Central Bank of Malta at the Forefront of Financial Compliance Regulations Against Money Laundering and Terrorist Financing

Amidst rising global concerns over money laundering and terrorist financing, Malta’s commitment to combating these illicit activities is reflected in its robust regulatory framework. The Central Bank of Malta plays a pivotal role in Malta’s anti-money laundering (AML) and counter-terrorist financing (CTF) efforts.

Central Bank’s Role in Malta’s AML/CTF Framework

The Prevention of Money Laundering Act Cap. 373 positions the Central Bank as an integral component of Malta’s AML/CTF and Sanctions framework (European Commission, 2022). Central Bank representatives are actively involved in various committees and regulatory bodies:

1. The National Co-ordinating Committee on Combating Money Laundering and Funding of Terrorism
2. The Board of Governors of the Financial Intelligence Analysis Unit
3. The Sanctions Monitoring Board

Maltese laws and EU Directives, such as the Prevention of Money Laundering Act, the Criminal Code, and the Prevention of Money Laundering and Funding of Terrorism Regulations, underscore Malta’s commitment to upholding AML/CTF regulations.

EU Directives and Global Standards

In recent years, European Union (EU) has issued several key AMLDs, including the Fourth AMLD, Fifth AMLD, and the Sixth AMLD (European Commission, 2022). These Directives require Member States to adopt appropriate measures in preventing money laundering and terrorist financing within their operations.

The Central Bank extends its engagement to European institutions like the European Banking Authority and the European Central Bank. At a global scale, the Central Bank’s membership in the Financial Action Task Force (FATF) enables the adoption of international standards for preventing and mitigating money laundering, terrorist financing, and other related threats.

Financial Crime Compliance

Financial Crime Compliance refers to ensuring that a “subject person” complies with local and EU legislation and regulations surrounding AML, CTF, and anti-bribery and corruption. Financial entities must implement proper checks and controls (FCA, 2007):

1. Customer due diligence
2. Ongoing monitoring and reporting suspicious transactions
3. Compliance training

The Central Bank of Malta’s Financial Crime Compliance Department oversees these efforts, focusing on safeguarding the financial sector by detecting and addressing potential risks (Central Bank of Malta, 2022).

Money Laundering and Terrorist Financing

Money laundering is defined as converting or transferring property derived from criminal activity, concealing its origin and ownership (Central Bank of Malta, 2022). Terrorist financing encompasses the solicitation, collection, or provision of funds with the intention to support terrorist acts or organizations (Central Bank of Malta, 2022).

Sanctions and Bribery & Corruption

Sanctions refer to political and economic responses addressing national security concerns or threats to international peace and security (Central Bank of Malta, 2022). Bribery and corruption involve abusing power for personal gain, posing a serious hindrance to effective governance (Central Bank of Malta, 2022).

The Central Bank’s role in financial compliance regulations is crucial to ensuring that these illegal activities are identified, addressed, and prohibited. Upholding the integrity of Malta’s financial sector is essential for Malta’s economic growth and international reputation.