20 Money Laundering Ch20 Gibraltar - triay.com€¦ · 20.2 Gibraltar 672 20.2 Gibraltar’s Parliament is elected every four years. It has legislative responsibility for all matters

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CHAPTER 20

Gibraltar

Robert Vasquez QCPartner, Triay & Triay, Gibraltar

Julian TriayPartner, Triay & Triay, Gibraltar

Introduction 20.1Legislation – an overview 20.17

20.29Legislation to prevent the laundering of proceeds arising from 20.79Legislation to prevent the laundering of proceeds arising from all non-drugs crimes 20.92Civil liability 20.101Additional obligations of certain businesses to prevent money laundering 20.104Internal policies and reporting procedures 20.125Considerations arising out of the Data Protection Act 2004 20.139

20.144The future 20.151

INTRODUCT ION

20.1 Gibraltar is a United Kingdom Overseas Territory. Its constitution is governed by the Gibraltar Constitution Order 2006 (‘the Constitution’) which modernised Gibraltar’s legislative, executive and judicial framework, as well as Gibraltar’s relationship with Great Britain. Sovereignty is vested in the British Crown, but the Constitution devolves legislative powers to Gibraltar’s Parliament and executive powers to the Government of Gibraltar whilst making the United Kingdom Government (acting by the Her Majesty’s Governor of Gibraltar

20 Money_Laundering_Ch20 Gibraltar.indd 671 23/09/2013 14:10

Practice (4th Ed), published by Bloomsbury Professional (October 2013), and is reproduced by kind permission of Bloomsbury Professional. For further information please visit:www.bloomsburyprofessional.com/uk/international-guide-to-money-laundering-law-and-practice-9781847669797/

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20.2 Gibraltar’s Parliament is elected every four years. It has legislative responsibility for all matters except for those for which the Governor remains responsible. Gibraltar’s executive consists in the main of the Council of Ministers1 on whose advice the Governor must act, save in those matters that only the United Kingdom Government is constitutionally competent. The Council of Ministers is made up from the majority party in Parliament. The Governor (acting on behalf of the United Kingdom Government) is the executive for matters relating to external affairs, defence, the police, and internal security, and all powers of making appointments conferred on him by the Constitution.2 The Governor is said to have ‘special responsibility’ in these fields, although he must act in consultation with the Chief Minister in relation to external affairs, and must fully inform the Chief Minister concerning the general conduct of his areas of special responsibility. He also retains full legislative powers in these areas. The Government of Gibraltar is made up, therefore, of the Governor and the Council of Ministers depending on which powers are exercised (although the Governor acts entirely on the advice of the Council of Ministers in relation to those matters over which it has responsibility).

20.3 Gibraltar is within the European Union (EU)3 as a European Territory for whose external affairs a member state (Great Britain) is responsible. It is excluded from the Common Agricultural Policy and the Customs Union. Hence there is no value added tax applied in Gibraltar. Gibraltar is bound by EU Regulations and is required to and does implement EU Directives, except for directives relating to freedom of movement of goods and value added tax form which it has a full derogation.

20.4 Common law and the rules of equity in force in England apply in Gibraltar,4 so far as they are applicable to its circumstances and subject to such modifications thereto as such circumstances may require, and except in so far as they are modified by any Order in Council of the United Kingdom Privy Council, Act of the United Kingdom Parliament or any Act of Gibraltar’s Parliament. English Judicial decisions based on Common Law are binding in Gibraltar. Those based on statute law are considered by the courts as highly persuasive where statute law is comparable. For example, English case law involving the interpretation of such terms as ‘suspicion’, including R v Montila,5 R v da Silva6 and R v El Kurd7 will invariably be followed.

20.5 Gibraltar has various courts. Its main court of first instance is the Supreme Court, consisting of three judges who sit singly and hear criminal cases on indictment, with a jury, and civil cases, where trial is by judge alone (save

1 Constitution, s 45.2 Constitution, s 47.3 Treaty of Rome, Art 355(3) (on accession, Art 227(4)). 4 English Law (Application) Act.5 [2005] 1 All ER 113.6 [2007] 1 WLR 303.7 [2007] 1 WLR 3190.


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for one exception in the case of libel). Gibraltar has its own peripatetic Court of Appeal (the President of which is also the President of the Courts), consisting of four judges drawn from the Senior English Judiciary of which three sit at hearings of appeals. A final appeal lies to the Privy Council in London, with the permission of the Court of Appeal or the Privy Council. The magistrates’ court deals with criminal matters and also has jurisdiction in sundry less complex civil matters requiring speedy and affordable justice, such as certain aspects of family law.

20.6 Gibraltar is a member of the Offshore Group of Banking Supervisors and was the subject of an independent review of its anti-money laundering regime by it in September 2002 for the Financial Action Task Force (FATF). The FATF report commented as follows;

‘Gibraltar has in place a robust arsenal of legislation, regulations and administrative practices to counter money laundering. The authorities clearly demonstrate the political will to ensure that their financial institutions and associated professionals maximise their defences against money laundering, and cooperate effectively in international investigations into criminal funds. Gibraltar is close to complete adherence with the FATF 40 Recommendations. Once the appropriate changes are made to the few remaining deficient areas, these standards will be fully met.’

There has been progress on remedying those areas where Gibraltar’s regime was considered deficient.

20.7 The International Monetary Fund (IMF) also produced an assessment of the regulation and supervision of financial services, initially in October 2000, followed by a further review in 2007.8 The 2007 review included a review of Gibraltar’s anti-money laundering regime. In its 2001 executive summary, the IMF commented that the development of the financial sector in Gibraltar has been facilitated by its location, favourable tax regime, a stable government, its status within the EU, no exchange controls, a legal framework based on the English system, and the availability of a well-qualified labour force, particularly well-endowed with accounting and legal skills.

20.8 The 2007 IMF update commented on Gibraltar’s successful transition from an economy 60% reliant on the maintenance of its British military base to one dominated by three pillars; tourism, ports and shipping, and financial services. Mention was also made of the rapid growth of the online gaming industry within Gibraltar.

20.9 In 2001, the IMF found that:

‘Current anti money laundering measures as they related to the Basel Core Principles, the IOSCO Principles and the LAIS Principles appear to be effective, although as in other jurisdictions there is always scope for improving know your customer requirements. The Financial Services Commission (FSC) complies with

8 Available on the FSC website www.fsc.gi.


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accepted international standards of co-operation with the Foreign Supervisory Agencies with regards to the exchange of information and allows Foreign Home Supervisors to conduct on site reviews in Gibraltar.’

20.10 In their 2007 update, the IMF commented that:

‘The Gibraltar authorities have done a good job of implementing improvements to Gibraltar’s AML/CFT [anti money-laundering /combating the financing of terrorism] regime in the main financial sector area of banking to keep abreast of evolving standards in AML/CFT. In other sectors of financial intermediation, the FSC is making considerable progress in enhancing the effectiveness of existing preventative measures.’

20.11 The improvements that FATF and the IMF considered necessary have been either implemented or resolved or are well in hand.

20.12 The IMF identified Gibraltar’s exposure to the risk of money laundering as being the following, locally well known and recognised, reasons:

● by reason of its location on drug trafficking and human smuggling routes

● by reason of its important finance centre and strong ties with London, the Channel Islands, Israel, Cyprus and other centres;

● by reason of its banking services being offered to expatriates in Southern Spain which had seen an influx of Eastern European criminal elements.

20.13 The International Association of Insurers evaluated Gibraltar’s insurance regulatory standards, in relation to the Insurance Core Principles (ICPS) as part of its peer review of its members in 2011. In relation to ICP 28, requiring the supervisory authority to require insurance entities to take effective steps to deter, detect and report money laundering and the financing of terrorism in accordance with FATF recommendations, Gibraltar was said to have ‘observed’ the requirements of ICP 28.

20.14 The Government of Gibraltar has at all times vehemently denied accusations levelled at Gibraltar by the Spanish Government that it is a centre for money laundering. These accusations are widely considered to be politically motivated by reason of Spain’s claim to sovereignty over Gibraltar. The 4th Report of the Foreign Affairs Committee,9 as well as reports prepared by the FATF and IMF strenuously support Gibraltar’s stance. Following tri-partite talks, leading to what is now known as the Cordoba Agreement, relations with Spain had greatly improved and these accusations became less frequent. The current change of Government in Spain has seen a small reversion to the days of some antipathy on this subject and a reversal of its agreement to hold tri-partite talks.

9 Session 1998–99.

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20.15 The Foreign Affairs Committee Report (a Committee of the UK Parliament) dealt with, inter alia, Spanish allegations of Gibraltar’s financial impropriety (in particular, money laundering) and tax evasion and recommended that:

‘We conclude that the series of allegations which Spain makes against Gibraltar appear almost wholly to be without substance. In many cases it is not just the Government of Gibraltar but the British Government itself which is traduced. It is deeply regrettable that allegations are made that cannot be sustained by a basis of fact. If concrete evidence were produced the British Government should act promptly to deal with the problem. But so long as allegations are unsubstantiated, the British Government should continue to rebut them promptly and decisively.’

20.16 The Drug Trafficking Offences Act 1988 was Gibraltar’s first anti-money laundering legislation. In 1995, this was replaced by the introduction of the Drug Trafficking Offences Act 1995. In 1995, the Criminal Justice Act 1995 introduced ‘all crimes’ money laundering legislation for the first time. After the terrorist attacks in the US on 11 September 2001, certain anti-terrorism measures, the Terrorism (United Nations Measures) (Overseas Territories) Order 200110 and the Al-Qa’ida and Taliban (United Nations Measures) (Overseas Territories) Order 2002,11 were also introduced by way of Order in Council of the United Kingdom Privy Council. The terrorist financing regime has been further strengthened by the Terrorism Act 2005, the Counter-Terrorism Act 2010 and Terrorist Asset Freezing Regulations 2011 referred to and further described below in some detail.

LegIsLatIon – an overvIew

20.17 Gibraltar’s anti-money laundering legislation is largely driven by EU directives which must be implemented by Gibraltar, as well as the recommendations of FATF and the IMF. Gibraltar’s anti-money laundering legislation follows the legislation of the United Kingdom but is not identical, as largely it goes no further than the requirements of EU directives, whilst the United Kingdom Government has on occasion legislated beyond those requirements.

