Financial Crime World

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Gibraltar Combats Terrorist Financing with EU-Led Regulatory Shift

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Gibraltar is set to adopt a comprehensive package of legislation presented by the European Commission aimed at strengthening anti-money laundering and countering terrorism financing rules. The proposed changes aim to improve processes for detecting suspicious transactions and activities, closing loopholes exploited by criminals.

Key Components of the EU AML Package

The EU Anti-Money Laundering (AML) package includes:

  • Proposal for a Regulation Establishing the Authority for Anti-Money Laundering and Countering the Financing of Terrorism: This proposal aims to establish a new regulatory framework for anti-money laundering and countering terrorism financing.
  • Proposal for a Regulation on the Prevention of the Use of the Financial System for Money Laundering and Terrorist Financing (AML Regulation): This regulation will unify the regulatory framework through an AML Rulebook, enhance supervision of obliged institutions, and make changes to the EU high-risk countries list.
  • 6th Directive on AML/CFT: This directive will replace the existing 4th Directive 2015/849/EU and introduce several significant changes, including the establishment of a new EU Supervisory Authority with enhanced competences.
  • Amendment to the Regulation 2015/847 on Information Accompanying Transfers of Funds: This amendment aims to improve processes for detecting suspicious transactions and activities.

Major Changes Introduced by EU AML Package

The EU AML package introduces several significant changes, including:

Establishment of a New EU Supervisory Authority

  • The new authority will have enhanced competences to supervise obliged institutions and detect suspicious transactions.
  • Direct supervision will begin in 2026 when the Authority reaches its target number of employees.

Unification of Regulatory Framework through AML Rulebook

  • The AML Rulebook will provide a comprehensive framework for anti-money laundering and countering terrorism financing.
  • This change aims to unify the regulatory framework across the EU.

Enhanced Supervision of Obliged Institutions

  • The new authority will have enhanced competences to supervise obliged institutions, including financial institutions and other organizations subject to AML regulations.
  • Enhanced supervision will help detect suspicious transactions and activities more effectively.

Practical Consequences of Implementing the EU AML Package

The implementation of the EU AML package is expected to have several practical consequences, including:

Impact on Polish AML Act

  • The AML Regulation will impact the Polish AML Act in force.
  • Financial institutions and other organizations subject to AML regulations in Poland will need to adapt their internal documentation, procedures, and whistleblowing mechanisms.

Changes to Internal Documentation, Procedures, and Whistleblowing Mechanisms

  • Financial institutions and other organizations subject to AML regulations will need to update their internal documentation, procedures, and whistleblowing mechanisms.
  • This change aims to improve processes for detecting suspicious transactions and activities.

Predicted Costs for Financial Institutions

  • The implementation of the EU AML package is expected to incur costs for financial institutions, including training, technology upgrades, and staff increases.
  • These costs will be borne by financial institutions and other organizations subject to AML regulations.

Timeline for EU AML Package Implementation

The Authority is expected to be established by 2023, with most of its activities starting in 2024. Direct supervision will begin in 2026 when the Authority reaches its target number of employees. The entire EU AML package, including the AML Regulation, is expected to be in force three years after adoption.

Gibraltar’s move to adopt the EU AML package reflects a paradigm shift in regulatory approach to combat financial crime, with a focus on strengthening anti-money laundering and countering terrorism financing rules.