Luis Ayllón
The actions of several MEPs from the European People’s Party Group (EPP), including former Foreign Affairs Minister José Manuel García-Margallo, yesterday prevented the European Parliament from ratifying the decision taken by the European Commission to remove Gibraltar from the list of ‘high tax risk’ territories.
The Gibraltarian government reacted by expressing its disappointment with the objection expressed by the European Parliament and especially with the accusations that the British colony has facilitated Russia’s evasion of sanctions imposed by the European Union.
The plenary of the European Parliament yesterday debated the European Commission’s agreement to remove Gibraltar from the EU’s list of territories that pose a threat to the EU’s financial system because of its regulatory shortcomings in the area of money laundering and terrorist financing. Brussels took the decision after the Financial Action Task Force (FATF) in February 2024 removed Gibraltar, Barbados, Panama, Uganda and the United Arab Emirates from its own list of ‘Jurisdictions subject to enhanced surveillance’.
Already in an initial motion submitted to the EP plenary, it was stated in relation to Gibraltar that ‘there is recent evidence to suggest that it does not make sufficient efforts or even facilitates the evasion of sanctions imposed on Russia in response to the aggression against Ukraine’. It added that the Rock could act as ‘a platform for circumventing’ those sanctions, ‘hampering the EU’s efforts to stop the Russian war machine’.
On behalf of the EPP Group, MEPs José Manuel García-Margallo, Javier Zarzalejos and Isabel Benjumea tabled four amendments on the Gibraltar issue. In the first two they pointed out that the agreement between the European Union and the United Kingdom on the future of the colony after Brexit has not yet been finalised and its content is unknown. And they warned that in the meantime, Gibraltar cannot be excluded from the grey list, since – they said – it is completely opaque and the measures it will include to combat money laundering and the financing of terrorism are still unknown.
Furthermore, it was pointed out that this agreement, given the financial and tax facilities that Gibraltar grants to its residents, is important for its socio-economic effects and also to guarantee the stability and good governance of a crucial and vulnerable external gateway of the European Union with a third country.
These amendments were adopted by a majority, with the support of all parliamentary groups, with the exception of the Socialists and The Greens.
The other two amendments stressed that Gibraltar has no value added tax and no tax on alcohol, tobacco and petroleum products, that online gambling taxes are so low that the Rock absorbed a quarter of the world market, and that no corporation tax is payable on profits from activities carried out outside its territory. Finally, it insisted that the fight against tax fraud and tax havens must be a priority for the European Union, as well as preventing the use of the financial system for money laundering purposes.
Both the resolution and these two amendments were adopted with an overwhelming majority: 490 votes in favour, 64 against and 56 abstentions.
Gibraltar expresses its disappointment
The reaction of the Gibraltar authorities was swift and, through a statement, they expressed their ‘disappointment’, recalling that the FATF’s decision regarding the Rock ‘came after a period of intensive technical analysis and meticulous assessment of all aspects of the regime’ for the Prevention of Money Laundering (AML) and Terrorist Financing (TF) of Gibraltar, including a verification visit to the territory by FATF assessors in December 2023.
The Government led by Fabian Picardo emphasises that in yesterday’s plenary session of the European Parliament, the European Commission firmly defended its decision to remove Gibraltar from the U list, taken – they stress – after an evidence-based consultation with the European Commission’s Expert Group on Money Laundering and Terrorist Financing.
On the contrary,’ the note adds, ’it is clear that the European Parliament’s opinion is not the result of any technical assessment. Nor is it the product of any detailed assessment or analysis of the work of the Gibraltar authorities. Rather, it is a politically poisoned position promulgated by hostile actors from the People’s Party, Vox and Ciudadanos within the European Parliament, including MEP José Manuel García-Margallo. This has come as no surprise.
Further on, the Gibraltar government says it is ‘seriously concerned by the sole reference to Gibraltar in the substantive part of the objection, which suggests that Gibraltar has facilitated the evasion of sanctions imposed on Russia’.
‘This fiction,’ they stress, ‘could not be further from the truth, given the series of high-profile and widely publicised coercive activities that have been carried out in Gibraltar in respect of assets held by designated persons in compliance with both the UK and EU Sanctions Regimes, the latter being vigorously enforced in Gibraltar, entirely voluntarily, as a result of a unilateral decision taken by the Government of Gibraltar. This baseless, totally unfounded and gratuitous accusation in itself reflects the value to be attached to the European Parliament’s decision’.
Noting that the Gibraltar authorities will not allow ‘Gibraltar’s good name to be associated, even remotely, with efforts to support Russia’s war aggression against Ukraine’, they indicate that they will raise this claim at the highest political level and that they will ask the European Commission to take a fresh decision to remove Gibraltar from the EU list, trusting that ‘this decision will be taken promptly’.
The note ends by stating that ‘none of these developments influence the FATF’s reasoned and considered position on Gibraltar, which means that Gibraltar will remain off the FATF list.’ Nor do these developments affect the ongoing negotiations on Gibraltar’s future relationship with the EU. None of this,’ insists the Picardo government, “will deter Gibraltar from enthusiastically continuing its excellent work in implementing its world-class AML/CFT regime and actively supporting its partners, including the EU, on geopolitical issues such as the war in Ukraine”.
