Monday, August 22, 2005

Interview with Head of FSC and spokesman for GFIU on Money Laundering

Interview with Marcus Killick, Head of the Financial Services Commission (FSC) and a spokesman for the Royal Gibraltar Police's Financial Intelligence Unit (GFIU).

Q1. Can you explain how Gibraltar’s anti-money laundering system works from the moment the FSC receives a complaint onwards?

I think there is a slight misunderstanding of the role of the FSC. We do not receive reports of suspicions of money laundering. That is the job of the Gibraltar Financial Intelligence Unit (GFIU). This is an independent body manned by Royal Gibraltar Police (RGP) and Customs officers.

We do have a legal duty to report to the GFIU any suspicions we have, and this we do.

Q2. How many allegations of money laundering and alleged fraud involving locally registered companies have been reported to the FSC in the past three years?

As mentioned above, we are not the reporting authority, this is the GFIU. They will have the relevant figures.

Q3. How many of these have resulted in actual police investigations whether locally or in an originating jurisdiction?

Reply as per Q2.


Q4. Whose job is it to enforce the law in Gibraltar in terms of anti-money laundering regulations?

The Police and Customs.

The role of the FSC is to monitor compliance with the anti-money laundering systems implemented by those we licence as outlined in the Anti-Money Laundering Guidance Notes (AMLGNs) which we publish.

If the requirements of the AMLGNs are not met we have the capacity to take the necessary enforcement action.

Q5. There are qualified voices in Gibraltar who state that there is a difference between having a state of the art anti-money laundering legislative framework as we do, and the practical enforcement of the legislation. It has been pointed out that there is a total absence of prosecutions / cancellations of Financial Services licences, which might give rise to doubts of how rigorously the law is being enforced. Can you comment on this?

Such views are based upon a misunderstanding of the position.

Gibraltar’s risk to the threat of money laundering does not primarily come at the point that cash from crime enters the financial system. Our main threat is of being used as part of the process of hiding the source of the money after it has entered the financial system, for example via a bank in another country.

This process is known as integration. (Sometimes this integration occurs through the use of trusts and companies). Because integration often occurs away from the jurisdiction where the criminal is located, to further confuse any attempt to trace the asset flow, this means that the criminals themselves are normally based outside Gibraltar.

Gibraltar’s role is therefore one of helping the jurisdiction where the original crime took place in seeking to recover the money laundered or prosecute the launderer. This is done through cooperation with that jurisdiction in obtaining any necessary information or evidence available in Gibraltar.

For this reason one would not expect many money laundering prosecutions to occur here.

In respect of the FSC, we check the anti-money laundering systems of those we regulate through on-site processes effected by our own staff. Indeed, we have required some firms to improve their anti-money laundering procedures and followed up that such improvements are made.

If we have not revoked a licence, it is because we have not had to.

It should also be noted that in the UK the FSA, with far more regulated firms has revoked virtually no licences as a result of Anti-Money Laundering (AML) breaches.

Q6. Why are statistics on money laundering cases, arrests etc not made public regularly by the authorities?

That is not a matter for us to comment on, it is a policy decision for the GFIU and the Government of Government.

Q7. What intelligence is kept to monitor persons who suddenly appear to amass great wealth and property without reasonable explanation? Who monitors this?

That is a matter for the Royal Gibraltar Police and Customs.

Q8. Do you think it is Gibraltar’s patriotic duty to defend the finance centre against criticism from outside whatever the circumstances?

The FSC will respond to unjustified criticism of the regulatory system, including that relating to AML. However there is always room for improvement and the FSC will not close its ears to legitimate criticism.


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Reply to Questions by Gibraltar Government Spokesman:

Q1. Can you explain how Gibraltar’s anti-money laundering system works from the moment the Gibraltar Financial Intelligence Unit. (GFIU) receives a complaint onwards?

It starts off the moment the GFIU receives a Suspicious Activity Report (SAR). SARs are also known as disclosures.

Under Gibraltar’s anti money laundering laws any organisation, professional or individual person is obliged to disclose to the GFIU any financial transaction or attempted transaction which they know or suspect represents the direct or indirect proceeds of drug trafficking or other criminal conduct.

When a SAR is received at the GFIU it is initially analysed by its staff. This would normally entail checking our database for any related information and conducting open source checks (mainly via internet) which may reveal status and personal information on the person or organisation reported on, newspaper reports etc etc.

GFIU also has access to Interpol’s databases which are also routinely checked. This initial process may also entail soliciting further information or clarification from the entity making the disclosure.

If after this process the disclosed information is deemed to fall under Gibraltar’s anti-money laundering laws and depending on the disclosure’s individual circumstances it can be allocated to the RGP or Customs Gibraltar for further investigation or simply for information.

Alternatively if the disclosure refers to people or organisations outside Gibraltar it can be sent to the relevant foreign FIU or information requested of them.

Q2. How many allegations of money laundering and alleged fraud involving locally registered companies have resulted in investigations by the GFIU both locally and overseas in the past three years?

This is difficult to quantify.

Criminal investigations can, by their very nature, take weeks, months or even years to result in arrest and conviction.

A disclosure may be the very first piece in a complex puzzle, or it may be the final piece which completes the picture.

In many cases the intelligence does not become relevant until a separate seemingly unconnected incident occurs.

The GFIU is obliged both by EU Law and the terms of membership of the Egmont Group (a worldwide association of FIU’s) to pass on intelligence (subject to certain criteria) either on request or spontaneously and regularly does so.

This intelligence has certainly assisted in some investigations and may possibly impact on some future investigations.

Q3. Whose job is it to enforce the law in Gibraltar in terms of anti-money laundering regulations?

These laws are enforceable by the RGP and Customs Gibraltar.

The Financial Services Commission also has certain powers of a regulatory nature in respect of the anti money laundering regimes applicable to licensed financial services firms.

Q4. Why are statistics on money laundering cases not made public by the authorities?

The RGP annually publishes its annual report containing statistics on all crimes reported.


Related Links:

Financial Services Commission (FSC)

Gibraltar Co-ordinating Centre for Criminal Intelligence and Drugs/Gibraltar Financial Intelligence Unit (GCID/GFIU)

Egmont Group List of world financial intelligence units (FIUs)

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