Gibraltar
Last updated: 01/02/2010
CENTRAL AUTHORITY FOR REPORTING
Gibraltar Financial Intelligence Unit (GFIU), which is integrated in the Gibraltar Co-ordinating Centre for Criminal Intelligence and Drugs.
It is staffed by officers seconded from HM Customs Gibraltar and The Royal Gibraltar Police and is a member of the Egmont Group of Financial Intelligence Units.
OTHER ANTI-MONEY LAUNDERING REGULATOR(S).
Financial Services Commission (FSC).
HAS THE THIRD EU MONEY LAUNDERING DIRECTIVE BEEN IMPLEMENTED? IF NOT, WHEN IS IT EXPECTED TO BE IMPLEMENTED?
EU’s Third Money Laundering Directive has been transposed and given effect by Gibraltar.
ARE LAWYERS COVERED BY ANTI-MONEY LAUNDERING LEGISLATION?
Yes. Lawyers are one of the designated non-financial business and professions in Gibraltar’s AML law.
LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.
The following statutes give effect to the to the Third Money Laundering Directive and other international obligations in relation to Combating of Terrorist Financing:
Anti-money laundering legislation had also originally derived from the following statutes:
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ORD 6 1995 Drug Trafficking Offences Ordinance, 1995;
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LN 30 1995 Drug Trafficking Offences (Prescribed Sum) Regulations, 1995;
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LN 41 1995 Drug Trafficking Offences Ordinance 1995 (Designated Countries and Territories) Order, 1995;
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LN 62 1995 Drug Trafficking (Detention and Forfeiture of Cash) Rules, 1995;
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LN 139 1997 Drug Trafficking Offences Ordinance 1995 (Designated Countries and Territories)(Amendment) Order, 1997;
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LN 111 1999 Drug Trafficking Offences Ordinance 1995 (Designated Countries and Territories) Order, 1999;
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ORD 14 1995 Criminal Justice Ordinance, 1995
ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?
N/A.
LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.
The Anti-Money Laundering Guidance Notes, issued by the FSC, outlines anti-money laundering practices and obligations.
IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?
The FSC of Gibraltar is the authority that oversees the compliance frameworks of the regulated financial sector for AML/CFT systems of control. This is done primarily through the publication of regulatory requirements in the form of Guidance Notes to the industry.
The FSC monitors a firm’s compliance with the principles of AML through its own risk assessment and on-site surveillance work of firms.
DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS.
One of the principles of anti-money laundering in Gibraltar is the requirement to know the client to such an extent as is appropriate for the risk profile of that client
Client Due diligence consists of two elements that are both linked to the country from which they originate:
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The physical person;
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The nature of the economic activity.
A firm must establish to its satisfaction that it is dealing with a real person (natural, corporate or legal), and must verify the identity of persons who are authorised to operate the business relationship. Whenever possible, the client should be interviewed personally.
Under section10B CMLPA lawyers must apply client due diligence measures in the following cases;
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When establishing a business relationship;
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When carrying out a one-off transaction amounting to €15,000 or more, whether the transaction is carried out in a single operation or in several operations which appear to be linked;
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Where there is a suspicion of money laundering or terrorist financing; and
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When there are doubts over the veracity or adequacy of previously obtained customer identification data.
Under section10A CMLPA client due diligence measures involve:
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Identifying the client and verifying the client’s identity on the basis of documents, data or other information obtained from a reliable and independent source;
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Identifying, where there is a beneficial owner who is not the customer, the beneficial owner and taking adequate measures, on a risk-sensitive basis, to verify his identity so that the relevant financial business is satisfied that it knows who the beneficial owner is, including, in the case of a legal person, trusts and similar legal arrangements, measures to understand the ownership control structure of the person, trust or arrangement; and;
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Obtaining information on the source of the income or wealth and the purpose and intended nature of the business relationship.
According to section 10C a relevant financial business must conduct ongoing monitoring of a business relationship. Here, ongoing monitoring of a business means the scrutiny of transactions undertaken throughout the course of the relationship (including, where necessary, the source of funds) to ensure that the transactions are consistent with the relevant financial business’s or person’s knowledge of the customer, his business and risk profile and keeping the documents, data or information obtained for the purpose of applying customer due diligence measures up-to-date.
The following documents should be collected:
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The physical person. The physical identity (eg. name, date of birth, registration number); and the activity undertaken. Confirmation of a person’s address is also useful in determining whether a customer is resident in a high-risk country;
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Personal Applicants for Business. Where verification of identity is required, the following information should be obtained from all individual applicants for business, and should be independently verified by the institution itself:
- True name and/ or names used;
- A current address;
- Details of occupation/ employment and sources of wealth or income.
One or more of the following steps is recommended to verify addresss:
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Checking the Register of Electors;
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Provision of a recent utility bill, tax assessment or bank or building society statement containing details of the address (to guard against forged copies’ it is strongly recommended that original documents are examined);
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Checking the telephone directory;
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Record of home visit.
- Bodies Corporate.
The following documents should normally be obtained from companies:
- Copy of the latest report and accounts (audited where applicable);
- Copy of the company’s Memorandum & Articles of Association;
- Copy of the board resolution to open the relationship and the empowering authority for those who will operate any accounts;
- Copy of the certificate of incorporation/ certificate of trade or equivalent.
