APPENDIX 13
Memorandum from the Government of Gibraltar
GIBRALTAR
Financial Services Sector
INTERNATIONAL CO-OPERATION
AND FINANCIAL
REGULATION
1. Gibraltar has met all the relevant international
initiatives in a constructive fashion over the last few years.
It has been held out to other Overseas Territories as a benchmark
in financial regulation by former Foreign Secretary Robin Cook
in 1997 and Andrew Edwards cited Gibraltar in similar terms in
his Review of the Crown Dependencies in 1998. Most recently, Gibraltar's
standards have been comprehensively audited and endorsed by several
independent bodies.
General Background
2. As a British territory within the European
Union:
— Gibraltar is required to implement
in full all EU legislation on financial services regulation and
related matters such as money laundering.
— Gibraltar therefore co-operates on
matters such as insider dealing and other investigations carried
out under EU directives.
— By law, Gibraltar is required to
match United Kingdom standards of financial supervision where
EU legislation applies.
— The Financial Services Commission
(FSC) is appointed by the United Kingdom Government.
FATF—anti-money laundering standards
3. Gibraltar has a record of full co-operation
with all the relevant international bodies. It was reviewed fully
by the Financial Action Task Force (FATF) and classified as a
co-operative jurisdiction in June 2000. The FATF simultaneously
published a list of 15 other non-cooperative jurisdictions. Gibraltar
complies fully with internationally-accepted standards and indeed,
was the first offshore financial centre to introduce all-crimes
money-laundering legislation (which includes terrorism-related
offences) in 1995.
US Internal Revenue Service
4. Significantly Gibraltar was also among
the first wave of countries and territories to be granted Qualified
Intermediary status by the United States Internal Revenue Service
in October 2000. This means that Gibraltar's know-your-customer
rules were regarded as acceptable by the United States.
IMF
5. In October 2000, the Government of Gibraltar
volunteered to undergo Module 2 assessments by the IMF on the
full range of financial services; namely banking, insurance, investment
services, and trust and company management (Gibraltar has regulated
trust and company management since 1989, ahead of most other jurisdictions).
These assessments are the same in substance and form as those
carried out on major countries such as Canada. A nine-strong IMF
team spent two full weeks in Gibraltar in May 2001 and their report
was published simultaneously on the IMF, Government of Gibraltar
and Financial Services Commission websites on 19 March 2002 (www.imf.org,
www.gibraltar.gov.gi, www.fsc.gi). In the report, Gibraltar was
judged by the IMF to be compliant with 66 out of 67 internationally-accepted
standards (the sole area of "material non-observance"
was in relation to onsite visits to insurance companies, which
many major nations such as the UK do not carry out).
6. The IMF noted in its report that Gibraltar
"is at the forefront of the development of good practices".
It further stated: "It is worth nothing that Gibraltar was
one of the first jurisdictions to have introduced regulation and
supervision of the company and trust services business".
The IMF concluded that Gibraltar's regulator, the Financial Services
Commission, "carries out its duties diligently and has an
intimate knowledge of the institutions under its supervision.
. . The results of our assessments indicated that supervision
is generally effective and thorough and that Gibraltar ranks as
a well-developed supervisor. The regulatory regime across the
industry meets most international standards and accords with best
practice."
OECD
7. As regards the OECD, Gibraltar submitted
a letter of commitment to transparency and effective exchange
of information on 27 February 2002. Our approach has consistently
been one of constructive dialogue with the OECD. The OECD has
itself also recognised the importance of a global level playing
field and of a role for all jurisdiction in developing international
standards to ensure the fairness and success of its own objectives
to eliminate harmful tax practices. We are confident that jurisdictionally
we are held in high regard by the OECD and are considered to be
a fundamentally co-operative jurisdiction internationally. We
would also point out that many of the objectives of the OECD Report
are already reflected in Gibraltar's laws and administrative practices.
The letter of commitment has been published and is available on
the OECD's website (www.oecd.org).
Anti-money laundering regime
8. Legislation in Gibraltar to counter money
laundering has existed since 1988. Under the Drug Trafficking
Offences Ordinance 1988 it was an offence to assist another to
retain the benefit of Drug Trafficking knowing or suspecting that
the other person was a drug trafficker or had benefited from drug
trafficking. The 1988 Ordinance was replaced by the Drug Trafficking
Offences Ordinance 1995 which added further offences. The Drug
Trafficking (Money Laundering) Regulations 1995 required relevant
financial businesses to have in place systems and training to
prevent money laundering and laid down identification and record
keeping procedures. These gave effect to the Vienna Convention
of 1988 and EEC Directive 91/308/EEC. The Criminal Justice Ordinance
1995, which came into effect in 1996, extended money laundering
provisions to encompass the proceeds of all criminal conduct.
Further amendments are being contemplated in the course of the
normal review of legislation.
INTERNATIONAL CO-OPERATION
AND ENFORCEMENT
(i) General
9. Gibraltar is a co-operative jurisdiction.
The policy of the Government is to ensure that mechanisms are
in place to enable the enforcement authorities of Gibraltar to
co-operate with overseas bodies. The necessary gateways to allow
information exchange with external counterparts are in place.
10. Membership of international enforcement
bodies would enhance the work of the Gibraltar enforcement authorities
(police, customs, Financial Intelligence Unit). However, this
sometimes meets Spanish political objections. For example in 1997-98,
the Gibraltar Financial Intelligence Unit (a special enforcement
arm of the Royal Gibraltar Police) applied to join the Egmont
Group (an international organisation of FIUs representing over
30 countries). However, and though all other countries supported
Gibraltar's application, the application for membership by the
Gibraltar FIU was vetoed by the Spanish FIU (SEPBLAC), which threatened
to withdraw from the international body if Gibraltar was admitted.
(ii) Reponse to September 11 events—summary
of enforcement action
11. As a case study of the enforcement work
conducted in Gibraltar, the following summary in relation to work
post 11 September 2001 tragedies in the United States may be of
interest to the Foreign Affairs Committee.
12. Following the tragic events on 11 September
2001, the Government of Gibraltar wrote to the Government of the
United States offering any assistance necessary in tracking terrorist-related
assets. No requests for assistance have been received.
13. In any event, Gibraltar's Financial
Services Commissioner wrote to all licensed entities reminding
them of their obligation under Gibraltar's anti-money laundering
arrangements to report all suspicious transactions to the Gibraltar
Financial Intelligence Unit (GFIU) and urging them to "use
their corporate memories" and look back to past instances,
including occasions where introductions and transactions may not
have been consummated, but which with the benefit of hindsight
might now be considered as suspicious.
14. In order to assist licences institutions
in checking the many names of terrorism-related suspects, the
Financial Services Commission (FSC) has been providing access
from its website (with a link from the Gibraltar Government website)
to other sites containing key lists of names. The linked information
includes the FBI list and documents issued by the Federal Reserve
Bank, the Office of Foreign Assets Control (OFAC) list and US
Presidential Executive Order of 23 September 2001 and the additional
OFAC list of 12 October 2001. Consistent with its general approach,
the FSC alerts all licensed entities whenever new names are added.
15. United Nations sanctions, such as those
against Afghanistan and Osama bin Laden apply to Gibraltar by
Order in Council. On 29 October 2001, for instance, the FSC drew
attention to the promulgation of the Terrorism (United Nations
Measures) (Overseas Territories) Order 2001, which came into effect
on 10 October 2001. The Order reflects United Nations Security
Council Resolution No 1373, adopted on 28 September 2001, which
contains mandatory provisions against terrorism.
16. Furthermore, in addition to these Orders,
there are (and will be in the future) comparative measures taken
by the European Union to enforce UN Security Council Resolutions,
which will have direct applicability within Gibraltar, given the
territory's EU status. In more general terms, the Government of
Gibraltar is in close liaison with the Government of the United
Kingdom and closely monitoring the new initiatives and legislation
that the UK is adopting. The Government of Gibraltar is committed
to rapidly adopting all international initiatives, models or standards
to ensure that our financial infrastructure is not in any way
abused by terrorism-related or other illegal activities.
Government of Gibraltar
1 July 2002
| 
