GIBRALTAR Law and Practice Contributed by: Aaron Payas, Jeremy Requena, Jerome Compson and Reece Atkinson, Hassans
Reverse Solicitation Where services are provided exclusively at the ini- tiative of a Gibraltar-based client, the firm providing those services should not fall within the scope of the FSA. This concept, commonly referred to as “reverse solicitation”, is recognised in practice in Gibraltar, although it has not been codified in legislation and no formal guidance has been published by the GFSC. Based on the authors’ understanding, reverse solici- tation requires that the Gibraltar customer, acting entirely of their own volition and exclusive initiative, proactively approaches the cross-border business to request its services. The cross-border business must not at any point approach, or even indirectly solicit, any Gibraltar customer. No marketing of any kind should be directed at Gibraltar. This includes situations where a Gibraltar-based customer makes an enquiry or request for a product or service after viewing a website or general advertising not specifi- cally directed at Gibraltar, or following a referral from an unconnected third party in Gibraltar who receives no remuneration from the cross-border business. The cross-border business must not maintain any physical presence in Gibraltar, nor should it travel to Gibraltar for the purpose of negotiating or concluding agree- ments with Gibraltar customers. Cross-border businesses should exercise extreme care in their marketing strategy. If the GFSC considers that a firm has created a sufficient nexus to Gibraltar through marketing, physical presence, or targeting of Gibraltar-resident individuals or institutions, it may deem the firm to be established in Gibraltar and con- sequently subject to the FSA and DLT Regulations. Marketing and Advertising Standards Section 12 (financial promotion restriction) of the FSA broadly prohibits a person from communicating, in the course of business, any invitation or inducement to engage in investment activity unless they are author- ised, exempt, or the communication is otherwise approved or falls within an exemption. In practice, this captures marketing, advertising, and unsolicited approaches (eg, calls or meetings) aimed at encourag- ing a person to enter into a regulated activity.
There is no bespoke advertising or marketing regime for crypto-assets in Gibraltar equivalent to, for exam- ple, the FCA’s financial promotion rules in the UK. However, DLT Providers and registered firms are sub- ject to the GFSC’s DLT regulatory principles, including Principle 2 (Customer Care), which requires firms to communicate with customers in a way that is fair, clear and not misleading. In practice, the GFSC expects all marketing materials produced by authorised or regis- tered firms to meet this standard. 4.2 White Labelling White-label arrangements are permitted in Gibraltar, subject to the regulatory framework applicable to DLT Providers. Under the GFSC’s Guidance Notes to the Financial Services (Distributed Ledger Technology Providers) Regulations 2020, a licensed DLT Provider may permit an external firm to offer services to end users using the DLT Provider’s infrastructure and licence. However, regulatory responsibility remains with the licensed entity at all times. The DLT Provider cannot delegate or transfer its regulatory obligations to the white-label partner. In practice, the GFSC expects the licensed DLT Provider to maintain full operational and compli- ance oversight of the white-label arrangement. This includes ensuring that all services delivered through the white-label solution comply with the ten DLT regulatory principles, in particular Principle 5 (Client Asset Protection), Principle 2 (Customer Care), and Principle 9 (Corporate Governance). The DLT Provider must conduct appropriate due diligence on the exter- nal firm, implement robust contractual arrangements governing the relationship, and ensure that AML/CFT obligations are discharged in respect of all end users onboarded through the white-label channel. There is no formal notification or approval process specific to white-label arrangements, but firms are expected to notify the GFSC of any material outsourc- ing or partnership arrangements as part of their ongo- ing supervisory engagement. The GFSC may request information about the nature of the arrangement, the identity of the white-label partner, and the controls in place to manage associated risks.
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