Anti-Money Laundering and Countering the
Financing of Terrorism (AML/CFT)
Money laundering is the process of transforming and concealing the profits generated by criminal activity and corruption (such as drug trafficking, fraud and tax evasion) into a ‘clean’/legitimate asset.
The Office of Fair Trading has been appointed as a supervisory authority under the Proceeds of Crime ACT 2015 (POCA). POCA is a Gibraltar law aimed at preventing the abuse of the financial system for the laundering or illicit money and the financing of terrorism. It also sets out processes relating to the confiscation, investigation and recovery of the proceeds of unlawful conduct.
The OFT will be specifically regulating High Value Dealers and Real Estate Agents for compliance with anti-money laundering and combatting the financing of terrorism (AML/CFT) legislation. The OFT aims to prevent High Value Dealers and Real Estate Agents being used for money laundering and terrorist financing through effective supervision, regulation and enforcement.
High Value Dealers (HVDs)
The buying and selling of high value goods is internationally recognised as a major avenue for money laundering activity which is very attractive to criminals seeking to launder illicit funds. Proceeds of crime are used to purchase high value goods as part of the layering and integration stages of money laundering.
According to HM Government of Gibraltar’s AML/CFT National Risk Assessment, the risk of high value goods being used for the laundering of money in Gibraltar is considered moderate.
HVDs are businesses that accept cash payments in any currency with a value which is equal to, or greater than, €15,000.00 in exchange for goods. The OFT will consider any transaction for goods which is equal to, or greater than, £8,000.00 as a high value transaction (or any currency equivalents based on the exchange rate at the time of the transaction). This monetary threshold does not apply to debit or credit card payments. Multiple transactions from the same customers can cumulatively surpass the monetary threshold. Any business accepting such payment is required to follow the requirements of POCA and to report annually to the OFT.
In order to assist HVDs with compliance of their AML/CFT obligations, and to explain how the regulation process will be enforced, the OFT have issued AML/CFT Guidance Notes for High Value Dealers. We have also created a sample high value transaction form which may be used by HVDs to keep appropriate records of cash payments.
Real Estate Agents (REAs)
The risk of real estate being used for the laundering of money in Gibraltar is considered high as set out in HM Government of Gibraltar’s AML/CFT National Risk Assessment. Gibraltar’s strong property market and stable economy can be attractive for money launderers.
Even though most of these transactions involve other regulated entities such as banks, law firms and other institutions, risk factors must be identified by REAs to avoid becoming a target to criminal organisations looking to launder illicitly obtained money. REAs must be aware of the risk posed by the purchase of real estate as a tool for placement, layering and integration of funds from illicit sources. Money can be laundered through the real estate industry in a number of ways, including:
1. purchasing expensive property using funds from illicit activities;
2. disguising the origin of funds by making a deposit on a property through a real estate agent, and then requesting a refund of the deposit before finalising the purchase; and
3. selling property under shell companies, front companies, trusts and other company structures to distance ownership from criminal activity.
It is therefore essential that professionals within the real-estate sector are aware that their businesses can be used by money launderers to integrate unlawful funds into the financial system.
Real estate agents who receive funds to settle real estate transactions shall be required to comply with AML/CFT obligations under Proceeds of Crime Act (2015) (POCA). As regulators and in order to assist REAs to comply with their AML/CFT obligations, the OFT are in the process of drafting guidance notes. The purpose of these is to ensure all REAs are fully aware and compliant on their AML/CFT obligations. Our aim is to increase awareness and understanding of potential risks, best practices, the establishment of AML/CFT procedures and other practical measures to mitigate risks. The guidance notes shall also set out how REAs are to report annually to the OFT.
All guidance notes should be read in conjunction with the REAs code of conduct.
The OFT’s Enforcement Powers
The OFT will require both HVDs and REAs to report annually to the OFT in order to allow it to carry out its regulatory function and to prevent money laundering and terrorist financing.
The OFT works closely with the GFIU (Gibraltar Financial Intelligence Unit), other Government entities and other regulatory entities in relation to AML/CFT matters. It uses various sources to acquire information and data to identify businesses which are a high risk of being targeted by criminal organisations for the laundering of money.
Those business who have failed to fulfil their POCA responsibilities or to report annually to the OFT regarding their compliance with AML/CFT obligations will be subject to enforcement action. This may include:
(i) naming and shaming of non-compliant businesses;
(ii) the revocation of business licences;
(iii) cease and desist orders; and/or
(iv) the imposition of significant fines or other financial sanctions.
AML/CFT Guidance Notes for High Value Dealers Download PDF AML/CFT Guidance Notes for Real Estate Agents Arriving soon! Suspicious Activity Report form Download PDF High Value Dealer Annual Report form Download PDF AML/CFT officer nomination form Download PDF Sample HVD High Value Transaction form Download PDF High Value Dealer Survey Download PDF
Other Gibraltar Documents
Proceeds of Crime Act 2015 Download PDF HM Government of Gibraltar AML/CFT National Risk Assessment Download PDF 4MLD and Amendments to POCA Newsletter Download PDF Gibraltar Based Non-Profit Organisations & the Risk of Abuse from Terrorist Funding Newsletter Download PDF
FATF guidance to assist HVDs and REAs
FATF Best Practices on Trade Based Money Laundering (HVD) Download PDF FATF RBA Guidance for Dealers in Precious Stones and Metals (HVD) Download PDF FATF RBA Guidance for Real Estate Agents (REA) Download PDF FATF Money Laundering and Terrorist Financing Through the Real Estate Sector (REA) Download PDF
Gibraltar Financial Intelligence Unit (GFIU)
The Gibraltar Financial Intelligence Unit receives, analyses and disseminates financial intelligence gathered from Suspicious Activity Reports (SARs).
Suite 832, Europort Gibraltar
Tel: (+350) 20070211
Fax: (+350) 20070233
Gibraltar Financial Services Commission
The Gibraltar Financial Services Commission (GFSC) is the financial services regulator in Gibraltar and regulates auditors, banks, company managers, e-money institutions, professional trustees, payment services providers, funds and fund services providers, insurance companies, managers and intermediaries, investment firms and insolvency practitioners. If your business involves any of the above, your supervising authority may be the GFSC rather than the OFT.
Atlantic Suites, Suite 3, Ground Floor, Gibraltar
Tel: (+350) 20040283
Fax: (+350) 20040282
Gambling Division - H.M Government of Gibraltar’s
The Gambling Division is the regulator for all gambling related matters in Gibraltar and is also appointed as a supervisory authority under the POCA. If your business involves gambling, your supervising authority may be the Gambling Commission rather than the OFT
GX11 1AA Gibraltar
Tel: 00350 20064142
Fax: 00350 20064150
Financial Action Task Force (FATF)
FATF is an inter-governmental body whose objectives is to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. The FATF's website is an excellent resource for both HVDs and REAs containing numerous guidance notes and typologies to help these meet their AML/CFT requirements.