Andrew Lyman, Gibraltar’s Chief Commissioner for Gambling, has stated that his department is committed to helping the government remove the British Overseas Territory from the Financial Action Task Force‘s (FATF) ‘greylist’ – ‘in the quickest of time possible’.
The statement was made to delegates attending the KPMG Gibraltar e-Gambling Summit this morning, in which Lyman detailed his surprise at the FATF’s decision to brand Gibraltar as a high-risk AML jurisdiction.
Addressing ‘lurid and skewed media headlines’, Lyman stood up for Gibraltar asserting that “there are no fundamental, systemic, AML/TF weaknesses in this jurisdiction and Gibraltar now has a strong AML and TF system which makes the greylisting decision more difficult to cope with”.
From his own interpretation of FATF’s rulings, Lyman stated there are only two action points to address on ‘successful confiscation cases’ (a subject of law and police) and supervisors imposing proportionate and effective sanctions where appropriate.
Highlighting the latter action point, that has led to Gibraltar being subject to enhanced FAFT monitoring, he outlined a spotlight has been placed on the ‘efficacy of gambling supervision in the jurisdiction’ and the imposition of appropriate sanctions.
Lyman stood by the Gambling Commission’s track-record on supervising ‘high-risk’ gambling businesses, stating his opinion that had the FATF accepted that the range of sanctions imposed by the Gambling Division in the post-observation period were effective and proportionate. “It may be that Gibraltar would not have been placed on the greylist at all. That is my perception,” he noted.
Accepting the FATF’s decision, Lyman underscored that the Gambling Commission and Gibraltar authorities were committed to maintaining the Moneyval and FATF’s processes that have been fully embraced by the jurisdiction.
He said: “This is the shortest action plan for any grey-listed jurisdiction and a different outcome may have been to return Gibraltar to Moneyval enhanced monitoring; as happened with the Isle of Man. Unfortunately, this alternative was not adopted.”
Irrespective of FATF demands, Lyman stated that the Gambling Commission had already transitioned to a more structured programme supervising Gibraltar-licensed gambling companies.
Currently, the Gambling Commission is supported by a “transparent risk assessment process, a structured site visit programme, a revised our guidance on AML and 4 TF and committed to professional development in this area”. “We are not seen as a weak point in the supervisory structure,” Lyman affirmed.
Casework undertaken between 2020-2022 saw the Commission reach six regulatory settlements (with five operators) including financial elements totalling £3.7m. All settlements required parties to undertake an independent third party or internal audit reviews and further licence requirements were imposed on senior management.
However, in light of FATF observations on actions required, Lyman stated that “what we are struggling to rationalise is that in setting out to achieve the action point relating to sanctions”.
“There has been no criticism of the quantum of the sanctions; so we must assume the issue is frequency, range, consistency and/or proportionality in the context of the FATF’s perception of the risk posed by this sector.”
“The system allows for structured subjective evaluation of effectiveness and as the FATF is an international governmental body without legal form, there are no grounds for judicial or quasi-judicial appeal; if this was even contemplated.”
Previous settlements issued by the commission were attributed to ‘operator shortcomings’ that had ‘reached the enforcement threshold’, with the Commission’s enforcements reflecting Gibraltar’s structured approach taken from the EC’s Financial Intelligence Unit (FIU).
The Commission presented evidence to the FAFT during the evaluation process and stated that it had dealt with any reservations on the proportionality of sanctions against gambling firms.
Lyman noted that as a jurisdiction that serves as a financial centre for a significant segment of the gambling sector, Gibraltar had been held to a standard that is exacting.
“Certainly we present zero risk to the UK, our biggest gambling market, as our UK facing firms are dual regulated, EU business is not conducted from Gibraltar and ROW jurisdictions are protected by our developed regulatory regime, where their domestic digital gambling supervisory regimes are underdeveloped or non-existent.”
Dealt its hand, Gibraltar’s Gambling Commission will ‘assault the summit again’ and prove that it is a robust regulatory regime. Yet, Lyman outlined that it would not “artificially adapt standards to accommodate enforcement cases.”
Standing firm, the Commission will bring forward some onsite visits which may not have been anticipated until a later date and may require operators to provide further data to complete a conduct effectiveness survey.
“I do not see the objective as imposing more sanctions per se, but proving out the overall effectiveness of our regime and imposing sanctions where necessary and in a proportionate manner,” Lyman added.
“There will be those who question whether the Government or its agents in this process could have done better or presented the case better.
“All I can say is that because of the professionalism of the core team that has worked tirelessly on Moneyval/ FATF issues, Gibraltar is far from bearing the hallmarks of an archetypal ‘grey list’ jurisdiction and is in many respects a flagship jurisdiction for the way it has massively improved its AML and TF systems in a difficult period for all jurisdictions.
“I am determined to see a successful outcome in this area over the line, but in a fair and balanced way. This is a mutual evaluation process and we would expect the FATF to be as equally supportive of Gibraltar as we are of it in difficult and challenging circumstances.”