Amendments to the Prevention of Money Laundering and Funding of Terrorism Regulations – Legal Notice 199 of 2021

On 30^th April 2021 a legal notice (L.N. 199 of 2021) (the “Legal Notice”) introduced a number of amendments to the ‘Prevention of Money Laundering and Funding of Terrorism Regulations’ (the “PMLFTR”).  The following is a short synopsis of the key amendments:

• Broader definition of “Supervisory Authority” under regulation 2(1) of the PMLFTR –  for the purposes of the PMLFTR, supervisory authorities shall also include:
  1.  the Malta Business Registry;
  2. the Trade Licensing Unit (limitedly to its licensing function relating to dealers in precious metals and stones); and
  3. the Licensing Board (established under the Real Estate Agents, Property Brokers and Property Consultants Act).

• Clarification of the definition of “Trust and Company Service Provider” under regulation 2 (1) of the PMLFTR – following an overhaul to the ‘Company Service Providers Act’ whereby amongst introduced amendments, company service providers shall need to apply for authorisation from the Malta Financial Services Authority to act as such, the definition of ‘trust and company service provider’ in the PMLFTR has been clarified by the inclusion of the term ‘authorised’.  To this effect, a trust and company service provider which is “authorised, registered or notified, or required to be authorised, registered or notified”, will be deemed a subject person under the PMLFTR. 

• Amendments reflecting EU Directive 2015/849 (the 4^th Anti-Money Laundering Directive) – amendments to regulations 4 and 13 were carried out to ensure these are aligned with the 4^th Anti-Money Laundering Directive.  The said regulations respectively provide for possible exemptions from PMLFTR requirements and record keeping procedures.

• Clarification regarding international calls for countermeasures in Regulation 11(11) of the PMLFTR – Regulation 11(11) used to list the obligations of subject persons in instances where there has been an international call for countermeasures, as well as provide the powers of the Financial Intelligence Analysis Unit (the “FIAU”) in such instances.  In terms of the Legal Notice, regulation 11(11) shall only provide the obligations of subject persons in such instances whereas a new sub-regulation shall provide the corresponding powers of the FIAU. 

• Clarification on the imposition of administrative penalties in terms of Regulation 21(4)(b)(ii) of the PMLFTR – Regulation 21(4)(b)(ii) has been clarified to ensure that with respect to serious, repeated or systematic contraventions of the PMLFTR (or any procedures or guidance issued under regulation 17 of the PMLFTR), the FIAU may impose an administrative penalty of not more than five million euro (€5,000,000) on a subject person carrying out a relevant financial business.  Should such administrative penalty be deemed ineffective, an administrative penalty of not more than ten per cent (10%) of the total annual turnover (according to the latest available approved annual financial statements), may be imposed.  

Link to the Legal Notice: https://legislation.mt/eli/ln/2021/199/eng

Women of Influence 2021

*This interview has been published in Maritime Economies newspaper.

Question 1. What has been the impact of Covid-19 on businesses and what is your forecast for the future.

The impact of the coronavirus (Covid-19) is being felt by all businesses around the world. The Covid-19 pandemic has created an unprecedented crisis practically grinding the world’s economies to a halt and which in turn impacted the backbone of the world trade, the maritime industry. It also highlighted the great importance of technology when it comes to conducting business. At GMX very early we put into effect our own contingency and business continuity plans seeking to strike a balance between ensuring the absolute well-being of all our team members and continuing to service all our clients and partners as best as possible. We had therefore the majority of personnel working from home whilst smaller teams continued to work from our offices in order to ensure that essential and crucial services are offered. The firm’s restructuring and dispute resolution personnel stepped in to offer assistance to clients in the sectors worst affected by the Covid-19 pandemic.

This pandemic guided us to realign our expectations, regroup and explore new opportunities while it also acted as a catalyst to spur further innovation. At a top management level we needed to stay on top of the constantly developing situation and adapt accordingly and quickly as possible. A long-term solution requires the input and involvement of all employees to produce a viable solution to overcome the challenges posed by the pandemic. Businesses are forced to explore innovative solutions to overcome the growing negative implications of this unprecedented crisis. In our firm, we quickly realised that in the current day economic scenario, innovation has become a major factor which leads to success and that out-of-the-box-thinking is important to generate new value and also sustain your business. At GMX we have always been firm believers of innovation; it is at the centre of our way of doing things, in our corporate functions, business models and processes. It has been our driving force which gave us the opportunity to remain competitive and survive in this ever-changing environment, ensuring in the same time that our team works conscientiously to accommodate each individual client. Our pro-Covid-19 established policies such as flexibility, training of employees and constant updating of procedures, assisted us to turn the impacts of the pandemic into opportunities as means to overcome the challenges ahead. Creativity and welcoming changes will help entrepreneurs to shape this new business landscape.

Question 2: Do you believe that nowadays women can lead in predominantly male-dominated corporations?

I firmly believe that leadership qualities are not a matter of gender but a matter of aptitude; otherwise, more and more gender bias will be inculcated and this is precisely what men and women do not need to be hounded by. Organisations headed by women report greater team cohesion, more inclusive communication and more co-operative learning in challenging situations caused by conflict, functional diversity and relocation. This is because women put emphasis on collegiality and bonding. I also believe that we are better listeners. All this helps to create stronger and more motivated teams. There are studies demonstrating that companies with more women in executive positions attained significantly higher profitability on average, than those with low representation.

