Financial Crime World

Financial Institutions and DNFBPs Take a Stand Against Money Laundering in Malta

Malta’s financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs) are exercising their right to appeal penalties issued by the Financial Intelligence Analysis Unit (FIAU), citing concerns over the secrecy surrounding the appeals process. Several financial institutions and DNFBPs have availed themselves of this option, seeking transparency in the appeals process.

AML/CFT Requirements for Financial Institutions and Businesses

In Malta, AML/CFT requirements are far-reaching, applying to all natural or legal persons carrying out “relevant financial business” or “relevant activities”. These entities include:

  • Credit institutions
  • Financial institutions
  • Payment service providers
  • Money brokers

These entities must undertake risk assessments, customer due diligence, and maintain policies and procedures for record-keeping, training, and reporting suspicious activity. The specific requirements depend on the size and nature of the business.

Cryptocurrency Industry Under Scrutiny

The AML/CFT obligations imposed on financial institutions and DNFBPs also extend to the cryptocurrency industry. VFA service providers, issuers of virtual financial assets, and VFA agents are required to comply with these regulations, which include:

  • Reporting suspicious transactions
  • Maintaining records

NFTs: The New Frontier in AML/CFT

The increasing popularity of non-fungible tokens (NFTs) has raised questions about their compliance with anti-money laundering requirements. While the FIAU has not issued specific guidelines on NFTs, it is clear that each case must be assessed individually to determine whether an NFT falls within the definition of a virtual financial asset.

Compliance Programmes: The Key to AML/CFT Success

Financial institutions and DNFBPs are required to establish and implement comprehensive compliance programmes, which include:

  • Customer due diligence
  • Record-keeping
  • Reporting
  • Risk management measures
  • Internal controls
  • Employee training

These programmes must be proportionate to the size and nature of the business, and regular monitoring is necessary to ensure their effectiveness.

Reporting Requirements: Large Currency Transactions and Beyond

While there are no specific reporting requirements for large currency transactions in Malta, financial institutions and DNFBPs are required to detect and assess unusually large transactions. Reports must be filed with the FIAU only where there is a suspicion of money laundering or terrorist financing.

Conclusion

The fight against money laundering is ongoing in Malta’s financial sector. Financial institutions and DNFBPs are taking steps to comply with AML/CFT regulations, while also exercising their right to appeal penalties issued by the FIAU. As the cryptocurrency industry continues to evolve, it remains to be seen how these regulations will adapt to new technologies and innovations.