Financial Crime World

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Compliance Risks in Financial Institutions in Malta

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International sanctions have far-reaching implications for financial institutions operating in Malta. The National Interest (Enabling Powers) Act empowers the Maltese government to implement United Nations Security Council Resolutions and European Union Council Regulations imposing restrictive measures on individuals, entities, and countries.

The Sanctions Monitoring Board

The Sanctions Monitoring Board is responsible for monitoring the implementation of sanctions legislation in Malta. Its functions include:

  • Proposing designations, delistings, and unfreezing of property
  • Reporting findings to the Maltese Financial Services Authority (MFSA)

Compliance Requirements for Financial Institutions

Financial institutions operating in Malta are required to take note of all international sanctions and exercise caution when conducting business activities. They must:

  • Verify their records on an ongoing basis for any information or transactions connected to designated individuals and entities
  • Report their findings to the Sanctions Monitoring Board and the MFSA
  • Inform the Sanctions Monitoring Board of any action taken, including reporting details about:
    • Funds, financial assets, and economic resources belonging to or controlled by designated individuals and entities that have been frozen in accordance with sanctions

Credit Institutions’ Reporting Requirements

In addition, credit institutions are required to submit information relating to entities and/or individuals subject to restrictive measures imposed by the respective sanctions. The collation and transmission of this information is coordinated by the Sanctions Monitoring Board.

US Sanctions Implications

The US government also imposes sanctions on various countries, individuals, and entities through its sanctions legislation. These measures can have significant implications for financial institutions operating in Malta and are therefore important to consider when conducting business activities.

Best Practices for Compliance

To ensure compliance with international sanctions, financial institutions operating in Malta are urged to:

  • Consult the appropriate Sanctions Monitoring Board, United Nations, and EU websites for complete and up-to-date information
  • Seek professional advice as may be necessary

By following these guidelines, financial institutions can mitigate the risks associated with non-compliance and maintain a safe and secure business environment.