After a long period of disagreement and discussion with the GFSC, Blacktower Gibraltar and its local regulator, the Gibraltar Financial Services Commission, have settled a long running dispute.

In a statement on 20 February, Blacktower said the dispute arose after a re-examination of a large book of business Blacktower acquired prior to the Covid lockdown, which in the opinion of the GFSC had AML procedural shortfalls, which Blacktower should have resolved more promptly.

This failure resulted in a fine, which was significantly reduced as a result of the firm’s full cooperation and action in resolving the issue.

Additionally, a conduct-of-business fine was imposed due to procedural deficiencies found within one of Blacktower’s appointed representative businesses based in Gibraltar.

The review highlighted compliance gaps within the representative’s procedures, that did not align with Blacktowers’ policies and procedures. These gaps have now been fully addressed, with strengthened oversight and alignment with our conduct-of-business standards, Blacktower said.

The majority of the appointed representative business consisted of ultra-low risk term insurance policies. The GFSC has now confirmed that term assurance should be out of scope of ongoing conduct of business requirements, where the ongoing client relationship is directly with the provider not the intermediary, which would be normal in such circumstances.

Gibraltar has recently been under enhanced monitoring by the Financial Action Task Force (FATF), leading to increased scrutiny of financial practices across the jurisdiction. In response, the GFSC has adopted a more stringent approach to compliance, issuing fines and implementing strict measures to demonstrate Gibraltar’s commitment to addressing the jurisdictions regulatory gaps in line with expectations from both FATF and Money Val.

While Blacktower said it has always prioritised a strong compliance culture and continues to be recognised for this within the industry, "we acknowledge these historical matters and have taken swift and comprehensive steps to address them".

Blacktower further said it could confirm that:

  • These issues are historical in nature and do not relate to current practices or ongoing activities.
  • Both matters have been fully remediated and we have significantly enhanced our AML and conduct-of-business procedures to align with GFSC expectations.
  • There was no criminal or fraudulent activity involved.

Blacktower Group "as a whole remains firmly committed to upholding a compliant and transparent operating environment globally. As Gibraltar itself progresses towards meeting its international obligations, Blacktower Group remains fully committed to the jurisdiction and supportive of measures the GFSC deem appropriate.

"We would also like to take this opportunity to clarify that each company within our group of companies operates independently, with its own dedicated compliance and anti-money laundering (AML) functions, as well as separate personnel. The operational activities of Blacktower Gibraltar are entirely distinct from those of our other entities."

A spokesperson for Blacktower said: "This regulatory approach should serve as a gentle warning to the industry and in particular those involved in M&A activities to ensure thorough AML processes are followed prior to contract.

"This not only applies to actual share or asset transfers, but should also include simple Change of Servicing Agent activities.

"Adviser firms could find themselves in technical breach of AML processes, owing to the simple fact they are active in the client acquisition market place. A fact that we feel is presently not fully appreciated by the industry."

In a separate statement yesterday (19 February) the GFSC said it had fined Blacktower Financial Management (International) Limited for incurring breaches of its obligations under the Proceeds of Crime Act 2015 and regulations issued under the Financial Services Act 2019.

In June 2023, the GFSC’s Anti-Money Laundering and Counter Financing of Terrorism Supervision team (AML/CFT team) conducted an onsite at Blacktower’s offices, during which the AML/CFT team reviewed a sample of client files and the firm’s policies and procedures.

In October 2023, the GFSC’s Pensions and Advisory Supervision team (the Pensions team) conducted an onsite at Blacktower’s offices, during which the Pensions team assessed the firm’s oversight of its Appointed Representatives (ARs).

The GFSC further said in its statement: "A Decision Notice has been issued by the GFSC imposing a financial penalty in the sum of £294,350 for the identified breaches.

"Blacktower fully cooperated with the GFSC and has since remediated its position and is working with the GFSC in ensuring that its practices and procedures meet regulatory requirements. No further action is contemplated in relation to this matter."