Gibraltar has been added to the Financial Action Task Force's (FATF) greylist, as the watchdog confirms that fellow gambling licensing hub Malta has been removed.
Lenient punishment and lax oversight of gambling companies was cited by FATF as key reasons why Gibraltar has joined the register of regions with a high risk of money laundering.
Gibraltar becomes just the second EU jurisdiction to be added to the greylist in its 21-year history. The first, Malta, moved off the list on Friday (June 17) after officials cited improvements in its anti-money laundering (AML) standards.
“Gibraltar needs to take a number of steps, including focusing on gatekeepers to the financial system, in particular gambling operators and lawyers,” said FATF president Marcus Pleyer on Friday.
In particular, regulators were chastised for not handing out harsh enough punishments for breaches of AML rules.
“At the moment supervisors are not issuing proportionate fines or penalties for money laundering or terrorist financing breaches,” said Pleyer.
“Supervisors need to start doing that, including using financial penalties where appropriate. This is important because the gambling sector is large in Gibraltar and is aimed at foreign clientele,” he said.
In December, a report by MONEYVAL found that Gibraltar had made good progress in building a strategy to fix its financial regulation, but FATF says there is not enough evidence that policies have been properly enacted.
“Gibraltar should work on implementing its action plan,” said FATF in its official comments.
Malta, which entered the greylist in June 2021, was removed on Friday, with Pleyer telling the Times of Malta that the country had made “significant progress” and passed an inspection in April of this year.
“This doesn’t mean there isn’t more work to do,” he added.
FATF said Malta had stepped up “detection of inaccurate company ownership information and sanctions on gatekeepers who fail to obtain accurate beneficial ownership information, as well as the pursuit of tax-based money laundering cases utilising financial intelligence”.
“The greylist lifting brings Malta back its degree of credibility, while diffusing inherent scepticism at both operational and investor level,” said Russell Mifsud, a partner with KPMG in Malta.
“Transitioning back to the white-list gives Malta the opportunity to come back stronger than it has ever been. This, in turn, should provide industry stakeholders who call Malta home with a tangible benefit going forward,” he said.
“Malta’s challenge will be to maintain the rigorous standards it has committed to, while remaining business-friendly and sustainable when compared to other competing jurisdictions,” said Mifsud.
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