Financial Institutions and Businesses Appeal FIAU Penalty in Closed-Door Hearing
A number of financial institutions and designated non-financial businesses and professions (DNFBPs) have exercised their right to appeal penalties issued by the Financial Intelligence Analysis Unit (FIAU). These appeals will be heard behind closed doors, with the outcome not made public. The FIAU is required to update its website with information on the status of the appeals and their outcome.
Anti-Money Laundering Requirements for Financial Institutions
Financial institutions and DNFBPs in Malta are subject to anti-money laundering (AML) requirements aimed at preventing the use of financial systems for illicit purposes. These requirements apply to a range of entities, including:
- Credit institutions
- Financial institutions
- Payment service providers
- Money brokers
- Virtual financial asset (VFA) service providers
Cryptocurrency Industry Under Scrutiny
The FIAU has imposed AML/CFT obligations on VFAs, including issuers and VFA agents. The agency has also issued sector-specific guidelines to assist entities operating in the VFA sector in ensuring compliance with their AML/CFT obligations.
With the upcoming implementation of the Markets in Crypto Assets Regulation, it is expected that the AML requirements for cryptocurrency-related businesses will become even more stringent.
Non-Fungible Tokens (NFTs) Subject to AML Requirements
The FIAU has clarified that NFTs may be subject to AML requirements on a case-by-case basis. If an NFT falls within the definition of a VFA, it would be subject to AML requirements. Entities handling NFTs are advised to seek legal advice to determine whether their activities are subject to AML requirements.
Compliance Programs for Financial Institutions and Businesses
Financial institutions and businesses subject to AML requirements must establish and implement compliance programs that address money laundering and terrorist financing risks. These programs must include:
- Customer due diligence
- Record keeping
- Reporting
- Risk management
- Internal controls
- Employee training
Recordkeeping and Reporting Requirements
Entities subject to AML requirements are not required to report transactions solely based on their size. However, they must detect unusually large transactions and assess their legitimacy. Reports to the FIAU arise only where there is suspicion of money laundering or terrorist financing.
Cross-Border Transactions Reporting Requirements
The Maltese AML regime does not impose specific cross-border reporting requirements on financial institutions and businesses.
Customer Identification and Due Diligence Requirements
Entities subject to AML requirements must:
- Identify and verify customers
- Understand the purpose and nature of their business relationships
- Undertake ongoing monitoring
- Special or enhanced due diligence measures may be required for certain types of customers.