EU court backs Spanish fine on Jyske Bank

By David Eade
The Court of Justice of the European Union (TUE) endorsed on Thursday the decision of the Spanish High Court to fine Jyske Bank. Although the bank is established in Gibraltar the fine was levied for its actions in Spain where it has operated on the Costa del Sol for a number of years.

Jyske was hauled before the Spanish beak because the bank had allegedly not released information relating to a transaction in 2007. Spain apparently requested information from Jyske relating to a specific transaction. The Spanish authorities believed the operation involved money laundering. By all accounts Jyske did give Spain some information but it did not identify those involved or provide copies of the transactions involved.

It has been the practice of people to form a Gibraltar company to purchase property on the Costa del Sol and to hide behind that company name hence their true identity is not revealed to the Spanish tax authorities.

Jyske’s refusals to release the requested information led to Spain taking legal action against the bank for not complying with the norms related to fighting money laundering and the financing of terrorism. Although financing of terrorism has been highlighted in Spain’s reporting of the case I have no reason to believe that was actually the case here.

I wrote on this case in Panorama last year when the Spanish Court first handed down its 1.7 million euros fine. I was then invited to Jyske to discuss the matter more fully. The bank appealed the Spanish court’s ruling to the EU court on the grounds that it was only obliged under EU law to inform the Gibraltar authorities and not the Spanish over such a transaction.

However the TUE has come down on the side of the Spanish court and the Spanish Government’s right to know. In its ruling on Thursday, the Court of Justice of the EU points out that the directive did “not prohibited” that credit institutions carrying out activities in Spain should communicate directly to the Spanish authorities the information required for the purposes of the fight against money laundering and the financing of terrorism. “Therefore, the directive is not opposed, in principle, to Spanish regulations”, says the TUE. In the court’s view, the restriction of the free provision of services involved in this legislation “can be justified by an overriding reason of general interest such as the fight against money laundering and the financing of terrorism”.

There are three main outcomes in the TUE’s rulings. The first is the conviction against Jyske stands as does the 1.7 million euro fine. The second is that the court ruling has given Madrid another stick to beat us with arguing it demonstrates we are an off-shore “chiringito” which floats the money laundering and associated legislation. Thirdly it means a legal precedent has now been set for any Gibraltar based financial entity that conducts business in Spain that the Spanish authorities can demand information on the transactions and the fact that our FSC has been informed is not deemed to be sufficient. Just how Jyske and the FSC responds to this remains to be seen.

29-04-13



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