It is arguable that the remote and disconnected financial environment that the Coronavirus has imposed on the financial sector might lead to better compliance because manual processes are now at a discount. In the meantime, Gibraltar's regulator is doing its best to help financial firms survive.

Because of Gibraltar’s geographical location, its government took restrictive measures to reduce the spread of the universal contagion slightly before the British Government did. On 14 March it shut down all bars and restaurants, advised against unnecessary travel across the land border into Spain and issued advice regarding Spain’s impending state of emergency, which came into force two days later.

Many workers in financial services commute daily over the border and go on flights to and from London, Bristol and other British cities. All firms are trying to stay in operation, often by adherence to pre-existing continuity plans.
 
On 22 March, Gibraltar’s Chief Minister announced a new amendment to the Civil Contingencies Emergency Regulations, resulting in a ‘social lockdown’ with travel generally permitted only for essential work, the purchasing of essential supplies and exercise. Schools were closed.

Life for the financial sector as a whole

Much like the British Government, the Government of Gibraltar has taken financial steps, which it calls the Business & Employee Assistance Terms (BEAT), to support those hit the hardest. The fundamental purpose of the BEAT measures is to provide direct financial support to employers and businesses so as to keep operations in continuance and staff in their jobs. However, these measures initially exclude financial services.

The Covid Emergency Liaison and Advisory Committee (CELAC) consists of people from several bodies and associations, including the Finance Centre Council (which includes the Law Council and all trade bodies in the financial sector). Firms set the committee up to advise the Government about how best to help them. CELAC works extremely efficiently, gathering information from trade bodies and firms so as to ensure that the information that the Government has from them is correct.
   
This ‘CELAC mechanism’ allows the Government to respond quickly where necessary and to support the sectors most in need.

The Gibraltar Financial Services Commission has decided to help businesses deal with their cash flow problems by declaring that annual licensing fees, which are usually due quarterly in April, can instead be paid quarterly in advance. Like the businesses that it regulates, the GFSC has had to activate its business continuity arrangements. It is now operating remotely but is communicating very frequently with firms and issuing regular pronouncements such as its statement on 20 March entitled ‘Covid 19: Handling customer expectations.’

Life at firms
 
All financial firms are now operating in way that differs greatly from three weeks ago. They are now using a mixture of working arrangements and set-ups which vary according to their nature. These include reductions in activity at the office, combinations of on-site and off-site activity and entirely remote arrangements. Any firms that expected disruptions to their services should have discussed these with the regulator some time ago. Most (if not all) say that they are operating ‘as normal.’ They will have to keep an eye on the way in which they govern and oversee their more remote or disconnected operations, which they might have adjusted too hastily.
 
Firms are now considering tools and mechanisms previously deemed unnecessary or perhaps too risky or expensive, such as electronic signatures, video conferencing facilities, "due diligence collection software" and messaging applications. Onboarding committees, 'high risk' committees and other convocations are having to meet remotely and keep records of their decisions in different ways. It is good, however, that the present situation might be forcing some of them to move towards more modern, remote, paperless and technological ways of doing things which tend to improve their efficiency and the experience that customers have when they deal with them.

Compliance goes on - and perhaps more efficiently!
 
While all this goes on, every firm's risk and compliance function will remain vital. They still have to make "customer due diligence collection," transaction monitoring, reviews of customers and suspicious activity reporting compliant. Firms may fall foul of the regulators should they by-pass their usual robust systems and controls, or fail to adjust them appropriately, in a race to keep up ‘business as usual.’ Although it is far too early to tell, the Coronavirus may have inadvertently bettered some of the outdated compliance practices at some firms.

* Jamie Allan can be reached on +350 200 76651 or at jamie@fid.gi