Anti-Money Laundering/ Combating Funding of Terrorism
The concern of money laundering and potential terrorist financing has given rise to the enactment of various rules and regulations. The regulatory framework in Malta comprises the Prevention of Money Laundering Act (‘PMLA’) and the Prevention of Money Laundering and Funding of Terrorism Regulations (‘PMLFTR’). These pieces of legislation are in alignment with European Union legislation and lay down the obligations of subject persons (i.e. persons from sectors which are prone to be used for money laundering and funding of terrorism activities).
What is Money Laundering?
Money laundering is the process of transforming the proceeds of crime (criminal property) into ostensibly legitimate money or other assets.
The main piece of legislation that addresses money laundering in Malta is the PMLA, which was enacted on 23rd September 1994 and was subject to a number of amendments thereafter.
Originally, the PMLA only applied to a limited list of predicate offences, however since 31st May 2005, with the coming into effect of Legal Notice 176 of 2005, Malta has shifted from having a restricted list of predicate offences to an ‘all crimes’ regime, meaning that ‘any criminal offence’, whenever or wherever it is carried out, may constitute the basis for the offence of money laundering.
What is Funding of Terrorism?
Funding of terrorism is the process by which terrorist organisations or individual terrorists are funded in order to be able to carry out acts of terrorism. This process is defined in the Criminal Code (Cap. 9 of the Laws of Malta) as the process by which a person receives, provides or invites another person to provide, money or other property intending it to be used, or which he has reasonable cause to suspect that it may be used, for the purposes of terrorism. Terrorism financing cares little about the source of the funds (contrary to money laundering), but it is what the funds are to be used for that defines its scope.
What AML/CFT policies and procedures are required?
Your business should establish and maintain policies and procedures relating to:
- customer due diligence
- record keeping
- internal control
- risk assessment and management
- compliance management
- internal communication of these policies and procedures
Subject persons must make sure that the records kept as well as the retention periods adhere to the obligations emanating from the Data Protection Act (Cap. 440 of the Laws of Malta), which has transposed the Directive 95/46/EC into national legislation.
How we can assist your business
The AML/CFT regime imposes significant obligations on subject persons, which will become even more cumbersome in light of the new 4th AMLD which has to be transposed until 26th June 2017.
If you would like to discuss any of the issues raised above or how the new Directive may affect your business, please do contact us. We have the knowledge and expertise to provide your business with comprehensive assistance with the regulation and other matters such as:
- design and implementation of AML/CFT policies and procedures;
- drawing up of Due Diligence manual and Customer Acceptance Policy;
- identification and management of risks associated with your business ;
- design and implementation of an effective Risk Based Approach;
- provision of training to managers, offices and company personnel;
- design and implementation of screening policy when hiring new employees; and
- dealing with regulators and consulting on regulatory issues.