Financial Crime World

Gibraltar Makes Significant Reforms to Address Deficiencies in Beneficial Ownership Requirements

The Financial Action Task Force (FATF) has re-rated Gibraltar as “LC” for Recommendation 24 and “C” for Recommendations 25 and 26, following significant reforms aimed at addressing deficiencies in beneficial ownership requirements.

Background

As of the fifth round Mutual Evaluation Report (MER), Gibraltar was rated “PC” for several recommendations, including Requirements 24 to 26. The deficiencies identified included:

  • Lack of adequate records on beneficial owners (BOs) held by trusts governed under foreign law
  • Absence of sanctions for non-compliance with record-keeping requirements

Reforms

To address these shortcomings, the Gibraltar authorities have carried out a series of amendments to the Regulatory Bodies Oversight Regulations (RUBOR) and the Trustees Act. Key reforms include:

  • New Section 61(2) of the Trustees Act: Requires trustees to hold basic information on all entities providing services to trusts.
  • Amendments to Regulation 12(1A) RUBOR: Now applies to express trusts as well as corporate and legal entities.
  • New Section 61B of the Trustees Act: Requires trustees to disclose their trustee status to relevant financial businesses.
  • Amendments to Regulations 42 and 45 of RUBOR: Ensure adequate civil and criminal sanctions for specified persons who fail to comply with record-keeping requirements.
  • New Section 62A of the Trustees Act: Provides safeguards against misuse of flee clauses.

Outcome

These reforms have addressed all deficiencies identified in the 2019 MER. As a result, Gibraltar has been re-rated as “C” for Recommendations 25 and 26.

New Financial Services Act (FSA) 19

The new FSA 19 has consolidated EU and local legislations related to financial services, introducing a Regulated Individuals Regime that requires pre-appointment approval from the Gibraltar Financial Services Commission (GFSC) for individuals responsible for certain functions within firms. Section 131 of the FSA Act specifically targets controllers and their beneficial owners.

Conclusion

The reforms demonstrate Gibraltar’s commitment to addressing deficiencies in its beneficial ownership requirements, ensuring greater transparency and accountability in the financial sector.