The following persons (i.e. individuals or legal entities) must also be identified in line with this part of the notes:
- All of the directors who will be responsible for the operation of the account/ transaction.
- All the authorised signatories for the account/ transaction.
- All holders of powers of attorney to operate the account/ transaction.
- The beneficial owner(s) of the company .
The majority shareholders of the company (if different from the beneficial owners).
Lawyers must not carry out a transaction or establish a business relationship until satisfactory evidence of identity has been obtained. They can, however, start processing business tasks immediately, provided that at the same time they are taking steps to verify the client's identity.
DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?
Yes. A risk-profile of a business relationship needs to take into consideration the following four risk elements that are present in every business relationship:
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Customer Risk;
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Product Risk;
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Interface Risk;
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Country Risk.
Together, the four risk elements above are combined to produce a risk-profile. It is the results of this risk profile and the firm’s own risk perceptions that will determine the intensity of the documentation and other process that will need to be obtained at the commencement of a business relationship or as an ongoing requirement.
ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?
Yes – in respect of PEPs the guidance notes states that specific risk based measures need to be adopted to reduce the risks inherent in dealing with PEPs.
The systems of control that lawyers must adopt to reduce the risks associated with establishing and maintaining business relationships with PEPs are that:
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The firm must establish and document a clear policy and internal guidelines, procedures and controls regarding such business relationships;
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Maintain an appropriate risk management system to determine whether a potential customer or an existing customer is a PEP;
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Decisions to enter into business relationships with PEPs to be taken only by senior management; and
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Business relationships which are known to be related to PEPs must be subject to proactive monitoring of the activity on such accounts.
Additionally, firms whose policy includes the acceptance of PEPs as clients need to take additional measures to mitigate the additional risk that the firm is exposed to from such persons originating in countries with a high propensity for bribery and corruption. This includes:
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Conducting and documenting an assessment of the countries which are more vulnerable to corruption; and
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The application of additional monitoring over customers from high risk countries whose line of business is more vulnerable to corruption (e.g. oil or arms sales).
ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?
In relation to listed companies, although not simplified, no further steps to verify identity over and above the usual practice will be required if the companies’ listed securities are admitted to trading on a regulated market within the meaning of Directive 2004/39/EC in one or more Member States or the companies are from third countries which are subject to disclosure requirements consistent with Community legislation.
Additionally, minimal measures will be required for the following:
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One-off transactions (unless this transaction in itself or in combination with the client’s other transactions exceed €15,000);
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Small insurance Contracts where a premium is payable in one instalment of an amount not exceeding €2,500 or a regular premium is payable and where the total payable in respect of any one calendar year does not exceed €1,000;
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Policies of insurance in connection with a pension scheme provided it does not contain a surrender clause or may be used as a collateral for a loan;
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E-Money with limits of €150 for device not recharged or for devices that are €2500;
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The client is a public authority of Gibraltar .
ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.
Under section 10N CMLPA, lawyers may rely on a third party such as an authorised financial institution, auditor, tax adviser or independent legal professional provided that the third party consents but the lawyers will remain liable for any failure to apply such measures.
The third party must make available to the lawyer any information and relevant documents about the client under section 10P(5) CMLPA.
WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?
Under sections 2(2) and (2A) CMLPA, a lawyer is under an obligation to make a report either internally to the Money Laundering Reporting Officer or to the GFIU if s/he has knowledge or suspicion or has reasonable grounds to suspect of any AML activity and the information on which that knowledge or suspicion is based came to her attention in the course of her business.
DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?
Under sections 2(2B) and 5(3) CMLPA, a lawyer is not guilty of an offence if he obtains information in relation to AML in the course of ascertaining the legal position for their client or whilst performing the task of defending or representing the client in judicial proceedings.
DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?
Lawyers who have acted in good faith will be protected from breach of confidentiality (see section 2(3) CMLPA¬).
ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?
N/A.
IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.
There is a tipping-off prohibition and if not respected can amount to an offence.
DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.
N/A.
ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.
Under section 10C(1) CMLPA a lawyer will need to conduct ongoing monitoring of a business relationship in respect to the client’s profile and the recording of data.
Further monitoring may be required depending on the expected pattern of activity of the client. Assessing at regular intervals will allow for unexpected activity to be examined for suspicion of money laundering.
Higher risk accounts and client relationships will generally require more frequent or intensive monitoring
DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.
Under section 2(2B) CMLPA, a lawyer is not guilty of an offence if he obtains information in relation to AML in the course of ascertaining the legal position for his client or whilst performing the task of defending or representing the client in judicial proceedings.
HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?
N/A.
HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF 40+9 RECOMMENDATIONS?
The latest evaluation on the FATF 40+9 recommendations was reported by the International Monetary Fund. The report stated that Gibraltar needs to take a number of steps to move its legal and regulatory regime to reflect the recommendations.
However, as this report was published in the 2007, it is unlikely to portray the current situation since Gibraltar has made recent amendments to its AML legislation. Further evaluation will be required to accurately assess the reforms.
Prepared by:
Constantino Gouvras
Legal Intern
International Bar Association
10th Floor, 1 Stephen Street
London W1T 1AT