20.18 The primary legislation in Gibraltar is the:

● Terrorism (United Nations Measures) (Overseas Territories) Order 2001(‘TO’);12

● Al-Qaida and Taliban (United Nations Measures (Overseas Territories) Order 2002 (ATO);13

10 SI 2001/3366.11 SI 2002/112.12 SI 2001/3366.13 SI 2002/112.


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● Terrorism Act 2005 (‘TA’); Drug Trafficking Offences Act 1995 (‘DTA’);

● Crime (Money Laundering and Proceeds) Act 2007 (‘C(MLP)A’);

● Counter-Terrorism Act 2010 (‘CTA’)

and

● Terrorist Asst Freezing Regulations 2011 (‘TAFR’)

20.19 In addition, various regulations have been passed by the Government of Gibraltar under the DTA and by the Governor under the TO.14

20.20 The anti-money laundering legislation contains appropriate confiscation provisions for property the subject of terrorist financing, drugs trafficking or other criminal activity. In addition provisions for confiscation can be found also in the Criminal Procedure Act and the Drugs (Misuse) Act.

20.21 In respect of international cooperation, the Evidence Act empowers the Supreme Court to assist foreign courts to obtain evidence in Gibraltar for both criminal and civil proceedings. The Fugitive Offenders Act 2002 contains provisions for the extradition of offenders to British Dependant Territories and designated Commonwealth countries. The Civil Judgments and Jurisdictions Act, the Mutual Legal Assistance (European Union) Act the Mutual Legal Assistance (International) Act and the Transnational Organised Crime Act 2006 all make provision for service of process, jurisdiction and other cross-border assistance. The European Arrest Warrant Act makes provision for the arrest and surrender of offenders to other countries. The DTA and C(MLP)A contain provisions for mutual assistance to overseas jurisdictions in respect of both information and enforcement of confiscation orders. The constraints of available space do not allow for a detailed explanation of these provisions.

20.22 The Financial Services Commission (FSC) is charged with the reduction of financial crime.15 Financial crime includes money laundering, the financing of terrorism, fraud or dishonesty, misconduct in or misuse of information in financial markets, and handling the proceeds of crime. The FSC is authorised to issue rules of practice and guidance notes on any matter which the FSC regulates, subject to certain political controls.16 The FSC has a general power of regulation that allows it to make rules and issue guidance notes.17 In 2007 the FSC replaced existing guidance notes with the Anti-Money Laundering Guidance Notes (‘AMLGN’). These became effective on 15 December 2007.

14 SI 2001/3366.15 Financial Services Commission Act., s 7(2).16 Financial Services Commission Act, s 24.17 Financial Services Commission Act, s 6(K).

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20.23 The AMLGN apply to:

● banks and building societies whether or not operating in or from Gibraltar as a branch or as a locally incorporated institution;

● the Gibraltar Savings Bank;

● investment businesses and controlled activities conducted under an authorisation granted under the Financial Services Acts 1989 or 1998 (this includes investment services, company management, professional trusteeship, insurance management and insurance intermediation; other than general insurance intermediation);

● life insurance companies;

● currency exchangers/bureau de change;

● money transmission/remittance offices.

20.24 The Government of Gibraltar has produced its own guidance notes for businesses dealing in large cash payments for goods.

20.25 Whilst the AMLGN are not strictly legally binding on any person, when a person is tried for offences created by s 20 A(1) of the C(MLP)A for failing to comply with Part 3 of the C(MLP)A,18 in deciding whether the defendant has committed the offence, a court must consider whether any guidance notes issued by a body that supervises, regulates or is a representative of any trade, profession, business or employment of the defendant was followed.19

20.26 It is highly unlikely, except in very exceptional circumstances that a court will depart from the principles contained in the AMLGN, and the AMLGN can therefore be considered quasi-legislative. Furthermore, the FSC makes the following comment in the AMLGN:

‘(a) the Notes are written in such a way that compliance with its terms is obligatory;

(b) if there is non-compliance with the Notes, a judge must take into account such non-compliance when determining whether a person is in breach of the provisions of section [Part 3]20 the CJA;21

(c) the end result of the combination of (a) and (b) immediately above is that a judge, save in an exceptional case, must hold that a person who does not comply with the terms of the Notes is in breach of the provisions of the CJA.

18 C(MLP)A, Pt 3 imposes duties on certain businesses to maintain systems to prevent money laundering and terrorist financing See paras 20.29ff below.

19 C(MLP)A, s 20A(2).20 Wording in brackets inserted by authors.21 The guidance notes do not yet reflect the change of name of the C(MLP)A.


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It follows that, if a person does not adhere to the provisions of the Notes, such person would be applying the standards of practice falling below best market practice and would not be held to have taken all reasonable steps and exercised all due diligence.’

20.27 The rules of professional conduct prescribed from time to time by the Bar Council and Law Society of England and Wales must be observed by Barristers and Solicitors in Gibraltar, with such modifications as the Chief Justice might allow.22 Money laundering is a matter of professional conduct. Consequently Gibraltar lawyers are bound by any anti-money laundering guidance notes issued by the Law Society of England and Wales and/or the Bar Council of England and Wales, with such variations as will be implicit due to any differences in legislation.

20.28 Licensed entities engaged in gambling (including on-line gaming) must abide by their own regime contained in the Gambling Act.

LegIsLatIon to prevent the fInancIng of terrorIsm

20.29 The United Kingdom Privy Council enacted the TO23 on 9 October 2001. It came into force on 10 October 2001. It introduced various offences relating to terrorism.

20.30 The word ‘terrorism’ is defined24 as the use or threat of action where the action:

● involves serious violence against a person;

● involves serious damage to property; or

● endangers a person’s life other than that of the person committing the action; or

● creates a serious risk to the health and safety of the public or a section of the public; or

● is designed seriously to interfere with or seriously to destruct an electronic system; and

● the use or threat is designed to influence the government or to intimidate the public or a section of the public; and

● the use or threat is made for the purpose of advancing a political, religious or ideological cause.

22 Supreme Court Act, s 33.23 SI 2001/3366.24 TO, reg 2.

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20.31 A terrorist action or threat of action is one involving the use or threat of firearms or explosives, regardless of whether the threat or action is designed to influence the government or intimidate the public.

20.32 This already wide definition is enlarged by the following:

● action includes action outside Gibraltar;

● a reference to any person or to property is a reference to any person or to property wherever situated;

● a reference to the public includes a reference to the public of the territory or country other than that of Gibraltar; and

● the government includes any other country’s government.

20.33 The definition of ‘funds’ is wide and includes: financial assets and economic benefits of any kind; cash; gold; and all financial instruments and debts.

20.34 The definition of ‘government’ does not state whether the government must be a government formally recognised by the British government.

20.35 The definition of ‘terrorism’ extends beyond what a layman might consider to be a terrorist act, and, clearly the defining characteristic of terrorism is that a criminal act is perpetrated in pursuit of a cause. The offences, created by TO,25 are described in the next following paragraphs.

20.36 It is an offence to invite, receive or provide funds (including funds being given, lent or otherwise made available, whether or not for consideration) ‘intending or knowing that they may be used’ for the purposes of terrorism.26 The first limb of the offence is subjective (although determined on an objective standard), in that nothing short of intention or knowledge is sufficient, but it is enough that the funds ‘may be used’ for terrorism. In other words, they do not actually have to have been employed in terrorism, an indication that they may be so used is sufficient.

20.37 It is an offence for any person who, except under the authority of a licence granted by the Governor, makes any funds or financial or related services available, directly or indirectly, to, or for the benefit of, a person who commits, attempts to commit, facilitates or participates in the commission of acts of terrorism, or to a person controlled or owned directly or indirectly by a person involved in terrorism, or a person acting on behalf or at the direction of that person.27 The offence is a strict liability offence, so no knowledge or belief is required. Given the novelty of the TO, it is unclear how reg 4 will interact with

25 TO, reg 3.26 TO, reg 3.27 TO, reg 4.


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the provisions of reg 3 and, in particular, reg 3(3), which creates the offence of providing funds.

20.38 It is an offence intentionally to engage in activities whose objects or effect are to enable or facilitate the offences of collecting funds, making funds available, failing to comply with the Governor’s directions, or failing to notify the owner of funds of a freezing direction.28

20.39 It is an offence that a relevant institution fails to disclose to the Governor knowledge or suspicion that one of its customers is a person who is a terrorist, or is directly or indirectly controlled by or acts on behalf of a terrorist. The term ‘relevant institution’ includes banks and building societies.29

20.40 The Governor may freeze funds belonging to or controlled by terrorists and may identify affected persons.30 Accordingly, the Governor has issued a list of persons and entities whose funds must be frozen,31 other than in circumstances in which the authority of a licence has been granted by the Governor. It is an offence to breach a freezing order, whether knowingly or otherwise.32 It is also an offence knowingly or recklessly to make a false statement to procure a licence and to breach any conditions attached to a licence.33 Finally, it is an offence for the holder of funds subject to a direction to notify the owner of funds of the notice or revocation thereof.34

20.41 The Governor is empowered to direct the furnishing of information from persons for the purpose of ensuring compliance or detecting evasion of the order, and it is an offence for a person:

● to fail to provide such information within a reasonable time;

● to furnish false information knowing it to be false;

● to furnish a document knowing or being reckless as to whether the information in it is false;

● otherwise to obstruct any person in the exercise of his or her powers under reg 9; or

● with intent to avoid the provisions of reg 9, delay, deface, secrete or remove any document.

20.42 The penalties for committing an offence are:

● Collection of funds, making funds available contravening a Governor’s

28 TO, reg 6.29 TO, reg 8.30 TO, reg 5.31 Legal Notice No 9, 2nd Supplement, Gibraltar Gazette 2002.32 TO, reg 5(9).33 TO, reg 7.34 TO, reg 5(10).

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direction to freeze funds, facilitating a prohibited activity, failing to comply with the terms of a licence:

– convictions on indictment: imprisonment for up to seven years and/or a fine;

– summary conviction: up to six months’ imprisonment and/or a fine of £10,000.

