GACO & LSRA Seminar for Legal Practitioners (Session 2 of 3) - Focus on SARs, Reliance, SOF/SOW, PEPs, Sanctions and other key requirements for the legal sector

The target Audience for this in-person seminar are 3yr + PQE legal professionals at all levels, as well as Partners (or persons in equivalent senior and managerial roles within a firm).

The intention behind all of these sessions is outreach to the actual fee earners (lawyers) themselves and not just legal practices’ compliance and MLRO functions. It is anticipated that this will spark useful debate and provide an opportunity for those in the first line of defence to engage with suitable experts as well as the regulator.

Compliance and MLRO staff are of course also welcome to attend, but the emphasis is on LSRA-Authorised Persons holding practising certificates.

This particular session will focus on:

• Suspicious Activity Reports (‘SARs’),
• the concept of Reliance (s.23 of POCA),
• source of funds and source of wealth,
• politically exposed persons,
• targeted financial and other sanctions, and other areas of concern raised by attendees or by the speakers.

SARs

Suspicious Activity Reports (SARs) are a legal requirement in Gibraltar for relevant financial business (‘RFB’, which includes independent legal professionals) to report any suspicion of money laundering, terrorist financing or proliferation financing (ML/TF/PF) to the GFIU. This is achieved through identifying a person (“the appropriate person”) under s.28 POCA and commonly referred to as the Money Laundering Reporting Officer (‘MLRO’).

However, MLROs within legal practices are dependent on fee earners (lawyers) reporting any ML/TF/PF suspicions internally. For this reason it is important for lawyers to be able to spot red flags that may lead to knowledge, suspicion or reasonable grounds to suspect ML/TF/PF.

It is therefore important for lawyers to understand their obligations around SARs and their practice’s processes for identifying and reporting suspicious activity internally (to the appointed person/MLRO) and externally to GFIU. Failure to report suspicious activity can result in fines and even criminal prosecution.

These reports are a key tool in the fight against financial crime and help to identify and disrupt illegal activity. Overall, SARs play a vital role in maintaining the integrity of the Gibraltar financial system and ensuring public trust in the professions that may facilitate dirty money entering the system.

Reliance

The words ‘reliance’ and ‘outsourcing’ are frequently used interchangeably. But what’s the difference between these two concepts? The difference lies in the level of trust conferred onto the third party. In outsourcing arrangements, the third party is technically working under the instruction of the original firm. Whereas placing ‘reliance’ is a legal concept within the AML/CFT/CPF legal framework, in which the third party must consent to being relied upon. This involves trust being placed on the third party to apply CDD measures on behalf of the firm, and to retain and be able to produce the records being relied upon at a later date, although the firm retains ultimate responsibility for compliance with its CDD obligations.

Another key difference lies in the further delegation of responsibilities. In an outsourcing scenario, the third party vendor may choose to further outsource (subcontract) delegated tasks, subject to the terms of their contract. However, when placing reliance, the third party is typically expected to perform the tasks themselves without creating a chain of reliance, since the trust is placed specifically in their expertise. The AML/CFT/CPF legal framework draws a distinction between these two concepts, so it’s important to consider which arrangement is most suitable for the specific risks a firm may be exposed to.

The AML/CFT/CPF legal framework enforces accountability for reliance arrangements by ensuring that the firm placing reliance is always liable for AML/CFT/CPF failings. It is not possible for firms under regulatory scrutiny to ‘point the finger’ at those they choose to place reliance on for inadequate systems and controls. The rationale is to encourage effective oversight of reliance arrangements by ensuring third parties are continually assessed from the start of a new relationship right through to the ongoing monitoring of an established one.

SoF/SoW

Another very important topic is the distinction between Source of Funds (SoF) and Source of Wealth (SoW). Some firms include a mandatory interim risk assessment for SoF and SoW for certain matters. For example, whereas a conveyancer will have conducted a thorough SoF and SoW check as soon as possible at the outset of a property purchase matter, they are required to conduct another ‘sweep’ to check that their understanding of the situation is still correct when the matter is nearing completion or completes (or otherwise take action to resolve), and they must document the outcome of their decisions.

Practitioners must also bear in mind that just because the previous tranche of matters for a client were acceptable from a SoF/SoW perspective, this does not automatically mean that any new instructions will be equally satisfactory. 

The situation of a client can/will change during their relationship with the firm; it is only sensible to assume that their SOF/SOW might also be subject to change.

Sanctions

The UN, UK, EU and other countries or bodies, such as the United Nations, may impose sanctions on countries, businesses or individuals to prohibit doing business with them. The UK government defines the purpose of sanctions as being “to change the behaviour of the target country’s regimes, individuals or groups in a direction which will improve the situation in that country.” 

As already touched upon in session 1, this session will recap on sanctions obligations and expand further on the legal framework, practical issues and red flags.

PEPs

When taking on new clients and opening new matters, relevant financial businesses are mandated to complete Politically Exposed Person (PEP) screening checks (in addition to sanctions checks) as part of their AML/CFT/CPF compliance procedures and client onboarding. Based on the results of these checks, businesses will then be required to perform Enhanced Customer Due Diligence before deciding whether to take on the client, in the event the client is a PEP, family member or close associate. This session will discuss the scope of the PEP definition, and understanding what this means in a local context as well as an international one.

