Malta’s Financial Institutions Urged to Strengthen Internal Controls Against Money Laundering and Terrorist Financing

The threat of financial crimes such as money laundering (ML) and terrorist financing (TF) continues to pose a significant risk to Malta’s economic stability and global financial system. As regulatory scrutiny increases, the country’s financial institutions are being urged to implement robust internal controls to prevent these illegal activities.

Primary Sources of Proceeds from Money Laundering and Terrorist Financing Activities

According to Malta’s National Risk Assessment, local criminal groups, drug trafficking, and tax evasion are the primary sources of proceeds from ML and TF activities. Banking and corporate service providers have been identified as sectors with higher inherent risks than others.

Strengthening Anti-Money Laundering and Combating the Funding of Terrorism (AML/CFT) Rules

Malta has transposed the 4th Anti-Money Laundering Directive into national law and is in the process of implementing the 5th Anti-Money Laundering Directive, which introduces several amendments to strengthen AML/CFT rules. The European Union Commission has also proposed a package of legislative measures to further enhance AML/CFT rules, including the establishment of an EU Anti-Money Launderling Authority.

Consequences of Failure to Maintain Effective AML/CFT Systems

Failure to maintain effective AML/CFT systems can result in significant consequences, including:

• Reputational damage
• Regulatory intervention
• Substantial monetary penalties

An organization’s AML/CFT controls can be easily undermined by a poor culture of compliance, highlighting the importance of strong management buy-in and involvement.

Developing a Strong AML Culture

Developing a strong AML culture requires dedicating appropriate resources and measures to mitigate identified risks. KPMG has extensive experience in assisting financial institutions in Malta develop robust AML/CFT frameworks that meet compliance objectives while ensuring program agility, effectiveness, efficiency, sustainability, and integration.

Real-World Solutions from KPMG

With its team of experts experienced in Malta’s regulatory environment, KPMG offers real-world solutions that prioritize a manageable and pragmatic framework that works within the organization’s business. By strengthening internal controls and implementing effective AML/CFT systems, Malta’s financial institutions can mitigate ML/TF risks and maintain their reputation as responsible and compliant players in the global financial system.

Benefits of Working with KPMG

• Expertise in Malta’s regulatory environment
• Real-world solutions that prioritize a manageable and pragmatic framework
• Robust AML/CFT frameworks that meet compliance objectives while ensuring program agility, effectiveness, efficiency, sustainability, and integration

By strengthening internal controls and implementing effective AML/CFT systems, Malta’s financial institutions can mitigate ML/TF risks and maintain their reputation as responsible and compliant players in the global financial system.