● Making a false declaration to procure a licence; failure to notify owner of funds of a direction by the Governor, delays or obstructs a request for information:

– on conviction on indictment: up to two years’ imprisonment and/or a fine;

– summary conviction: a fine not exceeding £10,000.

20.43 The ATO35 was enacted by the Privy Council on 25 January 2002 and came into force on the same day. It applies to anyone within Gibraltar, including companies, and any British Dependent Territories or overseas citizens (British subjects or British nationals) or a British protectorate person overseas who is ordinarily resident in Gibraltar. It introduces various offences in relation to assistance being given to terrorists.

20.44 It is an offence to make any funds available to or for the benefit of a listed person.36 The term ‘listed person’ is defined in the Order and includes Osama Bin Laden and any person designated by the Sanctions Committee of the UN as a member of Al Qaida or the Taliban and any body or entity associated with these organisations. Provisions entitling the Governor to freeze funds in the same way as the UN Order are included also. Additionally, the ATO creates similar offences in relation to facilitation of activities and failure to disclose, knowledge or suspicion in relation to the activities of listed persons.

20.45 The penalty for these offences is seven years’ imprisonment and a fine for conviction on indictment and six months’ imprisonment and/or a fine of £10,000 on summary conviction.

20.46 The TA 2005 sits uncomfortably alongside the provisions of the TO. The definition of terrorism is wider in the TA 2005 than in the TO in that there is no requirement for terrorism to be in furtherance of a political religious or ideological cause. It is enough that the act or threat is designed to intimidate the public, compel the Government of Gibraltar to perform or abstain from any act, or destabilize or destroy the Government of Gibraltar, or the social or economic fabric of Gibraltar. The acts or threats of the TA 2005 coming within the definition of terrorism have been expanded, and include the following acts:

35 SI 2002/112.36 ATO, reg 6.


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● attacks on a person which may cause death, or endanger life, or involve serious violence;

● acts which damage property;

● acts which result in major economic loss to Gibraltar;

● acts involving the seizure of ships, aircraft or other means of public transport;

● acts constituting various offences relating to the keeping or using chemical or nuclear weapons under ss 3, 9, 10 and 43 of the Weapons of Mass Destruction Act; and

● acts involving the use of noxious substances, hoaxes in respect of noxious circumstances or hostage taking.37

20.47 The TA 2005 creates various new offences relating to acts of terrorism. It also enacts similar offences to those contained in the TO of raising funds for terrorism,38 use and possession of money or property for terrorism,39 arranging funds for terrorism,40 arranging for the retention of control of terrorist property.41 These provisions differ from the provisions in the TO in the following ways:

● The required state of mind (mens rea) for the offences in the earlier provisions was subjective. In contrast, the mens rea for the offences in the TA 2005 contain an objective element. The mens rea is made out in each case if the defendant knows or has reasonable cause to suspect that the funds may be used for terrorist purposes. It is interesting to note the use of the word ‘cause’ in this legislation. The DTA and the C(MLP)A use the word ‘grounds’ in this context. It is not known whether the courts will make a material distinction between these different languages.

● The TA 2005 has no offence of tipping off. Rather disclosure to the Gibraltar Financial Intelligence Unit (GFIU) (see below) constitutes a defence.42 Under the earlier provisions, disclosure should be made to the Governor. The absence of such an offence in this Act is academic for banks and building societies, given the provisions of reg 8 of the TO.

● The penalties are more severe on conviction on indictment, the maximum penalty being 14 years’ imprisonment, but the maximum fine on summary conviction is £4,000 and or six months’ imprisonment.

20.48 There is an offence of entering or becoming concerned in an arrangement facilitating the retention or control of terrorist property on behalf of another person, by way of transfer, concealment, removal from the jurisdiction or in any

37 TA 2005, ss 22, 23, 24.38 TA 2005, s 5.39 TA 2005, s 6.40 TA 2005, s 7.41 TA 2005, s 8.42 TA 2005, s 9.

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other way.43 The offence is a strict liability offence. The defendant has a defence if he proves that he did not know, and had no reasonable cause to suspect that the arrangement related to terrorist property.

20.49 It is a defence to undertake any of these acts with the express consent of GFIU. A disclosure of a person’s ‘knowledge or belief’ that money or other property is terrorist property, and the information on which the suspicion or belief is based, is a defence to these offences, unless having made a disclosure, the GFIU specifically forbid the action or arrangement to which the disclosure relates, and the person continues with it.44 In relation to the offences under s 5(2) and (3) of the TA 2005 of receiving or providing property or money, or under ss 6 to 8 of the TA 2005, it is a defence to disclose after the commission of the act if the defendant shows he intended to make the disclosure, and there is a reasonable excuse for his failure to do so. Professional privilege is preserved in relation to disclosure. Disclosure pursuant to s 9 of the TA 2005 is not a breach of any restriction on disclosure pursuant to any statute or law.

20.50 The Export Control Act and Regulations made thereunder provide for the control and prohibition of goods and technical knowhow from Gibraltar inter alia to prevent terrorism, terrorist financing and serious crime. The provisions of this act are outside the scope of this chapter.

20.51 The CTA was passed in March 2010 and came into force on 29 April 2010. It is aimed at regulating financial businesses (as defined below) for the purpose of imposing counter measures on the activities of certain countries, territories, governments, organisations and individuals relating to terrorist financing, money laundering and the proliferation of weapons of mass destruction. Section 3 empowers the Minister with responsibility for Finance to give directions.

20.52 The conditions for making directions are one or more of:45

● that FATF has advised that measures should be taken in relation to a country because of the risk of money laundering or terrorist financing being carried on in that country, by the Government of that country or by persons or corporations within that country;

● the Minister believes that there is a risk that terrorist financing or money laundering is being carried on in that country, by the Government of that country or by persons or corporations within that country and this poses a significant risk to the interests of Gibraltar;

● the UK’s Secretary of State for Foreign and Commonwealth Affairs has advised that the United Kingdom Government reasonably believes that the production of nuclear, radiological, biological, or chemical weapons in that

43 TA 2005, s 8.44 TA 2005, s 9.45 sect 3 CTA.


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country or the doing of anything to facilitate the development or production of such weapons poses a significant risk to the interests of Gibraltar.

Such powers are not exercisable against a European Union State.

20.53 The direction may be made to any particular person, any description of persons or all persons operating in the financial sector (the relevant person).46 The term person includes natural or legal persons. The financial sector includes banks and other credit institutions, and investment businesses of all types.47 The Act contains a small exemption48 relating to businesses which operate in the financial sector on a limited, occasional basis, meaning that

● the business turnover from financial activity is less than £64,000.00

● that no more than one transaction relating to any one customer exceeds €1,000

● the financial activity does not exceed 5% of the turnover of the business;

● the financial activity does not consist of the remittal of money;

● the financial activity is not that of a credit or financial institution; and

● the financial activity is only offered to customers of the business’s main activity.

20.54 Any direction made may impose requirements in relation to business transactions with any person doing business in the country or its Government, or resident or incorporated in it, and may be made in relation to a particular person, groups of persons or all persons in that country (the designated person).49

20.55 The directions must be proportionate having regard to the FATF advice or the interests of Gibraltar50 and can impose the requirements outlined below.

20.56 A direction may require a relevant person to undertake enhanced due diligence either before the commencement of a relationship or if a relationship already subsists during that relationship51 and may be either general in nature, or require a relevant person to undertake the measures specified in the direction, or both.52 Customer due diligence means measures to

● identify the designated person, and

● obtain information about the designated person and his business, the source of their funds and

46 CTA s 4.47 CTA ss 5, 6.48 CTA s 7.49 CTA s 8.50 CTA s 8(7).51 CTA s 9(1).52 CTA s 9(2).

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● assess the risk of the person being involved in terrorist financing, money laundering or the development or production of weapons of mass destruction, or the facilitation of that development or production.53

20.57 The direction may require a relevant person to undertake enhanced ongoing monitoring of any business relationship with a designated person.54 Again this may be general or specific, and means that customer due diligence needs to be maintained up to date, and transactions undertaken during the relationship and the source of funds, to ascertain whether the transactions are consistent with the relevant person’s knowledge of the designated person and their business.

20.58 A direction may require a relevant person to provide such information and documents as is specified in the direction relating to transactions and the business relationship with the designated person and may specify how the direction is to be complied with, including details of to whom the information is to be provided and the periods within which or the intervals at which it is provided.55 The direction exempts information and document covered by legal professional privilege,56 but the provision of information is not otherwise subject to any restriction on the disclosure of such information, whether imposed by statute or otherwise.57

20.59 A direction under the CTA may also prohibit a relevant person from entering into a either a specified transaction or business relationship, or a specified description of transactions, or any transactions or business relationships with a designated person, or require him to desist from such transactions or relationships.58 A direction to cease or desist does not apply where the Minister issues a licence exempting any such act. The exemption may be general or particular, or subject to conditions, and may have an indefinite period, or expiry date.59

20.60 All directions addressed to a particular person must be sent to the addressee and published in the Gibraltar Gazette, and when they cease to have effect or are varied, such variation or revocation must also be published.60

20.61 The Minister may appoint enforcement officers for the purposes of administering and enforcing the powers of requiring information or documents, undertaking inspections and making Court applications detailed below in ss 16–20 of the Act.61 There is detailed provisions allowing enforcement officers to:

53 CTA s 9(3), (4).54 CTA s 10.55 CTA s 11(1), (2).56 CTA s 11(3).57 CTA s 11(4).58 CTA s 12.59 CTA s 14.60 CTA s 13.61 CTA s 15.


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● require information reasonably required by him in the exercise of his authority62

● Enter into premises which the enforcement officer believes to be used for a persons’ business (except premises used only as a dwelling)63 and inspect them, observe the business being undertaken within them, inspect any document at the premises and require any person on the premises to explain any document so found, without a warrant,64 on the grounds that the information or document sought is reasonably required in connection with the exercise of the Enforcement officer’s functions. It should be observed that the exclusion of Dwellings from the provisions of the CTA might arguably be somewhat circular, in that if a dwelling is used solely as a dwelling, they are not premises at which business records will be ordinarily be kept, or business activities are undertaken as envisaged in the provisions of ss 16–20 CTA, and if such records are kept or such activities are carried in dwellings, the dwelling would not be used solely as a dwelling for the purposes of the CTA.

