Financial Crime World

Malta Takes Bold Steps to Combat Financial Crime

In an effort to combat financial crime, Malta has been strengthening its banking regulations to prevent money laundering and terrorist financing. In this exclusive interview, Sylvana Gatt, Manager at Payments and Banking Office, and Raisa Spiteri, Legal Department Expert, shed light on the country’s efforts to curb these illicit activities.

Money Laundering and Combating the Financing of Terrorism (AML/CFT) - A Growing Concern

According to Dr. Raisa Spiteri, money laundering is the process by which criminals attempt to conceal the true origin and ownership of proceeds from illegal activities, often using legitimate means to disguise their ill-gotten gains.

  • The Prevention of Money Laundering Act defines it as “the conversion or transfer of property knowing or suspecting that such property is derived directly from, or the proceeds of, criminal activity”.
  • The funding of terrorism involves the provision of money or other property intended for terrorist activities, often using legitimate means to finance their illegal pursuits.

Compliance Function Key to Success

The compliance function plays a crucial role in ensuring that financial institutions comply with AML/CFT regulations. Dr. Spiteri explained that this function is responsible for:

  • Identifying, assessing, advising, monitoring, and reporting on the risk of non-compliance
  • Ensuring that an organization has internal controls that effectively measure and manage risks

Key Elements of a Sound AML Programme

Sylvana Gatt emphasized that a sound AML compliance programme must be:

  • Written
  • Approved by the Board of Directors
  • Noted in the Board minutes
  • Commensurate with the respective AML risk profile of the entity

Four key pillars form the foundation of an effective AML programme:

  • The Compliance Officer
  • Independent testing
  • Internal controls
  • Training

Sanction Screening and Transactions Monitoring - Two Critical Controls

Ms. Gatt highlighted the importance of:

  • Sanction screening, which involves real-time screening of payment messages against up-to-date sanctions lists
  • Transactions monitoring, which is conducted ex post to evaluate whether customer activities are consistent with the obtained information on the purpose and intended nature of their business relationship

Both controls are essential in preventing money laundering and terrorist financing.

Malta’s Efforts to Combat Financial Crime

Malta’s efforts to combat financial crime demonstrate its commitment to ensuring a safe and secure financial system for all stakeholders. By strengthening its banking regulations and implementing effective AML/CFT measures, Malta is poised to become a leader in the fight against financial crime.