Financial Crime World

Gibraltar Regains Reputation as Global Financial Hub after EU Removes High-Risk Status

In a notable development, the European Union (EU) has removed Gibraltar from its list of high-risk third countries. This recognition comes following Gibraltar’s enhancement of financial regulatory controls. Previously, Gibraltar was flagged for strategic deficiencies in anti-money laundering (AML) and countering the financing of terrorism (CFT) protocols.

EU’s High-Risk List: What It Means for Gibraltar

  • December 2017: Gibraltar placed on the EU’s high-risk list
  • Grey List: Increased monitoring following FATF’s identification of necessary improvements
  • January 2024: Gibraltar reclassified as a compliant jurisdiction by FATF
  • March 2024: Gibraltar removed from the EU’s high-risk list

Gibraltar’s designation as a high-risk country in December 2017 raised concerns about its commitment to financial transparency and regulatory compliance on a global stage. The EU’s evaluation was based on the Fourth Anti-Money Laundering Directive (4MLD). This Directive grants the European Commission the authority to list countries as high-risk if they present deficiencies as identified by the Financial Action Task Force (FATF). A high-risk labeling can adversely impact financial transactions and discourage investors.

Gibraltar’s Response

In response to such concerns, Gibraltar implemented measures to strengthen its regulatory framework:

  1. Customer Due Diligence: Enhanced customer due diligence processes
  2. Identity Verification: Implemented rigorous identity verification procedures
  3. Extensive Risk Assessments: Demanded financial institutions to conduct more extensive risk assessments
  4. International Cooperation: Bolstered international cooperation with law enforcement bodies worldwide

FATF’s Acknowledgment and EU’s Action

Gibraltar’s efforts to address the concerns raised by the EU did not go unnoticed. In February 2024, the FATF reclassified Gibraltar as a compliant jurisdiction. Following the FATF’s action, the European Commission removed Gibraltar from the high-risk list in March 2024.

Positive Implications

This reclassification is expected to have a positive impact on Gibraltar:

  • Investor Confidence: Boosts investor confidence in Gibraltar’s financial market integrity
  • Administrative Processes: Streamlines administrative processes linked to financial transactions involving Gibraltar-based entities
  • Trusted Financial Centre: Reinforces Gibraltar’s reputation as a trusted financial centre.