● The power to inspect may also be exercised with a warrant from the magistrates’ court;65 if there are reasonable grounds for believing that there are documents in premises which could be required under s 16 CTA, and if a requirement to produce were to be imposed, it might not be complied with or the document might otherwise be removed or destroyed,66 or and such a requirement for production has been made and not complied with,67 or if the relevant person has previously obstructed the Enforcement Officer, in a search of premises without a warrant.68

● The protection of legal professional privilege in relation to requirements for information and searches of premises is retained, but any other right of confidentiality is overridden by the CTA.69

● The enforcement officer may apply to court70 if a person has failed to comply with a requirement for information, and the court may require that person to do the thing they failed to do within a specified period or otherwise take steps to remedy the consequences of any failure. The CTA does not specify the court to which the application should be made under this section. In the absence of any specification, the Interpretation Act defines a court as

62 CTA s 16.63 CTA s 17(4).64 CTA s 17.65 CTA s 18.66 CTA s 18(2).67 CTA s 18(3).68 CTA s 18(4).69 CTA s 19.70 CTA s 20.

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a court of competent jurisdiction, being either the magistrates’ court or Supreme Court. Presumably an order may be made by the court in which any prosecution has been bought, or in the Supreme Court if no prosecution has been brought, as the jurisdiction of the magistrates’ court is in criminal matters and civil matters in which a statute confers jurisdiction.71

20.62 The CTA also gives the Minister power to impose civil penalties on any person who fails to comply with a direction, or any condition in a licence exempting relevant persons from any direction.72 The concept of civil penalties is new to Gibraltar law but the CTA does not say what the amount of the civil penalties should be, and the only criterion to be considered when imposing them is that they be appropriate, meaning ‘effective, proportionate and dissuasive’.73 The wording of the criteria suggests that they should be of a compensatory nature, but with an element of punishment added. Although the CTA provides for the preparation of guidance for the imposition of penalties74 none has yet been issued. Penalties are decided on by the Minister after inviting representations from the interested party,75 and the Minister therefore exercises a quasi-judicial function with an appeal of the interested party to the Supreme Court. No case has come to the courts whereby criteria for the imposition of civil penalties and their limits have been considered. Civil penalties can be recovered by the Government of Gibraltar as a civil debt.76

20.63 Apart from, and in addition to the civil penalties the CTA imposes offences of:

● Failing to comply with the requirements of a direction.77 The CTA allows for the defence of taking all reasonable steps and exercising all due diligence to ensure compliance with the requirement.78 In deciding whether an offence has been committed the court must consider whether the person followed any relevant guidance issued by the Minister or supervisory authority.79 Although provision is made for such guidance to be prepared, to date this has not been issued.

● It is an offence to provide false information or documents which is not what it purports to be in any material respect knowing or being reckless as to whether the information is false or the document is not what it purports to be.80

71 Magistrates Court Act ss 21 and 24.72 CTA s 21.73 CTA s 21(2).74 CTA s 34.75 CTA s 22.76 CTA s 24.77 CTA s 25.78 CTA s 25(2).79 CTA s 25(3).80 CTA s 26(1).


20.64 Gibraltar

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20.64 An offence is committed in Gibraltar under this Act by a person operating in the financial sector by conduct wholly or partly outside Gibraltar.81 The CTA confers jurisdiction for the Gibraltar Courts to try an offence under the Act committed outside Gibraltar.82 Proceedings can only be instituted with the consent of Her Majesty’s Attorney General for Gibraltar (Attorney General).83 The penalties on conviction for both offences are 12 months’ imprisonment and or a fine of up to £10,000.00 on summary conviction, and two years’ imprisonment and or an unlimited fine on conviction on indictment.84

20.65 The FSC is designated as the supervisory authority, with responsibility for ensuring compliance with the CTA,85 and for preparing guidance on the criteria for fixing civil penalties, and for issuing guidance on compliance with directions,86 by reason of it being the designated supervisory authority pursuant to the CMLPA.87 The Minister with responsibility for finance is empowered to make regulations concerning the issue of licences, to regulate any matter in connection with enforcement officers, to provide for supervision of transactions or business relationships, to implement international or EU obligations or for the better enforcement or implementation of the CTA.88

20.66 The CTA binds the Crown in right of Gibraltar,89 and is subject to the court’s supervision through the possibility of an applicant with sufficient interest obtaining a Declaration to the effect that an Act of the Crown is unlawful under the Act,90 but the Crown cannot be criminally liable.91

20.67 Nothing in CTA derogates from the Governor’s responsibility for defence, internal security and any other matter under the responsibility of the Governor pursuant to the Constitution. The Governor has the right to be consulted on any matter under this Act which affects the Governor’s responsibilities under the Constitution.

20.68 The TAFR was passed in accordance with the requirements of EU Council Regulation 2580/2001 on specific restrictive measures directed at certain persons and entities with a view to combating terrorism, and of United Nations resolutions 1373 (2001) and 1452 (2002) adopted by the Security Council on 28 September 2001 and 20 December 2002 respectively. The TAFR empowers the Minister with responsibility for Financial Services to issue either

81 CTA s 27.82 CTA s 29.83 CTA s 28.84 CTA s 25(4), 26(2).85 CTA s 33.86 CTA s 34.87 CTA s 32.88 CTA s 37.89 CTA s 36(1).90 CTA s 36(3).91 CTA s 36(2).



689

final designations92 or interim designations93 to designated persons, meaning any natural or legal person group or entity as provided in Regulation 2(3) of EU Regulation 2580/2001.

20.69 A final designation may be made where the Minister reasonably believes that a person is or has been involved in terrorist activity,94 or if the person is a corporate entity, if the person is owned by a person so involved, or is acting on behalf of such a person,95 and he considers it necessary for the purpose of protecting the public from terrorism that financial restrictions should be applied to that person.96 Involvement in terrorism is defined as the commission, preparation or instigation of acts of terrorism,97 conduct that facilitates the commission preparation or instigation of terrorism or is intended to do so,98 or conduct which supports or assists persons known or believed to be involved in terrorism.99 When a final designation is made the designated person must be notified in writing and steps must be taken to publicise the designation.100

There is a curious repetition of the requirement for publicity in the provisions requiring a final designation, In reg 5(1)(b) there is only a requirement to ‘publicise the designation’, whereas regulation 5(2) requires the Minister to take steps to publicise the designation ‘generally’ subject to certain exceptions described below. It is our view that the requirements for publicity mentioned in the two regulations are not separate requirements, or the whole effect of the ability to restrict publicity would be undermined.101

The requirement for publicity does not apply where the designated person is under 18 years of age, or the Minister considers that the disclosure of the designation should be restricted in the interests of internal security, for reasons connected with the detection of serious crime or in the interests of justice.102 It is of note that usually, when a Gibraltar Act requires publication, the provision usually requires that the Minister must publish a notice in the Gibraltar Gazette. The wider wording in the regulation implies that more comprehensive publicity is expected.

Final designations have effect for one year103 but may be renewed so long as the conditions pursuant to which it was originally imposed are still in place.104 Again

92 TAFR r 4. 93 TAFR r 8. 94 TAFR r 4(1)(a)(i). 95 TAFR r 4(1)(a) (ii and iii). 96 TAFR r 4(1)(b). 97 TAFR r 4(2)(a). 98 TAFR r 4(2)(b). 99 TAFR r 4(2)(c).100 TAFR r 5(1).101 TAFR r 5(2).102 TAFR r 5(3).103 TAFR r 6(1) and (3).104 TAFR r 6(1) and (2).


20.69 Gibraltar

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a renewal must be notified and publicised.105 The expiry of a designation must also be notified and publicised.106 The Minister may revoke or vary a designation at any time, subject to notification and publicity.107 Interim designations may be made if the Minister reasonably suspects the person of being involved in terrorism or controlled or owned by persons involved in terrorism108 (the definition being the same as above),109 subject to notification and publicity (or restriction thereof) as a final designation. An interim designation lasts for 30 days from the day made110 and can only be made once, but can be varied or revoked.111 The Minister may make a designation confidential and if any person divulges such confidential information without lawful authority, he is guilty of an offence, except if the information is already in the public domain, and there is a statutory power to apply for an injunction to prevent breach.112 The punishment is 6 months imprisonment and or a fine of up to £10,000 on summary conviction, and two years’ imprisonment and or an unlimited fine on conviction on indictment.

20.70 The effect of a designation is to create various offences in relation to dealings with the designated person’s assets and resources. Persons are prohibited from dealing with the funds or economic resources of a designated person, and a person who contravenes the prohibition is guilty of an offence, and liability is strict.113 ‘Deal with’ means using, altering, allowing access to or transferring ownership, possession, character or destination of the funds, or in the case of economic resources exchanging them or using them in exchange for funds goods or services.114

It is also an offence to make funds or financial services available directly or indirectly to a designated person 115 or for the benefit of a designated person.116 It is an offence to make economic resources available directly or indirectly to a designated person117 or for his benefit.118 Funds means financial assets of every kind, including but not limited to cash, cheques and other payment instruments, deposits and debt instruments, interest, dividends or other value generated from assets, credit set off letters of credit, bills of lading and sale, documents proving evidence of an interest in funds and any instrument in export finance.119 ‘Economic Resources’ means all assets tangible or intangible, moveable or immoveable, which are not funds but can be used to obtain funds goods or

105 TAFR r 6(4).106 TAFR r 6(5).107 TAFR r 7.108 TAFR r 8.109 TAFR r 8(2).110 TAFR r 10.111 TAFR r 11.112 TAFR r 12.113 TAFR r 16(1), (2).114 TAFR r 16(2).115 TAFR r 17.116 TAFR r 18.117 TAFR r 19.118 TAFR r 20.119 TAFR r 12.

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services.120 The mens rea for these offences is ‘knowing or having reasonable cause to suspect’ that the funds, services or resources of a designated person. The offences carry a maximum sentence of six months’ imprisonment and or a fine of up to £10,000 on summary conviction and to imprisonment of up to seven years and an unlimited fine for conviction on indictment.

