The 2019 Assessment
Both Moneyval (Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism), and the FATF (Financial Action Task Force), have recently reported that Malta has passed the Moneyval follow up test. The follow-up test to the 2019 assessment, studied the legal, regulatory and institutional reforms implemented by Malta. However, it did not assess the reforms’ effectiveness.
Malta has now achieved full compliance with twelve of the 40 FATF Recommendations constituting the international AML/CFT (Anti-Money Laundering and Countering the Financing of Terrorism) standard and has minor deficiencies for 28 other recommendations for which it has been rated as largely compliant.
Highlights of the Moneyval report:
Virtual Asset Providers
It is worth noting that Malta was among the first Moneyval countries to implement a regulatory framework for virtual asset providers. Virtual assets include virtual currencies such as Bitcoin. Indeed, in this sector, Malta has now been re-rated from partially compliant to largely compliant.
Voluntary organisations and other charities are prone to misuse by money launderers and financiers of terrorism. Malta’s 2019 assessment found that Malta had not adequately identified risks of money laundering and vulnerabilities in respect of voluntary organisations. Both issues have now been remedied and the Commissioner for Voluntary Organisations in Malta is encouraging voluntary organisations to conduct transactions via the formal financial sector.
Suspicious Transaction Reports
Previously, subject persons (persons/legal entities to whom anti-money laundering obligations apply) were expected to report suspicious transactions to the Financial Analysis Intelligence Unit (FIAU) within five working days from when the suspicion first arose. Amendments now require reports to be lodged promptly with the FIAU’s expectation being that of reporting to it by not later than the next working day, from when the suspicion first arises.
Ultimate Beneficial Owners of companies or partnerships.
Another area where strides forward have been made is where the ultimate beneficial owners of legal persons/legal entities are concerned. Although companies and partnerships have had for some time a requirement to submit information about their beneficial owner to the Registrar of companies, the penalties for failing to do so were not dissuasive. Now the Registrar of Companies may initiate the strike-off of a company or partnership that fails to submit information about its beneficial owner.
Designated non-Financial Businesses and Professions (DNFBP’s)
Traditionally, lawyers and accountants in Malta used to also act as company formation agents. The concern from an anti-money laundering viewpoint was that although regulated by their professional body, the exemption of lawyers and accountants from obtaining a company services provider licence could not be justified. Now lawyers and accountants need a company services provider licence from the Malta Financial Services Authority (MFSA) Such licence involves scrutiny to determine whether the applicants’ senior management are fit and proper persons.
Moneyval has put Malta on enhanced follow-up which means Malta will report to Moneyval on further progress in two years’ time. This is not to say that Malta is out of the woods yet as the FATF, has yet to assess Malta. Hence the possibility of greylisting remains. Indeed, the grey list includes the likes of war-torn Syria. Greylisting would have a devastating effect on the local economy, experts warn as doing business in Malta would become harder as firms’ de-risk and terminate business relationships deemed to fall outside of their risk appetite.
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