Malta’s Crusade Against Financial Crimes: Money Laundering and Beyond

Malta, a small island nation in the Mediterranean Sea, is making strides in the global fight against financial crimes. This bastion in the European Union (EU) is actively taking measures to combat money laundering and terrorist financing, two significant threats to the international community.

History of Financial Crime Legislation in Malta: A Proactive Approach

Malta’s commitment to preventing financial crimes started in 1994 when it enacted the Prevention of Money Laundering Act (PMLA). This legislation established the Financial Intelligence Analysis Unit (FIAU), which plays a critical role in collecting, investigating, and reporting financial crime-related information.

In 2008, Malta adopted the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR). This legislative step addressed key issues related to preventing and detecting money laundering and terrorist financing. In 2021, the Proceeds of Crime Act (POCA) was introduced to expand Malta’s ability to identify and confiscate proceeds from criminal activities.

1994: Enacted the PMLA and established FIAU
2008: Adopted the PMLFTR
2021: Introduced the POCA

Institutional Bodies: The Malta Financial Services Authority (MFSA) and FIAU

The Maltese regulatory landscape comprises two key institutions to maintain fairness and effectiveness in financial regulations:

The Malta Financial Services Authority (MFSA)

The Malta Financial Services Authority (MFSA) oversees and regulates financial institutions in Malta, ensuring economic stability. It regulates banks, credit institutions, electronic money institutions, investment companies, and all other financial institutions. In collaboration with FIAU, MFSA conducts the AML/CFT (Anti-Money Laundering/Combating the Financing of Terrorism) audit.

The Financial Intelligence Analysis Unit (FIAU)

FIAU is Malta’s primary national institution dedicated to preventing money laundering and terrorist financing. Its responsibilities include collecting, analyzing, and reporting financial crime information.

The AML/CFT Co-Ordination Committee: A Collaborative Effort

The AML/CFT Co-Ordination Committee, an extension of the MFSA, was established to coordinate and enhance Malta’s efforts to fight money laundering and terrorist financing. The committee collaborates with regulatory bodies, financial institutions, and other stakeholders to promote best practices and guidelines that support Maltese legislation.

Malta’s Progress in Countering Money Laundering and Terrorist Financing

Malta’s dedication to combating financial crimes has yielded significant progress. The latest MONEYVAL report upgraded Malta from “partially compliant” to “largely compliant” and “compliant” in nine Financial Action Task Force (FATF) Recommendations. Malta achieved full compliance with twelve out of forty FATF Recommendations. However, Malta continues to be subject to enhanced follow-up assessments to monitor the effectiveness of its AML/CFT measures.

Regulations and Penalties: Adherence to International Standards

Malta’s AML regulations are designed to be compatible with FATF and EU regulations. Financial institutions in Malta must comply with the Maltese AML regulations through the PMLA, PMLFTR, and POCA. This includes:

Implementing Customer Due Diligence (CDD) measures
Reporting suspicious transactions
Appointing Money Laundering Reporting Officers

In 2022, FIAU imposed fines totaling more than €3.1 million on entities that breached PMLA regulations, primarily due to insufficient business risk assessments.

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