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Gibraltar 'largely compliant' on implementation of Recommendation 15 by FATF Members and Jurisdictions with Materially Important VASP Activity

In a recently published update on compliance with Recommendation 15 by FATF members with Materially Important VASP Activity, Gibraltar is one of 22 members (of 58 listed, only 45 of which were deemed to have materially important VASP activity) to be considered ‘largely compliant’.  

The FATF explained the basis for publishing the table by saying: “Virtual assets are inherently international and borderless, meaning a failure to regulate VASPs in one jurisdiction can have serious global implications. This is particularly concerning given emerging trends in this space.”

The focus on FATF members reflects the importance for them to take a leading role on AML/CFT and on those with materially important VASP activity reflects a risk based approach to addressing the inherent risks of services, products, and customers. This approach aims to address the global nature and risks inherently posed by virtual assets while recognising that jurisdictions should consider all AML/CFT risks and regulatory gaps in their individual jurisdictions. Jurisdictions should thus prioritise implementing the FATF standards for virtual assets based on such risks. ”

The determination on ‘materially important VASP activity’ was based on the criteria set out by the FATF in its update. “This table of jurisdictions with materially important virtual asset service provider (VASP) activities includes all FATF members (by virtue of their membership of FATF) plus 20 non-FATF member jurisdictions which host materially important VASP activities. This section sets out the basis on which the latter 20 jurisdictions were identified. The FATF used a methodology adopted at the June 2023 Plenary as the basis for the Table."

This uses the following two criteria:

• Jurisdictions with materially important VASPs, based on trading volume (over 0.25% of global trading); and/or 

• Jurisdictions with a large virtual asset user base (over 1 million users). In total, 20 non-FATF jurisdictions met the criteria for inclusion: 11 non-FATF jurisdictions met the first criterion (trading volume), 5 met the second criterion (user base), and 4 met both criteria."

Having led the way in the development of a regulatory environment for digital assets in 2018 with the establishment of DLT specific regulations, as well as the VASP registration framework, the determination by the FATF of Gibraltar's ‘largely compliant’ status is an acknowledgement of the work and determination of stakeholders in the development of this, objectively determined, materially important aspect of the economic output of Gibraltar.  

Gibraltar's stakeholders have been and remain committed to ensuring the highest standards in the delivery of financial services on distributed ledger technology, and look forward to continuing to explore the growing opportunity of access to international markets, as regulation in the space matures to meet demands of business and consumers alike.  

Many countries have yet to fully implement the FATF’s requirements on virtual assets and virtual asset service providers to prevent their misuse for illicit finance. The lack of implementation of these requirements (Recommendation 15) leaves significant loopholes globally, that criminals and terrorists exploit.

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