Gibraltar Atlantic Suites

Financial Services: Regulatory Framework and Licensing

Most classes of financial services businesses in Gibraltar require licensing by the FSC in accordance with the regulatory framework.

The following are the Supervisory Acts established under the Financial Services Commission Act:

The Financial Services (Investment and Fiduciary Services) (Temporary Administration of Companies) Act 2010 Regulations, including detailed rules on Conduct of Business, have been issued under the various acts The FSC is a statutory corporation comprising eight members, including the chief executive officer. The work of the commission is subject to independent audit by experts appointed by the minister responsible for financial services.

The chief executive officer is also responsible for the supervision of banks and insurance companies under the requirements of the corresponding acts. The commission personnel include individual supervisors for banking and investment services, insurance and controlled activities.

The Financial Services (Licensing) Regulations, 1991 issued under the Financial Services (Investment and Fiduciary Services) Act, lists several categories of financial services business and activities that require licensing (licensable activities). These are shown in the table below.

Class Description Financial Services Business
i Investment dealer Dealing in investments
ii (a) Investment broker Arranging deals in investments
ii (b) Collective investment scheme intermediary Arranging deals in investments
iii Investment Manager Managing investments
iv Investment Adviser Investment Advice
v (a) Collective investment scheme manager Establishing, acting as the manager of, or as operator of, or winding up a collective investment scheme
v (b) Collective investment scheme depository Acting as the trustee of a unit trust scheme or the depository of any other collective investment scheme
v (c) Collective investment scheme administrator Acting as the administrator of a collective investment scheme
vi (a) General insurance intermediary Insurance or reinsurance mediation
vi (b) Life assurance intermediary Insurance or reinsurance mediation
vii Professional trustee Acting as trustee of soliciting such business
viii Company manager Provision of management and/or administrative services for companies
ix Insurance manager Exercising management or advisory functions in relation to one or more insurer or reinsurer
x Stock exchange Establishing and conducting the business of an investment exchange
xi Clearing house Establishing and conducting the business of a clearing house
xii Bureau de change Providing money service business activities of bureau de change
xiii, xiv Provision of payment services Providing money service business activities of money transmitter

In May 2007, the International Monetary Fund (IMF) published its report on the assessment of Gibraltar’s financial sector supervision and regulation. The assessment was carried out by a team of nine individuals from the IMF during March 2006, and it looked at FSC’s supervisory and regulatory practices in the areas of banking and insurance as well as a jurisdiction-wide review of the anti-money laundering and terrorist financing regime.

The report concluded that Gibraltar has a well -regulated financial sector and noted a high level of banking and insurance supervision, compliance with applicable international standards and a high level of compliance with the revised Financial Action Task Force (FATF) recommendations on the prevention of money laundering and combating terrorist financing.

Other External Review

During 2004, an independent team, comprising four financial services regulatory consultants and three secondees from the UK Financial Services Authority, was appointed by His Excellency the Governor under the Financial Services Act 1989 (now replaced by the Financial Services Commission Act 2007). The team assessed the supervisory activities of the FSC and was the third independent review commissioned.

The team’s report published in January 2005 emphasized the good standard of financial services regulation achieved by the FSC in Gibraltar, its clear commitment to meeting international standards, determination to tackle the risks faced and implementation of a high-quality regulatory regime in the context of the Gibraltar market. Further endorsement of Gibraltar’s regulatory regime is evidenced by the FSC’s acceptance as a member of the International Organisation of Securities Commissions (IOSCO) in April 2005.

More recently, the commission’s regulatory processes and supervisory procedures on banking activities are being assessed against the proposed revised Basel Core Principles and the revised IOSCO principles. Gibraltar’s “Know Your Customer” rules and procedures (and anti-money laundering laws and regulations in general) were reviewed and approved by the US Internal Revenue Service for the purposes of Qualified Intermediary status in October 2002. The Qualified Intermediary status enables banks to continue investing in U.S. Securities on behalf of their clients.