Financial Crime World

FINANCIAL CRIME TRENDS 2023 IN GIBRALTAR: A REGIONAL REVIEW

Regional Overview

The European region has seen its fair share of financial crimes in recent years, with countries like Albania and Gibraltar still on the Financial Action Task Force’s (FATF) watchlist for strategic deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing.

Country-Specific Concerns

Albania

  • Corruption, organized crime networks, and weak legal and government institutions make Albania vulnerable to money laundering.
  • The FATF has expressed concerns over the failure to complete its action plan.

Gibraltar

  • The gambling sector has been flagged by authorities for anti-money laundering failings.
  • An action plan consisting of just two points is expected to be implemented in 2023.

Global Impact

The invasion of Ukraine by Russia brought anti-money laundering into sharp focus last year, prompting major Russian banks to be excluded from the financial system and economic sanctions to be imposed. New legislation like the UK’s Economic Crime Bill was also fast-tracked, warning statements were published in response to the threats presented to the international financial system.

Emerging Risks

Artificial Intelligence-Based Tech Solutions

  • Compliance teams should conduct renewed risk assessments, gap analysis, and ongoing due diligence.
  • AI-based tech solutions and automation can help close these gaps and facilitate ongoing compliance.

Corporate Sustainability Due Diligence Duty

  • The European Commission’s proposed new legislation establishes a corporate sustainability due diligence duty to address negative human rights and environmental impacts.
  • This directive is now formally being enacted and implemented.

Regulatory Developments

German Supply Chain Diligence Act

  • Came into effect on January 1, 2023, requiring large companies to ensure social and environmental standards are observed in their supply chain.
  • Organizations must assess the actual and potential impact of shortcomings, act on their findings, and effectively address the impact.

Mitigating Emerging Risks

Due Diligence Limitations

  • Data availability can be a limitation when conducting due diligence.
  • A long supply chain can incur high costs.

Consultation with Global Advisory Experts or Third-Party Compliance Software

  • Essential for organizations to identify, mitigate, and respond to emerging risks.

FinTech Developments

Digital Finance Package

  • Introduced by the European Commission in 2020 aimed to regulate the risks while supporting digital transformation.
  • The Markets in Crypto-Assets Regulation (MiCA) is expected to come into force in early 2023 and take effect in 2024.

Synthetic Identify Fraud (SIF)

Growing Threat

  • One of the fastest-growing types of financial crimes and predicted to continue in 2023.
  • Artificial intelligence, machine learning, and deep learning technology applications are being used by criminals to modify or construct video, images, and audio.

Combating SIF

  • Organizations should request and verify more information beyond just the basics such as utility bills and ID documents.
  • Incorporating AI software into compliance programs can help identify subtle and nuanced patterns of suspicious behavior.