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The Importance of Compliance with International Sanctions in Malta’s Financial Sector

Malta has long been a hub for international businesses and individuals seeking to take advantage of its favorable tax regime and strategic location. However, the country must also comply with international sanctions imposed by the United Nations Security Council and the European Union, which can have far-reaching implications for both local and foreign entities operating in Malta.

What are Sanctions?

Sanctions are typically issued to address various issues, including human rights violations, terrorism, and nuclear proliferation. They often take the form of diplomatic, economic, or military measures aimed at pressuring targeted individuals or entities into compliance with international law.

Implementation of Sanctions in Malta

In Malta, sanctions are implemented through the National Interest (Enabling Powers) Act, which requires financial institutions, including credit institutions and insurance companies, to comply with these restrictions. Licence holders must exercise caution and vigilance in their business dealings to ensure that they do not inadvertently support activities or individuals subject to sanctions.

Guidelines for Licence Holders

The Malta Financial Services Authority (MFSA) has issued guidelines for licence holders on the identification and freezing of funds and economic resources related to sanctioned individuals and entities. Licence holders are also required to report any findings to the Sanctions Monitoring Board and the MFSA, providing detailed information about frozen assets and transactions.

Compliance with US Sanctions

In addition to EU sanctions, Malta must also comply with US sanctions imposed by the United States Treasury Department’s Office of Foreign Assets Control (OFAC). These measures can have significant implications for financial institutions, as they may be prohibited from conducting transactions with designated individuals or entities.

Best Practices for Compliance

To ensure compliance with international sanctions, licence holders are encouraged to:

• Consult the Sanctions Monitoring Board and other relevant websites for up-to-date information
• Seek professional advice when necessary to avoid unwittingly violating these restrictions

MFSA’s Efforts to Promote Awareness

The MFSA’s efforts to promote awareness of sanctions among licence holders aim to protect both local businesses and foreign entities operating in Malta from the risks associated with non-compliance. By staying informed about international sanctions, Malta can continue to maintain its reputation as a responsible and compliant financial center.

Source

Maltese Financial Services Authority (MFSA)