20.71 There are various exceptions to these offences,121 including the crediting of interest or other earnings in a frozen account, and payments due under contracts or obligations concluded before an account was frozen. The prohibition from dealing with funds does not extend to the mere crediting of a frozen account, or if the payment is to be made to a non designated person, even if the payment is made in respect of a designated person, but banks or other institutions making such payments to a frozen account must inform the Minister. The TAFR again provides for the prohibitions not to apply if a licence has been issued allowing the conduct.122

Licences must specify the activity permitted, made specific to a particular person or general to a category of persons, may have conditions attached, and may be for an indefinite or specified duration,123 and may be amended or revoked at any time.124 Licence holders must be notified of the grant, amendment or revocation of any licence, or in the case of general licences, such publicity as the Minister considers appropriate must be given.125 Any person who for the purpose of obtaining a licence knowingly or recklessly provides false information or produces a document which is not what it purports to be, or fails to comply with a condition of a licence is guilty of an offence.126 The maximum punishment is six months’ imprisonment and or a fine of up to £10,000 on summary conviction, and two years’ imprisonment and/or an unlimited fine on conviction on indictment.

20.72 It is an offence to participate intentionally with any activity the purpose or effect of which is to circumvent directly or indirectly any prohibition contained in the Regulations or which enables or facilitates such circumvention.127

20.73 The Regulations provide that a financial institution must inform the Minister if they know or suspect that a person is a designated person, or if any offence under these regulations has been committed.128 The disclosure must also state the basis of the knowledge or suspicion, and any information identifying the designated person must also be provided.129 Although the draftsman of this legislation has omitted to include wording to limit the duty to disclose knowledge

120 TAFR r 13.121 TAFR r 21.122 TAFR r 22.123 TAFR r 22(2).124 TAFR r 22(3).125 TAFR r 22(4).126 TAFR r 22(5), (6).127 TAFR r 23.128 TAFR r 24.129 TAFR r 24(10(b), (2).


20.73 Gibraltar

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or suspicion that a person is a designated person in any way, it is our view that the disclosure requirement is limited to informing the Minister of designated persons who have, or have had a connection with the relevant institution. It would also seem that the duty to disclose is an exception to the right to silence if by dealing with a designated person, the financial institution commits an offence.

Where the designated person is also a customer, the institution must also inform the Minister of the economic resources held by the institution at the time that the knowledge or suspicion came to light.130 It is an offence not to make such disclosures.131 The Regulations allow the Minister to request information and documents that he reasonably requires from a designated person relating to funds or economic resources or disposals of a designated person132 or the expenditure by and on behalf of the designated person133 for the purpose of monitoring compliance or detecting evasion of the provisions of TAFR.134

Similar provision exists in relation to obtaining information from financial institutions operating for the account of designated persons under licence.135 The TAFR then goes further and allows the Minister to request such information ‘from any Person for the purposes of monitoring compliance, and detecting evasion of the regulations.’136 A wide discretion is given to disseminate this information both within and outside Gibraltar, to United Nations and European authorities, and to enable prosecutions.137 A person who fails to provide information requested in the time and manner required or if no time is specified a reasonable time, or knowingly or recklessly gives false information or documents, or destroys mutilates or conceals any document or obstructs the Minister is guilty of an offence. On conviction the court can require the provision of the information or documents.138 The Regulation overrides any statutory duty of confidentiality, except under the Data Protection Act.139

20.74 The regulations provide for appeals by designated persons from a Minister’s designations, and for the review by any person affected by a minister’s acts under this regulation, on human rights or reasonableness grounds available in a Judicial Review.140

20.75 There are some procedural protections. The Attorney General’s consent is required for any prosecution,141 no offence can be tried three years after its commission, and within 12 months of the information justifying the

130 TAFR r 24(3), (4).131 TAFR r 24(5).132 TAFR r 25(1).133 TAFR r 25(2).134 TAFR r 25(3).135 TAFR r 25(4).136 TAFR r 25(5).137 TAFR r 29.138 TAFR r 27.139 TAFR r 30.140 TAFR r 31.141 TAFR r 39.

20.73



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prosecution coming to the knowledge of the prosecutor (who in Gibraltar under the Constitution is the Attorney General)),142 although the offences have an extra territorial application for British citizens and Gibraltar companies.143 Company Officers will be personally liable for offences as well as the company of which they are officers, if the offence was committed as a result of their consent connivance or neglect.144

20.76 There is a similar saving in these Regulations for the Governor’s powers in respect of national security as in the CTA.

Legislation to prevent the money laundering of the proceeds of drug trafficking

20.77 The DTA creates a number of offences in relation to drugs trafficking, which is defined to include145 the production, supply, transport, storing, importation or exportation, and any offence, described in paras 20.78 and 20.83 below. The definition of drugs trafficking also includes the laundering of the proceeds of drugs trafficking.

20.78 It is an offence to conceal or transfer the proceeds of drugs trafficking or to remove them from the jurisdiction.146 This offence is aimed at the primary drug trafficker who originally makes the profit from the sale of drugs. There is also an offence of concealing or disguising, converting or transferring property belonging to another person, with the purpose of assisting that person to avoid prosecution for a drug trafficking offence, or the making or enforcement of a confiscation order.147 In R v Hughes, Hughes Linley and Linley,148 the Court of Appeal for Gibraltar held that for the purposes of s 54, the definition of confiscation order was limited to Gibraltar confiscation orders and did not include overseas confiscation orders. The required mens rea for the offence is ‘knowing or having reasonable grounds to suspect’ that the property is in whole or in part the proceeds of drugs trafficking. The test is objective. The defendant need not actually suspect that the property being concealed or removed from the jurisdiction is actually the proceeds of drug trafficking. Having reasonable grounds to suspect is sufficient. There is no defence of disclosure available for this offence.

20.79 It is also an offence to assist another person to retain the benefit of drugs trafficking.149 The mens rea for the offence is subjective, in that the person must know or suspect that the primary offender is the person who carries on, or has carried on, drug trafficking, or has benefited from drugs trafficking.

142 TAFR r 37.143 TAFR r 34.144 TAFR r 35.145 DTA, s 2(2) and (3).146 DTA, s 54.147 DTA, s 54(2).148 R v Hughes, Hughes, Linley and Linley CC 2007–09 Gib LR 361.149 DTA, s 55.


20.80 Gibraltar

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20.80 Where a disclosure is made to a customs or police officer of a suspicion or belief that the funds in question are the proceeds of drug trafficking, the disclosure does not breach any duty of confidentiality and, further, if the disclosure is made before any act is carried out and the act is done with the consent of customs or police officers, or the disclosure is made after the act has been carried out, but on the discloser’s own initiative and as soon as it is reasonable, the discloser has a defence to a charge of the nature described in para 20.79 above.150

20.81 It is also a defence to an offence of the nature described in para 20.79 above to prove (and there is therefore a formal burden of proof on the defendant in this regard) that the defendant did not know or suspect that the arrangement related to drug trafficking or that they did not know or suspect that the retention control by or on behalf of the primary offender was facilitated. It is also a defence that the defendant intended to disclose, but there was a reasonable excuse for their failure to make such disclosure. Again, the defendant must prove this.

20.82 There is an offence of the acquisition or possession of the proceeds of drugs trafficking knowing that the property represents the proceeds of drugs trafficking.151 There is a defence to this offence of purchasing the property for adequate consideration. In this case, suspecting that the property represents the proceeds of drug trafficking is not enough to constitute the offence; the defendant must know that they are acquiring the proceeds of drugs trafficking. Disclosure constitutes a defence and provisions similar to those described in para 20.80 above apply.

20.83 There is an offence of failing to disclose information to a customs or police officer knowing or suspecting that another person is engaged in drug money laundering.152 The offence is only made out if the information or other matter on which the knowledge or suspicion is based came to the defendant’s attention in the course of their trade, profession or business employment. Again, disclosure is not a breach of confidentiality, and legal professional privilege is retained. Thus a barrister or solicitor need not disclose information when they are obtaining information to offer advice, or they come by the knowledge or suspicion in the course of litigation. Professional privilege does not apply when the information given is communicated with a view to furthering a criminal purpose. It is a defence that the person charged had a reasonable excuse for not disclosing the information or other matter in question or, in the case of an employee, that they disclosed the information to their employer in accordance with the established procedure.

20.84 There is also an offence of tipping off.153 The elements of this offence are:

150 DTA, s 55.151 DTA, s 56.152 DTA, s 57.153 DTA, s 58.



695

● that the defendant knows or suspects that there is an investigation being conducted in relation to drug money laundering; and

● they disclose to any person information or any other matter which is likely to prejudice the investigation. The knowledge or suspicion that there is an investigation being conducted need not come from the fact that the person has him or herself made a disclosure. The knowledge or suspicion can come from any source.

20.85 In addition, it is an offence if a person knows or suspects that a disclosure has been made to the police or customs officer and discloses to any other person information or any other matter which is likely to prejudice any investigation. Again, legal advisers are protected in that they may disclose information to clients in contemplation of the giving of advice or legal proceedings for the purposes of those proceedings, unless the information is disclosed with a view to furthering any criminal purpose. It is a defence that the defendant proves that he did not know or suspect that disclosure was likely to be prejudicial.

20.86 The DTA allows police or customs officers to apply to court for orders:

● for production of materials;154 and

● for a warrant for the search of premises.155

20.87 It is an offence if a person knows or suspects that the investigation is taking place, and they make a disclosure likely to prejudice the investigation.156 It is a defence for the defendant to prove that they did not know or suspect that the disclosure was likely to prejudice the investigation, or that they had lawful authority or reasonable excuse for making the disclosure. Legal privilege is once again preserved.

20.88 The penalties for offences described in paras 20.78, 20.79 and 20.83 above are:

● on summary conviction: imprisonment for a term not exceeding six months or a fine not exceeding level 4 (£4.00 on the standard scale), or both; and

● on conviction on indictment: imprisonment for a term not exceeding 14 years’ imprisonment or a fine, or both.

20.89 The penalty for offences described in paras 20.84 and 20.85 above is liable on summary conviction to a fine not exceeding level 4 on the standard scale (£4,000) and on conviction on indictment to imprisonment of up to five years or to a fine, or both.

