Gibraltar: Banking In The New Era Of Transparency

Greetings and welcome to summer in Gibraltar. Now it's not often that I do 'requests' in this column but I am making an exception this month. Cloti (although that's not her real name) and I were discussing my article in the April edition of this magazine, which was titled 'Digesting the alphabetti spaghetti of pensions'. "How it took me back," she said. Instinctively I asked if she was talking about the pasta, which immediately provoked a look of serious disdain. "No, I meant taking out my first pension," she retorted.

Cloti continued by saying she'd been in her twenties at the time and what a shame it was that young people were not doing the same thing these days. I corrected her, of course. There's nothing to stop today's twenty-somethings from starting to save for their retirement. Indeed with so many options available and with such a volatile economic outlook for the decades ahead, retirement planning is something to be highly recommended.

We went on to discuss the potential impact of new technologies on the job market and the prospects for home ownership in the years to come but Cloti had a bee in her bonnet. Not literally you understand. She related how during the process of opening a bank account recently, she had been asked for her TIN. Once it was explained that this referred to her Tax Identification Number, she told me she had "made her excuses and left". "No bank is going to get that information from me," she protested.

Silently I wished her good luck with any bank account or indeed similar process in the future. I tried to explain why the bank needed this information as part of its account opening process – or "on-boarding" to use the banks' vernacular. Cloti was clearly of the view that we should abide by different standards in Gibraltar; I was equally keen to reassure my friend that nothing could be further from the truth and that asking for a TIN is certainly not unique to the local market.

"So you mean, Gibraltar is just following the others then?" Well yes and no I said. While Gibraltar does indeed adhere to international standards, it is also now helping to draft them and, in many areas, it is right at the forefront. Cloti suggested that I might care to explain "these things" so that people like her "could be prepared" the next time they had dealings with their bank. "I mean how are we to know our FATF from our FATCA," she asked, "still less our TIN from our GIIN?" 

So here goes, dear Cloti. Let me try to straighten out some more of the 'alphabetti spaghetti' when it comes to banks needing to know more about their customers. None of this should come as a great surprise as I have been writing on these subjects for many years. But it might be useful to review just a few of the areas where Gibraltar is at the front of the field. Let's begin by looking at the often vexed question of confidentiality.

Generally, in all countries that follow English common law there is an implied duty for professional firms such as bankers, management companies and others to keep their clients' affairs confidential. In some places, this common law duty may be enshrined in local legislation that imposes criminal penalties on those who breach confidentiality – or who attempt to get others to do so.

Confidentiality, though, is very different from secrecy. In the past two decades there have a number of international initiatives – the most important I discuss below – that are designed to increase transparency. When fully implemented, these initiatives will see secrecy disappear completely but this will not concern companies whose arrangements are legally and fiscally compliant.

In April 2016, the UK, Germany, France, Italy and Spain announced a pilot scheme to exchange beneficial ownership information relating to "companies, trusts, foundations, shell companies and other relevant entities and arrangements". It will be exchanged "in a fully searchable format" and will include "information on entities and arrangements closed during the relevant year. The exchange is to operate as a pilot, during which participating economies will explore the best way to exchange this information with a view towards developing a "truly global common standard". Ultimately, the system should develop into one of "interlinked registries containing full beneficial ownership information".

This does not mean that international structures can no longer provide efficiencies. They can. Legitimate planning that utilises compliant structures has always been and remains effective. Expert advice is essential – not just to ensure the correct planning but also to demonstrate that care has been taken to achieve tax compliance.

Now on to some of that 'spaghetti'. Let's start with 'KYC', or Know Your Customer rules. As long ago as 1990, a group called the Financial Action Task Force (FATF) published a series of recommendations, which together are recognised as the international standard for anti-money laundering (AML) and combating the financing of terrorism (CFT).

Since the first draft, the FATF Recommendations have been revised to ensure that they remain up to date and relevant, and they are intended to be of universal application. That includes Cloti's bank, as well as most financial institutions around the world.

As a result, banks worldwide now have a legal duty to implement KYC procedures for all clients, new and old. Clients must expect to supply proof of identity, proof of residential address and references. They must also explain the source and business purpose for any substantial movement of funds. Compliance with these standards brings additional costs and inconvenience but is entirely unavoidable. KYC is now mandatory everywhere.

Let's move on to perhaps the hottest topic this summer – Automatic Exchange of Information or 'AEOI'. Originally agreed in 2013, this initiative was put in place by the Organisation for Economic Co-operation & Development (OECD) and is generally referred to as the Common Reporting Standard or 'CRS' for short. But what does it mean in practice?

CRS provides for annual automatic exchange between governments of financial account information, including balances, interest, dividends and sales proceeds from financial assets. Governments receive this information from financial institutions and it covers accounts held by individuals and entities, including trusts and foundations. The first information exchanges are taking place this year, with the remainder to follow in 2018.

Regular readers may recall me writing in the past about the US version of CRS known as the Foreign Account Tax Compliance Act or 'FATCA', which came into effect in 2014. It is designed to target non-compliance by US taxpayers using foreign accounts. Again, foreign financial institutions (FFIs) and certain other non-financial foreign entities are obliged to report information to the IRS, either directly or via their local revenue authority, about financial accounts held by US taxpayers, or held by foreign entities in which US taxpayers hold a substantial ownership interest.

I could go on. A further example is known as Base Erosion and Profit Shifting or 'BEPS' initiative under which companies doing business globally will be obliged to report their income and what taxes they have paid – but maybe that's for another day.

As someone who has been involved in business locally for many years, and who has also monitored the development of these various initiatives, there are a couple of points on which to end.

This is not some passing fancy – increased transparency and reporting are here to stay. Gibraltar is fully compliant with her obligations and that is rightly something to celebrate. I won't tell Cloti, but she isn't going to get her account opened without disclosing her TIN – spaghetti or otherwise. Nor will the rest of us.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions