Malta Toughens Stance on Anti-Terrorism Financing Regulations Amid Rising Global Concerns
Strengthening Regulatory Scrutiny Against Money Laundering and Terrorist Financing
In response to growing global concerns, Malta has stepped up its regulatory scrutiny to combat the threat of money laundering (ML) and terrorist financing (TF). The country’s National Risk Assessment (NRA) identified local criminal groups, drug trafficking, and tax evasion as primary sources of illegal proceeds, with higher risks inherent in sectors such as banking and corporate service providers.
Medium-High ML and TF Risk Level
Malta’s ML and TF risk level was rated Medium-High by the NRA, prompting the government to transpose the 4th Anti-Money Laundering Directive (4AMLD) into national law in 2018. The country is currently working on transposing the 5th Anti-Money Laundering Directive (5AMLD), which introduced significant amendments to the previous directive.
EU’s Efforts to Strengthen AML/CFT Rules
The European Union has also taken steps to strengthen anti-money laundering and combating the financing of terrorism (AML/CFT) rules, publishing a package of legislative proposals in July 2021 aimed at further improving compliance. The plan includes the establishment of an EU AML Authority (AMLA), which will serve as the central authority coordinating national authorities and ensuring private sector compliance with EU regulations.
Consequences of Ineffective AML/CFT Systems
Failure to maintain effective AML/CFT systems can result in severe consequences, including:
- Involuntary support for criminal or terrorist entities
- Regulatory intervention resulting in substantial monetary penalties
- Reputational damage
Importance of Developing a Strong Anti-Money Laundering Culture
It is crucial that organisations prioritize developing a strong anti-money laundering culture to prevent shortcomings and identify potential issues before they become major concerns. To achieve this, management buy-in and involvement are critical, as well as the implementation of integrated controls to meet compliance objectives.
A Sustainable AML/CFT Framework Requires:
- Dedicated resources
- Measures to mitigate identified risks
- KPMG’s extensive experience assisting subject persons in their AML/CFT journeys
Leveraging Expertise from Trusted Partners Like KPMG
As the global threat of ML and TF continues to evolve, it is essential for organisations to stay vigilant and proactive in their AML/CFT efforts. By leveraging expertise from trusted partners like KPMG, organisations can navigate the complex landscape and transform compliance into a competitive edge.
KPMG’s Solutions
KPMG offers robust, real-world solutions based on its experience in Malta and internationally, providing manageable, pragmatic frameworks that work within an organisation’s business while ensuring full compliance with regulatory expectations. The firm’s team is focused on helping organisations transform compliance from a burden into a competitive edge.