154 DTA, s 60.155 DTA, s 61.156 DTA, s 65.


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20.90 The penalty for offences described in para 20.86 above is liable on summary conviction to imprisonment for five years and/or a fine not exceeding level 5 on the standard scale (£10,000), and, on conviction or indictment, to imprisonment for a period of five years and/or a fine.

Legislation to prevent the money laundering of the proceeds of all non-drugs crimes

20.91 The C(MLP)A is a substantial amendment and renaming of the previous Criminal Justice Act 1995, bought in to make changes proposed by the various international organisations, and also in implementation of the EU Council Directives on money laundering. It applies to all crimes other than drug trafficking offences. Criminal conduct is conduct which, if it occurs in Gibraltar, constitutes an indictable offence other than a drug trafficking offence, or, if it does not occur in Gibraltar, would constitute such an indictable offence if it had occurred in Gibraltar.

20.92 The C(MLP)A creates offences which run parallel to the drug trafficking offences for other criminal conduct. There is an offence of assisting another to retain the benefit of criminal conduct, knowing or suspecting that the other person is engaged in criminal activity.157 There is an offence of the acquisition, possession or use of property knowing that it represents the proceeds of criminal conduct.158

20.93 The defence of disclosure is available in relation to the offences described immediately above. Note that disclosures of information or other matters leading to knowledge or suspicion must be made to GFIU, (defined as the body with responsibility for receiving, processing analysing and disseminating information relating to suspect financial transactions)159 rather than a police officer as provided for under the previous legislation and in the DTA. In relation to the offence of the acquisition, possession or use of property knowing that it represents the proceeds of criminal conduct, the offence is not made out if the person discloses the knowledge or suspicion prior to undertaking any action, and GFIU consent to the undertaking of the action, or if disclosure is made as soon as practicable after undertaking the action on the discloser’s own initiative. It is also a defence to this offence and the offence of concealing or transferring proceeds of criminal conduct (see below) to prove lack of knowledge that the property in question is the proceeds of crime, or that the arrangement facilitated the retention of control of the property by the criminal, or that the defendant intended to make the disclosure and he has a reasonable excuse for failing to do so.

20.94 It is also an offence to conceal or transfer proceeds of criminal conduct;160 and there is a prohibition on tipping off.161 The defences available are similar to the defences available under the DTA, which are explained above.

157 C(MLP)A, s 2.158 C(MLP)A, s 3.159 C(MLP)A, s 2(2A).160 C(MLP)A, s 4.161 C(MLP)A, s 5.



697

20.95 Under the previous ‘all crimes’ legislation, there was no offence of failure to disclose; rather, disclosure was simply a defence to charges under the Criminal Justice Act 1995. When this Act was amended in 2004, a new offence of failure to disclose was introduced, and in 2007 the offence was extended to include an objective element for the mens rea of the offence. Persons who conduct ‘relevant financial business’ (see below for the definition) commit an offence if knowing, suspecting or having reasonable grounds to suspect that another person is engaged in money laundering, or attempting to do so, and the information or other matter on which the knowledge or suspicion is based came to his knowledge in the course of their trade, business or employment and they fail to disclose such matter or information to the GFIU as soon as practicable.162 It is noteworthy that this offence is more widely drafted than its equivalent in the DTA, which requires actual knowledge or suspicion. In this case, having reasonable grounds to suspect money laundering is sufficient, thus introducing an objective element to the mens rea of the offence.

20.96 Legal professional privilege is preserved, and indeed the defence of privilege is extended to notaries, auditors, external accountants and tax advisers.

20.97 Offences under Gibraltar tax laws are not indictable, they are summary offences with the result that similar offences in the nature of tax evasion in other countries would not appear to fall within the ambit of the C(MLP)A. An act of foreign tax evasion, however, might constitute a common law offence or offence under another statute in Gibraltar, for example false accounting, fraud or cheating. The AMLGN recognise this and warn that matters relating to taxation need to be treated with caution.

20.98 Where the European Commission adopts decisions prohibiting the disclosure of information to any person in a particular jurisdiction,163 the Minister may by notice prohibit the disclosure of information to persons in that country.164

20.99 The following penalties are prescribed for each offence:

● Assisting another to retain the benefit of criminal conduct, acquisition, possession or use of proceeds of criminal conduct, concealing or transferring the proceeds of criminal conduct:

– on summary conviction: six months’ imprisonment and/or a fine not exceeding level 5 (£10,000) on the standard scale; and

– on conviction on indictment: 14 years’ imprisonment and/or a fine.

● Tipping off:

– on summary conviction: six months’ imprisonment and/or a fine not exceeding level 5 (£10,000) on the standard scale; and

– on conviction on indictment: five years’ imprisonment and/or a fine;

162 C(MLP)A, s 2A.163 EU Money Laundering Directive, Art 40.164 C(MLP)A, s 5A.


20.99 Gibraltar

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● Section 5A:

– on summary conviction: imprisonment for a term not exceeding six months and or a fine not exceeding level 5 (£10,000) on the standard scale; and

– on conviction on indictment: five years’ imprisonment and/or a fine.

cIvIL LIabILIty

20.100 As Gibraltar adopts English rules of common law and equity,165 the same considerations in relation to civil liability apply in Gibraltar as under English law. The same tension between constructive trustee liability and the criminal offence of tipping off exists. It is also possible to apply to the court for directions, as in England and Wales.

20.101 The new AMLGN provide no guidance on the conflict between tipping off and liability as a constructive trustee. However, the standard form of disclosure contained in the AMLGN makes provision for disclosure to GFIU of any constructive trust issue.166 The previously issued AMLGN provided that disclosure be made immediately and neither the customer nor any third party should be tipped off. The GFIU, which is the central authority for disclosures,167 will evaluate the report and fast track it back to an investigator, who will determine whether the ‘consent’ to undertake the transaction can be issued. If the constructive trust issue comes to light after the disclosure is made, GFIU should be warned about this in a further report. The previously issued AMLGN considered the risk of civil liability to be slight, given the absolute nature of the prohibition against tipping off.

20.102 The courts of Gibraltar would invariably follow recent cases decided in the courts of England, for example, Finers v Miro,168 The Bank of Scotland v A Ltd169 C v S170 and Amalgamated Metal Trading Limnited V City of London Financial Investigation Unit and Others.171

addItIonaL obLIgatIons of certaIn busInesses to prevent money LaunderIng

20.103 Part III of the C(MLP)A imposes measures to prevent the use of the financial system for the purposes of money laundering and terrorist financing. In

165 English Law (Application) Act.166 See AMLGN, App 6.167 See paras 20.69 above and 20.107 below.168 (1991) 1 All ER 182 and see 2.74 above.169 [2001] EWCA Civ 52, [2001] 1 WLR 751, CA and see 2.71 above.170 [1999] 1 WLR 1551 and see 2.68 above.171 (2003) 1 WLR 2711.

20.99


Additional obligations of certain businesses to prevent money laundering 20.104

699

particular, ‘relevant financial businesses’ are required to undertake certain due diligence obligations.172 This term is defined173 to include the following:

● banks, savings banks and building societies, including any bank regulated elsewhere in Europe;

● any investment business requiring a licence under the Financial Services Act;

● insurance businesses;

● auditors, external accountants and tax advisers;

● estate agents;

● lawyers and notaries when:

– assisting in the planning or execution of transactions for their client concerning the:

(a) buying and selling of real property or business entities;

(b) managing of client money, securities or other assets;

(c) opening or management of bank, savings or securities accounts; or

– acting on behalf of and for their client in any financial or real estate transaction;

● company managers and professional trustees;

● dealers in high value goods;

● casinos including internet casinos;

● currency exchange offices/bureaux de change;

● money transmission services and

● funds and related activities.

20.104 Although gambling operations which are not casinos do not come within the definition, all betting and gaming companies have a duty to make reports of suspicious transactions,174 and to have systems, procedures and controls to identify suspicious transactions.175 Also, when considering an application for a gaming or betting licence, the Gambling Commissioner must have regard to the proposed controls to detect money laundering activities (see Gambling Act, Sch 1).

172 C(MLP)A, ss 10A–10R.173 C(MLP)A, s 8.174 Gambling Act, s 33.175 Gambling Act, s 36.


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20.105 It is an offence not to comply with the C(MLP)A176 punishable by two years’ imprisonment on indictment and/or a fine, and on a summary conviction, by a fine not exceeding level 5 of the standard scale (£10,000). Where a corporation commits this offence, any director, secretary or manager who consented or connived in the commission of the offence, or to whom can be attributed any neglect, is also deemed to have committed the offence.

20.106 A relevant financial business is obliged177 to apply ‘customer due diligence measures’ whenever it:

● establishes a business relationship with a customer, (defined as any business, professional or commercial relationship expected to have an element of duration);178

● carries out an occasional transaction amounting to €15,000 or more either in a single operation or in several operations which appear linked;

● suspects money laundering or terrorist financing;

● doubts the veracity or adequacy of documents previously obtained.

20.107 At other appropriate times a relevant financial business must apply customer due diligence to existing customers on a ‘risk sensitive basis’. The term ‘risk sensitive basis’ is not defined, but presumably the term implies that relevant financial businesses must consider factors such as the risk of money laundering in relation to any particular type of customer, business relationship, or product.179 Presumably the term also encompasses factors requiring only simplified due diligence180 or increased due diligence,181 including enhanced due diligence for non-face to face transactions, correspondent banking, politically exposed persons or any other situation which by its nature can represent a higher risk of money laundering or terrorist financing. The opacity of this provision might make it difficult for businesses to know whether they have dealt with any customer due diligence on a risk sensitive basis, and may create room for legal argument later as to what this term encompasses. Whilst the AMLGN give more concrete guidance on what is intended by the term ‘risk sensitive basis’, they also state that it is impossible to reconcile a risk based approach with prescriptive requirements.

20.108 Firms are obliged to determine the extent of customer due diligence required depending on the type of customer, business relationship, product or transaction, and to demonstrate that the extent of the measures are appropriate in view of the risks of money laundering and terrorist financing.182

176 C(MLP)A, s 20A.177 C(MLP)A, s 10B.178 C(MLP)A, s 7.179 C(MLP)A, s 10A(3).180 C(MLP)A, s 10G.181 C(MLP)A, ss 10H–10K.182 CMLPA, s 10B(3).



