Financial Crime World

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Financial Institutions Appeal Penalty in Malta

A number of financial institutions and designated non-financial businesses and professions (DNFBPs) have exercised their right to appeal penalties issued by the Financial Intelligence Analysis Unit (FIAU). The appeals are being heard behind closed doors, and the FIAU is required to update its website with information on the status of the appeal and its outcome.

Anti-Money Laundering Requirements for Financial Institutions and DNFBPs

In Malta, anti-money laundering (AML) requirements apply to a wide range of financial institutions and DNFBPs, including:

  • Credit institutions
  • Payment service providers
  • Money brokers
  • Trust and company service providers
  • Auditors
  • External accountants
  • Tax advisors
  • Legal professionals
  • Notaries
  • Casino and gaming licensees

These entities are required to undertake risk assessments, risk-based customer due diligence, and maintain policies and procedures for:

  • Record keeping
  • Training
  • Reporting suspicious activity
  • The manner in which these obligations are implemented will depend on the size and nature of the business in question.

Cryptocurrency Industry

AML/CFT obligations imposed on the cryptocurrency industry apply to:

  • VFA service providers
  • Issuers of virtual financial assets (VFAs)
  • VFA agents registered under the Virtual Financial Assets Act

The FIAU has also issued sector-specific guidelines to assist these entities in ensuring compliance with their AML/CFT obligations.

NFTs

The application of AML requirements to non-fungible tokens (NFTs) is determined on a case-by-case basis, taking into account the characteristics of each NFT. If an NFT falls within the definition of a VFA, it would be subject to AML requirements. Service providers are advised to seek legal advice to determine whether an NFT qualifies as a VFA or otherwise.

Compliance Programs

Regulation 5(5) of the Prevention of Money Laundering and Funding of Terrorism Regulations requires all supervised persons (SPs) to establish and implement measures, controls, policies, and procedures to address money laundering and financing of terrorism risks. These procedures include:

  • Customer due diligence
  • Record keeping
  • Reporting
  • Risk management
  • Internal controls
  • Compliance management
  • Communications
  • Employee screening
  • Training
  • Awareness

Recordkeeping and Reporting

Maltese laws and regulations do not impose additional reporting and record-keeping requirements solely based on the size of the transaction. However, SPs are required to detect unusually large transactions and assess their legitimacy. A reporting obligation arises only where there is a suspicion of money laundering or financing of terrorism.

Cross-Border Reporting

The local AML/CFT regime does not impose particular cross-border reporting requirements on SPs.