Alan Kentish, the chief executive of Gibraltar's STM Group, which is listed on the London Stock Exchange, has been arrested on suspicion of failing to disclose potential money-laundering information to the Rock's financial intelligence unit. His board, in a memo to the LSE, claims that he nonetheless generated the right 'internal' suspcious activity reports.

STM is a multi-jurisdictional financial services group which is listed on the Alternative Investment Market of the London Stock Exchange. It 'delivers' financial service products to professional intermediaries and administers assets for HNW international clients in relation to retirement, estate and succession planning and wealth structuring. It has operations in the UK, Gibraltar, Malta, Jersey and Spain and wants to expand by developing more products for its ever-more sophisticated clients. STM has an international pensions division which specialises in Qualifying Recognised Overseas Pension Schemes (QROPS) and Qualifying Non UK Pension Schemes (QNUPS). It also has a Gibraltarian Life Insurance Company, STM Life plc, which provides life insurance bonds - wrappers in which a variety of investments, including investment funds, can be held.

The memo refers to Kentish "in his capacity as a professional director of a client company of STM." In November 2015 the ultimate beneficial owner of that client company, who had been a client of STM's for over 15 years, became involved in a tax dispute between two countries between 2008 and 2013 "over their respective taxing rights to the taxes correctly paid by him."

At that time, and until it was clear that the issue was a tax dispute, Kentish's company states that he followed compliance procedures properly by sending off two relevant suspicious activity reports (SARs) to STM's money-laundering reporting officer (MLRO), both of which the MLRO sent onwards to the Gibraltar Financial Intelligence Unit (GFIU).

The GFIU is legally obliged to respond within fourteen days if it wants to order any action to be taken. If it does not, the firm can continue as normal. STM says that its MLRO did not receive any response.

STM goes on to say that on Thursday 19 October, approximately two years since the two SARs came into being, the Royal Gibraltar Police arrested Kentish on the allegation of failure to disclose his money-laundering suspicions in accordance with the Proceeds of Crime Act 2015. The investigation is not over. Kentish and STM have received legal advice to the effect that the allegations have no merit, so the board of STM is right behind him.

In September last year, STM acquired London & Colonial Group and now has administrative offices in the UK, Malta, Jersey, Spain and Gibraltar, with its head office based in Gibraltar. The board of STM is working out where its next head office should be.