701

20.109 The AMLGN describe how firms should adopt their own policies and systems in relation to the potential threats against them, and Gibraltar generally. They describe the risk factors in some detail, dividing them in accordance with the likelihood of the threat, and its impact. The AMLGN identify six statements of principle.

20.110 Customer due diligence measures is defined as meaning:183

● identifying the customer, verifying his identity on the basis of documents, data or information obtained from a reliable and independent source;

● identifying the beneficial owner where he is not the customer, and taking adequate measures, on a risk sensitive basis to verify his identity;

● obtaining information on the purpose and intended nature of the business relationship.

20.111 The term ‘beneficial owner’ is defined by reference to the definition contained in the EU’s Third Money Laundering Directive.184 Briefly, it means the person who owns or controls the customer, or on whose behalf a transaction or activity is carried on. This Directive provides that in the case of a corporate entity, the owner of over 2 per cent of the entity shall be the ‘beneficial owner’, as well as the persons who ultimately control the management of the entity. AMLGN give more details on what evidence of identity should be obtained from whom, and in what circumstances customer due diligence should be renewed. The due diligence required depends on the potential risk, and the impact it might have. The greater the risk, the more detailed the due diligence should be. Conversely where there is a reduced level of risk, simplified customer due diligence is acceptable.

20.112 There is a simplified customer due diligence for customers who are credit or financial institutions in Gibraltar or the EU, customers who are listed on regulated markets, lawyers, Gibraltar and certain EU public authorities.185 Simplified due diligence is also possible in respect of certain products, namely life insurance products where the annual premium is less than €1,000 per annum or where a single premium is no more than €2,500, an insurance contract for the purposes of a pension scheme without a surrender clause which cannot be given by way of security, non-assignable employee pension scheme, where the employer contributes or deducts an amount from the employee’s salary, an e-money product with a maximum purse of no more than €150 where the device is non rechargeable, or if the device is rechargeable, it has an annual limit of €2,500, except if an amount of €1,000 or more is redeemed in a year by the bearer. All such products must comply with the requirements of para 2 of Sch 1 to the C(MLP)A, including:

● the contact underpinning them must be in writing;

183 CMLPA, s 10A.184 Council Directive 2006/60/EC.185 CMLPA, s 10G.


20.112 Gibraltar

702

● related transactions are carried out through EU credit institutions;

● the product cannot be anonymous;

● there are detailed provisions relating to insurance pension and savings products and their financial limits.

20.113 The Third Money Laundering Directive and the AMLGN grant a postal concession, meaning that where satisfactory evidence of identity would ordinarily be required, but in the circumstances the applicant for business has arranged, and it is reasonable in the circumstances to do so, for the payment to be sent by post or by any electronic means effective to transfer funds, or for the details of the payment to be sent by post, to be given on the telephone or to be given by any other electronic means, the fact that the payment is debited from an account held in the applicant’s name with a Gibraltar bank or building society, banks authorised within the EU or EU authorised credit institutions, is sufficient evidence of identity. There are restrictions on the postal concession, such as where initial or future payments can be made by third parties, or where cash can be withdrawn other than on a face to face basis. If it becomes clear that the bank from which the payment was made has not verified the customer’s identity, then it is necessary to do so. Records of how the transaction arose must be kept, and detailing the paying bank’s details and account number.

20.114 Where the risk and impact of money laundering/terrorist financing is higher it is necessary to apply enhanced due diligence.186 There are also specific examples of where enhanced due diligence is required:

● where the customer is not face to face;187

● a politically exposed person, in which case the institution is required to obtain approval of senior management, take adequate measures to establish the source of wealth and funds, and undertake enhanced monitoring;188

● credit institutions proposing correspondent relations with a correspondent outside the EU must ensure that they have sufficient information to understand the nature of the respondent’s business, its reputation and the quality of its supervision, that it has adequate money laundering systems and controls, obtain approval from the senior management before commencing a business relationship, document the respective responsibilities of both parties, and be satisfied that the correspondent’s customers who have direct access to the Gibraltar entity’s account have had their identity verified, that ongoing monitoring occurs and can provide the Gibraltar credit institution with copies of the relevant customers’ due diligence;189

● credit institutions are prohibited from entering into transactions with a shell bank, which is a bank incorporated in a jurisdiction with no physical

186 C(MLP)A, s 10H.187 C(MLP)A, s 101.188 C(MLP)A, s 10K.189 C(MLP)A, s 10J.

20.112



703

presence or management within that jurisdiction, and unaffiliated with any regulated group.190

20.115 A relevant financial business is obliged to monitor transactions during the course of the business relationship to ensure that the transactions are consistent with its knowledge of the customer his business and risk profile and to keep customer due diligence up to date.191 The AMLGN give more detail on the implementation of monitoring procedures

20.116 The customer due diligence should be obtained before the establishment of the business relationship.192 Verification may be completed during the establishment of the relationship if this is necessary not to interrupt the normal course of business and there is little risk of money laundering or terrorist financing, provided that verification is completed as soon as practicable thereafter.193 In respect of beneficiaries of a life insurance policy, evidence of identity of the beneficiary need not be obtained until before payout or there is an exercise of a vested right under the policy. In respect of bank accounts, verification may be obtained after opening of the account provided no business is done through it before customer due diligence is obtained. If, at any time, the relevant financial business is unable to apply customer due diligence, no transactions can be undertaken for the customer, no business relationship can be established, and any existing relationship must be terminated.194

20.117 A relevant financial business is permitted to rely on the customer due diligence of other supervised Gibraltar or EU credit or financial institutions, auditors, accountants, insolvency practitioners or legal professionals, or such non EU entities or persons in the above mentioned categories who are supervised and subject to equivalent money laundering requirements as are contained in the Third Money Laundering Directive.195 The firm on whose due diligence the relevant financial business seeks to rely must consent to the information so being relied on, and the relevant person remains liable for any failure to apply customer due diligence, despite its reliance on the other party.

20.118 The Minister has power to make directions prohibiting dealings or further dealings with countries against which FATF has decided to apply counter-measures.196

20.119 Records of identity and of transactions must be kept for five years from the completion of the business.197

190 C(MLP)A, s 10M.191 C(MLP)A, s 10C.192 C(MLP)A, s 10D(2).193 C(MLP)A, s 10(3).194 C(MLP)A, s 10F.195 C(MLP)A, s 10N.196 C(MLP)A, s 10O.197 C(MLP)A, s 10P.


20.120 Gibraltar

704

20.120 The AMLGN state that the following records should be kept in respect of each transaction:

● name and address of customer;

● name and address of counterparty;

● what the transaction was used for, including price and size and whether the transactions were sales or purchases;

● the form of instruction or authority;

● account details from which funds were paid including, in the case of cheques, sort code, account number and name;

● form and destination of payment made by the business to the customer;

● whether the investments were held in safe custody by the business or sent to the customer; and

● where an eligible introducer is him or herself authorised under a law providing for supervision for relevant financial business, the principal can rely on an assurance that the eligible introducer will keep on the principal’s behalf the necessary records. However, the principal must also keep copies of these records.

20.121 The AMLGN provide that the records must be kept in a reliable form which can be reproduced without delay. It does, however, allow for microfiche or electronic record keeping.

20.122 Whilst it is not a legal requirement, the AMLGN recommend that original documents be kept for at least one year to assist law enforcement agencies. Original documents are sometimes required by investigating authorities for forensic purposes. It is requested that institutions, before informing the authorities that the documents are no longer available by reason of the originals having been destroyed, check that the documents have actually been destroyed. The records may be held centrally and in another jurisdiction, provided that they are freely accessible from Gibraltar and that they are kept for the required period.

20.123 Following FATF special recommendations on terrorist financing, the AMLGN require relevant financial businesses to include accurate and meaningful originator (name, account number and, where possible, address) and beneficiary information, account name and/or account number on all outgoing transfer funds and related messages, and that this information should remain with the transfer throughout the payment chain. Incoming transfers should be subject to increased scrutiny and monitoring for suspicious activity if they do not contain meaningful originator information. According to the AMLGN, this does not apply where ordering and beneficiary customers are both banks.


Internal policies and reporting procedures 20.128

705

InternaL poLIcIes and reportIng procedures

20.124 Relevant financial businesses are required198 to establish and maintain appropriate risk sensitive policies and procedures relating to:

● customer due diligence;

● reporting;

● record keeping;

● internal control;

● risk management and assessment;

● the monitoring and management of the policies and their dissemination throughout the firm.

20.125 These should include policies for the identification of suspicious transactions, complex or unusually large transactions, unusual patterns and any other activity which the firm regards as particularly likely to be related to terrorism. These policies should be reviewed by the money laundering reporting officer in an annual report to the senior management.

20.126 Relevant financial businesses must put in place internal reporting procedures which identify a person within the organisation to whom reports of knowledge or suspicion that another person is engaged in money laundering may be made,199 known in the AMLGN as the Money Laundering Reporting Officer (MLRO).

20.127 The MLRO must:

● consider each report for the purpose of determining whether or not the information or other matter contained in the, report does give rise to such knowledge or suspicion;

● have reasonable access to other information, which may be of assistance to him or her; and

● be responsible for making a report to the police or customs officer, if necessary.

20.128 The Gibraltar supervisory authorities, the Financial Services Commissioner, Banking Supervisor and the Commissioner of Insurance and the Insurance Supervisor, must also disclose information to the GFIU,200 even if they are secondary recipients of the information.

198 C(MLP)A, s 10Q.199 C(MLP)A, s 18.200 C(MLP)A, s 20.


20.129 Gibraltar

706

20.129 The AMLGN provide that the MLRO must determine whether the transaction is suspicious, and that he or she should have regard to the following:

● The size of the transaction; is it consistent with the customer’s normal activities?

● Is the transaction rational in the context of the customer’s business or personal activities?

● Has the pattern of transactions of the customer changed?

● Where the transaction is international, does the customer have any obvious reason for conducting business with the other country involved?

