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FIAU Appeals: Financial Institutions and DNFBPs Take Action
A number of financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs) in Malta have taken advantage of their right to appeal penalties issued by the Financial Intelligence Analysis Unit (FIAU).
Behind Closed Doors
According to sources, the appeals are being heard behind closed doors, with the outcome not publicly disclosed. The FIAU is expected to update its website with the status of the appeals and their outcome.
Anti-Money Laundering Requirements
Malta’s anti-money laundering (AML) regime applies to a range of financial institutions and DNFBPs, including:
- Credit institutions
- Financial institutions
- Payment service providers
- Money brokers
- Auditors
- External accountants
- Tax advisors
- Legal professionals
- Notaries
- Trust and company service providers
- Nominee companies
- Casino and gaming licensees
- Others
These entities are required to implement AML/CFT measures, including:
- Risk assessments
- Customer due diligence
- Record-keeping
- Training
- Reporting of suspicious activity
The specific obligations will depend on the size and nature of the business in question.
Cryptocurrency Industry
The Maltese government has also implemented AML/CFT requirements for the cryptocurrency industry, with entities such as:
- Virtual Financial Asset (VFA) service providers
- VFA issuers
- VFA agents
subject to these measures. The FIAU has issued sector-specific guidelines to help these entities comply with their obligations.
Non-Fungible Tokens
The application of AML/CFT requirements to non-fungible tokens (NFTs) will depend on the characteristics of each NFT. If an NFT falls within the definition of a VFA, it would be subject to AML requirements. SPs are advised to seek legal advice to determine whether their NFT qualifies as a VFA.
Compliance Programmes
Regulation 5(5) of the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR) requires financial institutions and DNFBPs to establish and implement compliance programmes, including:
- Customer due diligence
- Record-keeping
- Reporting
- Risk management measures
- Internal controls
- Employee screening
Record-Keeping and Reporting
Maltese law does not impose specific reporting requirements based on the size of a transaction. However, SPs are required to detect unusually large transactions and assess their legitimacy. A reporting obligation arises only where the SP is not satisfied with the explanations provided or there are doubts about the veracity of the information.
Cross-Border Reporting
The local AML/CFT regime does not impose particular cross-border reporting requirements on financial institutions and DNFBPs. However, international cooperation and information sharing may still be required under certain circumstances.