Malta’s Banking Regulations: Fighting Money Laundering with Stringent Measures

Money laundering poses significant threats to global stability and security, enabling criminals to finance terrorism and commit further crimes. In response, countries worldwide are working to combat this menace. Malta has taken decisive steps in recent years to strengthen its anti-money laundering (AML) regulations, earning recognition from international authorities.

A Brief History of AML Compliance

Malta’s history of AML compliance began with the Prevention of Money Laundering Act (PMLA) in 1994, which established the Financial Intelligence Analysis Unit (FIAU) as the national institution responsible for preventing money laundering and terrorist financing. The unit collects and investigates financial crime information, acting swiftly to initiate action upon detecting suspicious transactions.

Enhancing AML Compliance

Building on PMLA, the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR) was enacted to reinforce AML compliance policies. In 2021, the Proceeds of Crime Act (POCA) was introduced to enhance the identification and confiscation of criminal proceeds, including laundered assets.

Regulatory Institutions

To ensure effective regulation, Malta established the Malta Financial Services Authority (MFSA), a public institution responsible for regulating financial institutions. MFSA jointly conducts AML/CFT audits with FIAU to maintain economic stability. The AML/CFT Co-Ordination Committee, an extension of MFSA, publishes guidelines and regulations that support Maltese legislation.

Progress in Combating Money Laundering

Recent reports have highlighted Malta’s significant progress in combating money laundering and terrorist financing. After a 2019 evaluation identified compliance gaps, the country adopted stricter measures, earning upgrades from “partially compliant” to “largely compliant” and “compliant” in nine FATF Recommendations. Malta has achieved full compliance with twelve out of forty FATF Recommendations, adhering to international AML/CFT standards.

Regulation of Virtual Assets

The nation’s proactive approach to regulating virtual assets, including cryptocurrencies, led to an elevation from “partially compliant” to “largely compliant” status. While minor deficiencies remain, Malta no longer holds non-compliant or partially compliant ratings.

Compliance Requirements for Financial Institutions

Offshore financial hubs like Malta must comply with Financial Action Task Force (FATF) and European Union (EU) regulations. Financial institutions must meet Customer Due Diligence requirements, report suspicious transactions, and employ a Money Laundering Reporting Officer.

Penalties for Non-Compliance

The Financial Intelligence Analysis Unit (FIAU) issues penalties to non-compliant organizations and individuals involved in financial crimes. In 2022, FIAU issued more than €3.1 million in fines for breaches of PMLA.

Customized AML Compliance Solutions

For Malta’s unique regulatory landscape, Sanction Scanner offers customized AML compliance solutions. By addressing the country’s distinct requirements, Sanction Scanner enables businesses to achieve compliance seamlessly. Contact us or request a demo to discover the future of AML compliance today!