Mystery Surrounds Wealthy Individuals’ Move to Malta

A recent trend has been observed in which wealthy individuals are seeking advice on relocating to Malta with no apparent intention of actually taking up residence. This phenomenon has raised suspicions among authorities and experts, who believe it may be linked to tax evasion.

Corporate Governance Red Flags

• Rubber Stamping: Company officials blindly following instructions from the beneficial owner without questioning their legitimacy, leading to transactions being approved without proper consideration or knowledge of their purpose.
• Lack of Skill or Time: Administrative bodies, such as boards of directors, may not have the necessary expertise or time to properly oversee their functions, resulting in inadequate arrangements for ensuring that required functions are executed.

Commingling of Personal and Business Accounts

• The use of personal accounts for business purposes is another red flag. Individuals may be advised by credit institutions against this practice, but it remains a common occurrence during statutory audits.
  • Income passed through personal accounts could remain unaccounted for and undeclared.
  • Individuals may also inflate their business expenses to reduce their tax burden.

Intricate Structures

• The use of complex structures with no clear commercial purpose or rational explanation is another indicator of potential malpractice. These structures may be designed to conceal the beneficial owner’s identity or obscure financial transactions.

Other Red Flags

• Multiple Trading Companies: Setting up multiple trading companies in different jurisdictions with the same company name without a legitimate reason.
• Bearer Shares: Using bearer shares, which can make it difficult to trace ownership and control.
• Fiduciary Shareholders: Including fiduciary shareholders within the entity structure without a clear and legitimate purpose.
• Incomplete Records: Maintaining incomplete records that undermine the integrity of tax-related documents.

Source of Funds and Wealth

• Understanding the customer’s source of wealth and funds is crucial in establishing legitimacy. Red flags include:
  • Customers unable or unwilling to provide information on their source of funds and wealth.
  • Doubts about the documentation provided, which seems odd or not sufficient.

These red flags have raised concerns among authorities and experts, who believe that some individuals may be using Malta as a haven for tax evasion. As such, it is essential to scrutinize these transactions closely and ensure that all necessary due diligence is conducted.