Other areas

This session is also an opportunity to prompt discussion in areas such as ongoing monitoring & business relationships, bribery and anti-corruption, legal privilege and information sharing, and relevant vs. non-relevant financial business. If you have any particular questions in advance of the session, please reach out to GACO.

The LSRA and GACO are delighted to have engaged with Michael Adamberry to deliver what should be a useful and interactive face-to-face seminar.

Participants will have an invaluable opportunity to discuss areas of concern with a legal expert in this area as well as with their regulator. Whilst legal advice will not be offered, it is an open forum aimed at dispelling misconceptions and fostering collaboration between the public, regulatory and private sectors.

A final session will be held sometime later this year focused on AML Red Flags and case studies in the legal sector in a more open/collaborative format, with case studies and small group work.

It is again important to stress that whilst other RFBs and Compliance/MLRO staff are welcome to participate, the intention is to outreach to the first line of defence, being the fee earners themselves. Firms are recommended not miss out on this key opportunity.

Speaker Profiles

Michael Adamberry

Michael Adamberry is a Crown Counsel at the Ministry of Justice, Trade and Industry, at His Majesty’s Government of Gibraltar (HMGoG). 

Michael is a dually qualified solicitor and barrister and has prior experience as a legal professional in private practice specialising in Regulatory Compliance advisory services, including AML/CFT/CPF and Data Protection compliance. As a former regulator at the Gibraltar Financial Services Commission, Michael was also called upon for his expertise in Banking & Regulatory Compliance Services, with focus on AML/CFT/CPF & Financial Crime.

Michael has advised a wide range of clients ranging from sole traders and SMEs, to large multi-national corporates, public authorities, HMGoG, financial institutions, real estate agents, and insurance companies. 

He is presently seconded to the Royal Gibraltar Police’s Economic Crime Unit, where he is at the forefront of money laundering and other financial crime investigations. 

Michael also assisted in edits to the first edition of the anti-money laundering guidance notes for Gibraltar’s legal profession, and has advised HMGoG on the implementation of legislative amendments concerning the 5th and 6th Anti-Money Laundering Directives. 

One of his key contributions in this space was assisting HMGoG in the drafting of the Proceeds of Crime (Miscellaneous Amendments Act) 2021 and related legislation as part of remediation work following the Mutual Evaluation Report for Gibraltar issued by the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL). He is also recently trained as an assessor by the Financial Action Task Force (FATF) and will be looking to participate in Mutual Evaluations Reports on other jurisdictions in due course. 

As a trained lawyer and having been active in the local compliance industry, Michael is well qualified to provide legal professionals and other RFBs with key insight into these topics, as they were and remain part and parcel of his day-to-day responsibilities and duties. 

Edgar Lopez

Edgar has had a distinguished career serving as a police officer in the Royal Gibraltar Police, primarily working in specialist departments within the Crime and Protective Services Division. He was the Head of Special Branch before becoming the Head of Interpol Gibraltar Sub-Bureau, gaining experience in criminal and counter-terrorism intelligence. He holds a Masters on International Affairs specialising in Cybersecurity at King’s College London. His dissertation focused on the use of the cyber domain by state actors to fund illicit nuclear weapons and missile programs.

With experience in the MONEYVAL and Financial Action Task Force (FATF) processes, Edgar brings in a wealth of knowledge in the FATF Recommendations and Standards. He remains focused on tackling proceeds of crime specifically on victim-based crime such as Human Trafficking, Cyber-enabled Fraud and Online Child Sexual Abuse and Exploitation. He is keen to exploit all opportunities to enhance information sharing between the public
and private sector. He currently chairs the Financial Liaison and Intelligence Network (FLINT) and the Royal Gibraltar Police’s Ethics Committee. He has been Chair of the Quad Island Forum since June 2022 and as the Director of the GFIU represents Gibraltar at the Egmont Group and the Council of Europe’s MONEYVAL plenaries.

Francis Muscat

The CEO of the LSRA, Francis Muscat will open the seminar and address the attendees of the event.

Francis Muscat, is currently the Chief Executive Officer at Legal Services Regulatory Authority. Francis Muscat brings experience from previous roles at the Office of Fair Trading, Gibraltar Financial Services Commission, Line Group Limited and Hassans.

Francis holds a 2006 - 2007 Bar Vocational Course (BVC) as Barrister @ Cardiff University / Prifysgol Caerdydd. With a robust skill set that includes Leadership, Restructuring, Corporate Finance, Legal Assistance, Tax and more.

Further information
Date: 19th June 2025
Venue: Borealis Room, Sunborn Gibraltar Yacht Hotel, Gibraltar GX11 1AA

Event timings: 
9.00hrs - 9.30hrs - Welcome coffees and address by the LSRA;
9.30hrs to 11.30hrs - Seminar;
11.30hrs to 12.00hrs - Q&A

Fees: £25 per attendee