20.130 The AMLGN gives examples of suspicious transactions, with a caveat that they are not intended to be exhaustive. These include unusually large cash deposits, frequent exchange of cash into other currencies, ‘in and out’ electronic transfers and others. Further information is available on the FSC website at www.fsc.gi, at Appendix F. The AMLGN make the following comments on internal reporting procedures:

● reporting lines should be as short as possible;

● supervisors should be aware of their own legal obligations; for example, a junior member of staff may not consider a transaction suspicious, but the supervisor may still be suspicious;

● in larger groups, institutions may choose to appoint an assistant within divisions or subsidiaries, and these should liaise with a central MLRO;

● all suspicions reported should be documented, with details of the customer and as full a statement as possible on the information giving rise to the suspicion; the MLRO should acknowledge receipt of the report and at the same time provide a reminder of the obligation to do nothing that might prejudice inquiries;

● all internal inquiries should be documented and the reason behind the decision whether or not to submit the report to the authorities recorded;

● ongoing communication between the MLRO and the reporting person is important, and records of suspicions, whether reported or not, should be retained for five years unless an investigating officer informs the financial institution that they are no longer needed; the Guidance Notes stress the importance of communications between the law enforcement agencies, the MLRO and the initiator of the report.

20.131 Relevant financial businesses must ensure that staff is trained to be made aware of the law relating to money laundering and terrorist financing and to recognise and deal with transactions which may be related to terrorist financing


Internal policies and reporting procedures 20.134

707

and money laundering.201 The AMLGN provide guidance on the need for training and the levels to which staff should be trained. Further information is available on the FSC website at www.fsc.gi. In particular, the AMLGN state that all relevant staff should be educated in the process of ‘Know Your Customer’ including:

● know the true identity of the customer;

● where a business relationship is established, the need to know enough about the type of business activities expected in relation to that customer;

● to know at the outset what might constitute suspicious activity at a future date;

● relevant staff should be alert to any change in the pattern of a customer’s transactions; and

● directors and senior partners should be aware of the statutory duties placed on them and their staff, and high-level, general awareness-raising training is therefore suggested.

20.132 The AMLGN designate a section point for disclosure of suspicions at the GFIU. This unit is integrated with the government of Gibraltar Coordinating Centre for Criminal Intelligence and Drugs (GCCID), and is staffed by officers seconded from HM Customs Gibraltar and the Royal Gibraltar Police. In its 2002 report the IMF considered GFIU to be somewhat understaffed and recommended that the authorities consider providing more staff to improve its effectiveness and to provide additional expertise in computer and financial analysis and investigative skills. They also recommended the retention of a cadre of career employees. However, GFIU is purely a reception point for disclosures, which are analysed by the GCCID, located in the same premises. Reports which are considered by GCCID to warrant investigation are then passed either to the Fraud Office of the Royal Gibraltar Police or to HM Customs Gibraltar, who are responsible for bringing prosecutions by the Attorney-General.

20.133 The AMLGN provide a standard form for disclosures, which should be typed and should contain sufficient information, including the reason for the suspicion and any particular offence that is suspected. However, lack of information on the report should not be a reason to delay a disclosure. Where the institution holds relevant evidence, this should be noted on the form.

20.134 According to the IMF Report, GFIU received 108 suspicious transaction reports in 2005, of which about 68 were from banks, two from money transmission services, 27 from company management and one from bureaux de change. No arrests resulted from the disclosure, but 11 reports led to enhanced intelligence. The IMF was concerned about the low levels of reports from lawyers (five) and accountants (two) and has recommended that seminars be held in Gibraltar to promote the need to make disclosures.

201 C(MLP)A, s 10CR.


20.135 Gibraltar

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20.135 The IMF Report commented that whilst these statistics do not necessary reflect levels of compliance, they could reveal differences in compliance within the financial sector and should be followed up, with additional training and publicity provided by the GFIU and the FSC.

20.136 The ordinary penal penalties have been described above, in the appropriate description of the offence. In addition, the court may impose confiscation order on persons convicted under the DTA or C(MLP)A.

20.137 There is a new supplementary guidance for auditors on systems of control for the prevention of the use of the financial system for money laundering and terrorist financing. The detailed notes can be found on AMLGN on the FSC website as follows: http://www.fsc.gi/amlgn/auditors.htm

consIderatIons arIsIng out of the data protectIon act 2004

20.138 It should be borne in mind that the Data Protection Act 2004 grants individuals a right to seek and be provided with details of personal data held by businesses in respect of that individual.202 This would appear to include suspicious activity reports, sent by businesses to the police as outlined above, although such disclosure would, in all likelihood, constitute the offence of tipping off. The Act provides that personal data is exempt from this duty of disclosure if such disclosure is likely to prejudice the investigation or prevention of a crime.203 Where an investigation is live, it is possible to simply omit any reference to the report in any disclosure made. However, the law does not provide a blanket exemption to such reports, and where any investigation has concluded, a duty to include such a report could arise.

20.139 The AMLGN provides that where a report has been made, unless there is evidence to the contrary, the disclosure is likely to prejudice an investigation, and should not be made. Where such disclosure is made the data processer could be guilty of tipping off. In deciding whether any item is exempt from disclosure, the data processor may have regard to the fact that such disclosures are confidential in nature, and that although the disclosure might not itself provide evidence of criminal conduct, it may form part of a larger jigsaw of evidence in relation to a particular crime. Thus, apparently stale disclosures may in fact have the protection of the exemption, but it is clear that each request for personal data which has potential tipping off implications should be considered very carefully. The AMLGN also stresses that in each case the data processor should provide as much information as they can in response to a request.

202 Data Protection Act 2004, s 14.203 Data Protection Act 2004, s 19.


Confiscation orders under the DTA and C(MLP)A 20.146

709

confIscatIon orders under the dta and c(mLp)a

20.140 When a person is being sentenced under the DTA for a drugs trafficking offence, on the application of the prosecutor or on its own initiative, a court will first determine whether the defendant has benefited from drugs trafficking. There are detailed provisions on how this assessment should be carried out. The court will then go on to make a confiscation order. The amount to be confiscated is the value of the defendant’s proceeds of any trafficking. These powers are exercisable by the Supreme Court before sentencing.

20.141 The C(MLP)A has a similar provision for confiscation, but the court can only apply this when the prosecutor has been given written notice of the court to the effect that it appears that for the court to consider it ought to make such an order, it would be able to make an order requiring to the offender to pay at least £10,000.

20.142 Both the DTA and the C(MLP)A contain provision for the enforcement of foreign confiscation orders, provided that the orders are made by countries designated by the Governor. The Governor has made such a designation of various countries whose confiscation orders Gibraltar will enforce.204 The countries covered include the United Kingdom, Jersey, Guernsey and the Isle of Man, the US, Italy Spain and Switzerland.205 No such order has been made under the Crime (Money Laundering and Proceeds) Act 2007.

20.143 The DTA also allows a prosecutor to apply to the court for a restraint order prohibiting a person from dealing with any realised capital or property. The DTA provides that a restraint order can only be made if proceedings have been instituted against the defendant. There are similar provisions in relation to the C(MLP)A.

20.144 There is also provision for charging orders to be made to secure payment confiscation orders made or to be made under the DTA. There are similar provisions in the C(MLP)A.

20.145 The TA makes detailed provision for forfeiture of terrorist property by order of the Supreme Court, and for restraining any dealings in terrorist property. An order restraining dealings can be applied for on the institution of proceedings or as soon as an investigation is begun.206 The court may order forfeiture of any property or money found on the defendant’s person, and any property or money which the defendant has cause to suspect might be used for terrorism, or to which an arrangement for terrorist financing relates.

20.146 Under the anti-terrorism regime, intelligence may be given to other authorities with the consent of the person giving the information, provided

204 Drug Trafficking Offences Act 1995 (Designated Countries and Territories) Order 1999.205 For an exhaustive list, see Gibraltar Gazette, 2nd Supplement, Legal Notice No 111 of 1999.206 TA, ss 5–8.


20.146 Gibraltar

710

that they hold the information only as a servant or agent of another person, and that other person must also consent. Furthermore, information may be given to officers of the governments of the United Kingdom, Isle of Man, Channel Islands or various other British overseas territories authorised by the order to request information. The Governor may disclose intelligence to any organ of the United Nations or to the government of any country for the purpose of assisting the United Nations or that government in securing compliance with, or detecting evasion of, measures related to terrorism decided on by the Security Council of the United Nations.

20.147 Finally, the information may be disclosed for the purpose of instituting or continuing proceedings relating to terrorism in Gibraltar, and in the other territories mentioned above.

20.148 In relation to drugs trafficking, information can be obtained by a foreign court or investigating authority to which the application of the Vienna Convention has been extended on request to the Attorney-General, who will designate a court in Gibraltar to receive the evidence, if the offence subject to the proceeding or investigation is a drugs trafficking offence.

20.149 The C(MLP)A is silent as to what use can be made of the information. The AMLGN comment that only the information contained in any report submitted to the GFIU, and not the reports themselves, may be allocated to police or customs officers, for investigation only. An investigation will be mounted which will seek to obtain admissible evidence of criminal activity. The evidential material may be sought from the institution which made the disclosure by way of court order. In the event of prosecution, the source of the information will be protected. There is no mechanism for passing the information to the tax authorities, either in Gibraltar or overseas, under the C(MLP)A. Access to the information contained in disclosures is restricted to designated officers within the Royal Gibraltar Police and HM Customs Gibraltar. Whilst other officers may be involved in subsequent investigation, the original information is restricted to GFIU and these designated officers.

the future

20.150 Gibraltar has well-developed and modern anti-money laundering legislation implemented as required by EU Anti-Money Laundering Directives.207

20.151 Most of the few remaining concerns highlighted by the IMF have been or are being adequately dealt with in the short to medium term. The bureaux de change and money transmitters in particular are now the subject of increased

207 Council Directives 91/308/EEC and 2001/97/EC.

20.146


The future 20.151

711

supervision following the enactment of legislation whereby such entities are licensed and supervised by the Financial Services Commission.208 It is possible that consolidated legislation will be enacted so that the legislative regimes dealing with the prevention of the financing of terrorism and of the money laundering of the proceeds of drug trafficking and other crimes will soon all be covered by one statute.

208 Financial services (Investment and Fiduciary Services) Regulations 2008


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