AML/CFT

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 2020 National Risk Assessment for AML/CFT and PF, the risk of high value goods being used for the laundering of money in Gibraltar is considered medium to low.

The OFT is responsible for ensuring that HVGDs comply with their legal AML/CFT obligations as set out in POCA. HVGDs are businesses that:

1. sell high value goods - The OFT considers a high value good to be any individual item or good sold by weight or volume that is sold, or is for sale, by a business for a value which is equal to, or greater than, £2,000.
2. accept cash payments in any currency with a value which is equal to, or greater than, £8,000 (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 nor does it apply to payments in cash for tobacco (which is regulated separately by HM Customs). Multiple transactions from the same customers may cumulatively be considered as surpassing the monetary threshold if the are considered related. Any business accepting such payment is required to follow the requirements of POCA and to report annually to the OFT.

In order to assist HVGDs with compliance of their AML/CFT obligations, and to explain how the OFT supervises the sector , 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 HVGDs to keep appropriate records of cash payments.

The OFT has also created obligations for:

1. Potential HVGDs - dealers in goods which have not yet received a payment in cash above the monetary threshold but are open to accepting such cash payments (see Chapter 10 of the Guidance Notes); and
2. High Risk Dealers (HRDs)- businesses that have not received payments above the monetary threshold but are dealers in goods which are considered to have a higher inherent risk and vulnerability to money laundering and terrorist financing (see Chapter 11 of the Guidance Notes).

Targeted Financial Sanctions

Targeted financial sanctions (TFS) are legal restrictions imposed by the United Nations, European Union, United Kingdom or Gibraltar against states, people, businesses, organisations and financial institutions (the designated persons or entities) to achieve specific international policy or security objectives. TFS includes both asset freezing and prohibitions to prevent funds or other assets from being made available, directly or indirectly, for the benefit of designated persons or entities.

On the 28th March 2019 HM Government of Gibraltar published the Sanctions Act 2019 (the “Act”) to give effect to numerous international requirements relating to financial and other sanctions. The Act provides a regime to implement both international and domestic sanctions in Gibraltar. These sanctions include financial sanctions, immigration sanctions, trade sanctions, aircraft sanctions and shipping sanctions. For more information on the Act please refer to the National Coordinator for Anti-Money Laundering and the Combatting of Terrorist Financing's Sanctions Act 2019 Newsletter.

Pursuant to section 8(3) of the Act, HVGDs and REAs must have policies, controls and procedures in place which ensure that:

1. they are aware of the lists of persons and entities to whom international sanctions apply; and
2. they undertake appropriate checks of the lists when undertaking business in relation to both new and existing customers.

The OFT recommends that HVGDs subscribe to the consolidated lists of UN, UK and EU sanctions and that they screen their customers against the lists in the ‘Sanctions’ section of the GFIU’s website and that they have systems in place to receive list updates through GFIU's Themis system. 

It should be noted that HVGDs and REAs should not rely exclusively on screening TFS lists and should deploy broader non-screening controls to effectively implement sanctions regimes.

For further practical information about sanctions, how they work and your obligations please refer to the section 8 of the OFT's AML/CFT Guidance Notes for HVGDs and for REAs and to the Gibraltar Financial Intelligence Unit's (GFIU) Financial Sanctions Guidance Notes.

High Risk Jurisdictions

The FATF identifies jurisdictions with weak measures to combat money laundering and terrorist financing (AML/CFT) in two FATF public documents that are issued three times a year. These documents may be accessed on the FATF website.

In order to meet its statutory obligations as supervisory authority under Proceeds of Crime Act 2015 (POCA), the OFT shall supervise HVGDs’ and REAs’ compliance with their AML/CFT obligations as set out in POCA and in the OFT’s Guidance Notes for HVGDs and for REAs respectively. The OFT's guidance notes should be regarded as regulatory standards for the purposes of the POCA and are issued pursuant to Section 11(3) of the Supervisory Bodies (Powers Etc.) Regulations 2017 (SBPR). Compliance with these guidance notes is enforceable pursuant to the provisions of POCA and of SBPR.

Supervision is mainly carried out in the following manner:

Documentation

HVGDs and REAs are required to submit up to date copies of various documents to the OFT in order for the OFT to ensure that the business understands its AML/CFT obligations and has put in place appropriate processes, procedures and controls. These include, but are not limited to:

1. Business risk assessments;
2. AML/CFT policies;
3. MLRO nominations;
4. Cash policies; and
5. Organograms.

Annual Returns

HVGDs and REAs are required to submit Annual Returns to the OFT. The OFT collects and analyses the information and data submitted in the returns to assess the type and volume of transactions and business relationships entered into by the businesses. It also collects data about the industry generally that allows the OFT to identify ML/TF schemes and suspicious trends.

The submission dates and processes differ for HVGDs and REAs. For more information about the annual reporting requirements refer to Section 8 of the Guidance Notes. You can find the relevant documents here.

Onsite Visits

In order to determine the effectiveness of HVGDs' and REAs’ AML/CFT processes, procedures and controls, the OFT shall carry out onsite visits. We may also visit businesses if information suggests that your business may be exposed to a money laundering/terrorist financing risk.

The OFT will look at how your business applies its AML/CFT measures and assess whether your business understands its obligations and is effectively compliant. It will do so by looking at how you operate, reviewing documents and records and meeting with your employees, including senior management and the MLRO. It is also a good opportunity for you to ask about anything you’re unsure of regarding your AML/CFT obligations. For more information refer to our Onsite Visit Guidance.

The OFT’s Enforcement Powers

The Proceeds of Crime Act 2015 (the Act) and the supporting Supervisory Bodies (Powers etc.) Regulations 2017 provide the OFT with powers to take enforcement action against those business who have failed to fulfil their POCA obligations or fulfil the requirements set out in the OFT's AML/CFT Guidance Notes. This may include the imposition of financial penalties and other disciplinary measures including suspensions or withdrawal of licences, temporary bans from managerial positions and the giving of directions in accordance with the OFT’s Enforcement Policy.

OFT Documents

Legislation

National Risk Assesment & Mutual Evalution Report

Other Gibraltar Documents

National Coordinator for AML/CFT Newsletters

FATF Guidance for HVGDs and REAs

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

E-mail: information@fsc.gi