Gibraltar
Banking
Banking
in Gibraltar is regulated by the Financial Services
Commission
under The Banking Ordinance 1992. A substantial
amount of subsequent legislation has kept Gibraltar
up with current EU regulatory standards. See
Offshore Legal and
Tax Regimes and Law
of Offshore for further details of the
regulatory regime and of the offshore taxation
regimes for banks.
Under
EU 'common passport' legislation any branch
of an authorised EU bank may establish itself
in Gibraltar subject only to notification procedures.
Likewise a Gibraltar-licensed bank may set up
branches elsewhere in Europe. Most of the twenty
banks established in Gibraltar are branches
of major UK, European or US banks. Gibraltar-registered
banks have three branches elsewhere in Europe.
The
minimum capital required for the issue of a
banking license in Gibraltar is Euros 5m, in
line with EU requirements, and the supervisory
regime follows EU and Basle Committee guidelines.
In considering the issue of a banking license,
the Commission applies a number of guidelines,
many of which are set out in Law
of Offshore.
The
banking sector is well established in Gibraltar
in both the offshore and local market with assets
in the vicinity of GŁ8.3 billion. The advantages
of offshore banking in Gibraltar include its
favourable tax status, the lack of exchange
controls, excellent communications, stable government,
and EU membership. Much of the banking activity
in Gibraltar is directed to asset management
for high-net-worth individuals, not least because
Gibraltar has tried hard to attract such people
with special tax regimes. See Personal
Taxation for details of these schemes.
Under the Deposit Guarantee Scheme Ordinance,
1997, a deposit protection policy was put into
effect in 1999 by the Gibraltar Deposit Guarantee
Board in line with EU directives in this area
(see Law of Offshore).
An
annual licence fee of G£5,000 (at the
time of writing) is payable by banks in Gibraltar.
In
January 2004, Chief Minister, Peter Caruana
launched the Gibraltar Association of Compliance
Officers. The Association, which agrees upon
compliance standards and duties, offers training
programmes, and provides a forum for compliance
officers to share their expertise, was established
to fill the gap left by the UK's Compliance
Institute, which in 2003 announced that it would
only be offering support to members based in
the United Kingdom.
As
the finance industry continues to implement
tougher "Know Your Customer" requirements in
the wake of global initiatives, the role of
the compliance officer has become increasingly
important, Trevor Nicholls, chairman of the
steering committee behind the Association explained:
"Where in the old days compliance was in effect
a "part-time" duty carried out by someone in
middle management, most major financial service
firms now have at least one - and sometimes
more - qualified professionals doing the work
full-time. Not everyone realises that 'due diligence'
and KYC are only a small part of the compliance
function. Part of the problem, even among compliance
officers, is that everyone has a different concept
of what compliance is and what their duties
are."
In
June, 2004, Gibraltar’s Criminal Justice Ordinance
(1995) was amended to adopt into local law a
European directive designed to prevent money
laundering in the financial system. The provisions
of the amendment created an offence of failing
to disclose information to the police where
a person has knowledge that money laundering
is taking place, and put in place a ‘good faith’
requirement if a disclosure is not to be treated
as breach of confidentiality.
In
March, 2006, a team of International Monetary
Fund personel arrived in Gibraltar to conduct
an investigation into the workings of the jurisdiction's
financial system. The ten-strong IMF team focused
their investigation on the banking and insurance
sectors.
The
object of the review was to measure Gibraltar's
laws against 49 principles designed to protect
financial centres against money laundering and
terrorist financing. The last such IMF investigation
in Gibraltar took place five years previous.
The
conclusions of the IMF review were published
in May 2007, and endorsed Gibraltar’s
robust regulatory environment, according to
the jurisdiction's government.
TheIMF
team conducted an extensive review of the Financial
Services Commission’s regulatory and supervisory
practices in the fields of Banking and Insurance,
as well as a jurisdiction-wide review of the
Anti-Money Laundering and Terrorist Financing
Regime, which also included the FSC, as well
a large number of enforcement agencies and Government
Departments.
In
all three areas Gibraltar was found to be meeting
international standards, and was found to be
ahead of many onshore - and much larger - finance
centres.
However,
the report made a number of recommendations
for further improvements, which were accepted
by the government and the FSC. The government
said that most of these had already been identified
and were being actioned.
