 Solution

Suppose first that $\Gamma$ is conjugacy separable. If $h\in \Gamma$ is not conjugate to $\gamma$ in $\Gamma$, some homomorphism to a finite group sends them to nonconjugate elements. This homomorphism factors through a finite quotient of $\hat{\Gamma }$, so $h$ cannot be conjugate to $\gamma$ in $\hat{\Gamma }$. Thus

Conversely, suppose this equality holds and $h$ is not conjugate to $\gamma$ in $\Gamma$. Then they are not conjugate in $\hat{\Gamma }$. By the finite-quotient criterion for conjugacy in a profinite group, their images fail to be conjugate in some finite quotient. This is precisely conjugacy separability.