEYVAL said in a statement accompanying the report.

By Bryan Reyes, Gibraltar Chronicle, 12 February 2020

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