Malta Takes Steps to Enforce Beneficial Ownership Requirements
As part of its efforts to strengthen its financial sector and prevent money laundering and terrorist financing, Malta has emphasized the importance of identifying and verifying the ultimate beneficial owners (UBOs) of legal entities.
Background
The requirement to identify UBOs stems from Recommendation 24: Transparency and Beneficial Ownership of Legal Persons by the Financial Action Task Force (FATF). This recommendation is designed to prevent criminals from using complex organizational structures to obscure their ownership and control of illicitly obtained assets.
Malta’s Previous Score
According to a recent report, Malta’s lack of transparency in beneficial ownership information contributed to its low score in Moneyval’s 2019 Mutual Evaluation Review. As a result, Malta was greylisted by the FATF, citing the need for further improvement in this area.
Beneficial Ownership Requirements
The beneficial ownership requirements are set out in Malta’s Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR) and Implementing Procedures (IPs). Subject persons, including financial institutions, lawyers, accountants, and other professionals, must identify UBOs as part of their customer due diligence measures.
What is a Beneficial Owner?
According to the PMLFTR, a beneficial owner is any natural person who ultimately owns or controls a customer or is conducting a transaction on behalf of another person. This can be achieved through direct or indirect ownership, and includes individuals with control over 25%+1 shares, voting rights, or ownership interest.
Common Methods Used to Conceal Beneficial Ownership
Criminals often use complex legal arrangements and financial instruments to conceal their beneficial ownership, including:
- Shell companies
- Shelf companies
- Front companies
- Trustees
- Bearer shares
- Informal nominee shareholders
- Directors
These structures can make it difficult to determine the true owner of an entity, but subject persons must still identify and verify UBOs as part of their due diligence obligations.
Malta’s Beneficial Ownership Register
Malta has established a beneficial ownership register to increase transparency and provide authorities with access to this information. All companies registered in Malta are required to maintain an internal register of beneficial owners and report any discrepancies to the Malta Business Registry (MBR).
Quotes
- “Identifying UBOs is crucial for subject persons to prevent their illicit misuse and ensure that they are not associated with criminal activity. It’s also essential for financial institutions to maintain a good reputation and avoid potential legal and reputational consequences.” - Alicia Vella, advisory senior manager at [firm name]
- “Malta’s implementation of beneficial ownership requirements is a step in the right direction. However, it’s essential that subject persons understand the importance of identifying UBOs and take steps to verify this information as part of their due diligence obligations.” - Rebekah Barthet, forensic investigation senior manager at [firm name]
Conclusion
By enforcing beneficial ownership requirements, Malta can strengthen its financial sector and prevent money laundering and terrorist financing. As the country continues to work towards improving its reputation in this area, subject persons must be aware of their obligations and take steps to comply with these requirements.