Having said this, I don’t think that all female leaders radiate such abilities or that male leaders lack them. Besides such skills can be taught and I feel that with the right training any organisation can nurture an atmosphere of belonging and where everyone learns from each other. Gender parity in the top management level can lead to thriving enterprises.

Furthermore, leaders should walk the talk of happy employees work better and with more enthusiasm from the ground up. Giving sufficient feedback is the first point-of-take off in this regard so that employees know where they stand, in terms of job performance and both short/long-term goals. This is why emotional intelligence is gaining traction so that learning empathic techniques provide helpful appraisal that interweaves appreciation and candour. Although there are several studies showing that women are better empaths than men, once again, the determining factor is character and not gender; there are women who do not score high on emotional intelligence just as there are men who do.

I would like to think that diversity and inclusion are engrained in GMX’s DNA and are in fact the very foundation on which our firm was formed. In reality at GMX the female population is higher. We are a team of lawyers and auditors and the vast majority we are women. I believe that truly successful results will only be reached when we no longer talk of women striving to succeed as much as men do in the business world, but when such success is regarded as natural.

Question 3. What is the role of women in today’s society?

Women today have proved themselves in positions of power, carrying considerable decision-making authority and game-changing leadership positions. Women no longer lag behind men in most study areas and occupations. Progress is also clear on women’s leadership and political participation; Kamala Harris is the United States’ first female vice president and the highest-ranking female elected official in U.S. history, after winning the 2020 election, Ursula Gertrud von der Leyen is the European commission’s first female president, while closer home Katerina Sakellaropoulou, made history when she was elected as Greece’s first female president.

Undoubtedly, women today have more freedom in the broadest sense to fulfil their dreams. Women’s all round contribution to society needs recognition not proof. Multi-tasking, productivity, consistency, managerial skills and the ability to adapt to new situations are the main characteristics of working women and these have led us to climb the corporate ladder. We have inherent qualities of empathy and emotional connection and more than competition, we focus on team-work to better ourselves, others and our work. Women over the last years have begun taking the reins in more and more companies worldwide and they have established their position as business leaders. The representation of women in senior management positions has increased over the last years, yet gender bias and stereotypes persist keeping countless women disadvantaged. According to the Global Gender Gap Report 2020, issued by the World Economic Forum, there is still a 31.4% average gender gap that remains to be closed globally.

Having said that, women empowerment has taken place and has opened new doors for the women to thrive and shine. The achievements of women in the maritime industry have been very well noted and the recruitment of more women has been encouraged. Despite ingrained stereotypes, there is a growing number of professional women in the maritime industry.

The position of women in our society cannot be generalised as throughout the world women receive different amounts of respect. There has been a change but there is still room in eliminating inequality. It is challenging to combine a full-time career and a family at the same time but whatever is a woman’s choice, either a high-level job, or stay-at-home mom or the most common a working mother, should be respected as when we set our goals we strive to be the best we can.

Malta Budget 2021

Malta’s budget for the year 2021, was presented on Monday by the Finance Minister Hon. Edward Scicluna, delving into social measures, the economy, the environment, law, education, health, and infrastructure. The salient fiscal and financial measures may be found below:

Economic aspects

• 7.4% reduction in GDP for 2020 following the challenges brought by the COVId-19 pandemic.
• The deficit for 2020 is expected to reach €1.2billion, which the Government anticipates will be endured at a decreasing rate until 2023.
• It is expected that while the rate of unemployment will remain at 4%, there may be an increase in jobs by 2.3%.
• Cost of living allowance (COLA) will amount to €1.75 per week with student stipends increasing pro-rata.
• Over and above the COLA adjustment, pensioners should benefit from an increase of €3.25 a week for a total increase of €5 per week. Furthermore, the amount of exempt annual pension income should be increased from €13,798 to €14,058.
• Increase in the supplement granted to elderly who employ a full time carer to be increased by €700 per annum.
• Re-issuance of Government Saving Bonds for pensioners who are over 62 years of age.
• The rates for children’s allowances within families generating low and average income is expected to be increased.
• Foster Care Allowances is also set to be increased by €520 per year.
• Couples adopting a child from Malta may benefit from an Adoption Grant up to €1,000 to assist in covering the costs. 
• Vacation leave entitlement should be increased by an additional day, amounting to a total of 28 days.
• Tal-Linja Card will be given free of charge to individuals who are over 70 years old.
• The COVID Wage Supplement should be extended up until the end of March 2021.
• In order to counter the economic challenges posed by the pandemic and to support businesses, the Government should issue a second round of €100 government vouchers to be utilised in 2021, which should be spent €60 on hospitality and €40 on goods and services.

Tax matters

• Tax refunds with respect to individuals who earn less than €60,000 should also be granted in 2021, which refunds range between €45 and €95 depending on the individual’s income bracket.
• A 15% final withholding tax should be introduced on royalty income derived from the publication of literary works.
• The amount of tax credits on private pension plans and voluntary occupational pension schemes should be increased.
• VAT exempt threshold to increase from €20,000 to €30,000.
• Increase in the tax exemption by €1,000 up to €3,000 for individuals contributing towards the Third Pillar Pension Scheme and the Voluntary Occupational Pension Scheme.

Property related measures

• The reduced rate of duty at 1.5% for qualifying business transfers in relation to particular intra-family donations of business property and securities should be extended by a year.
• First time buyer scheme has been extended for another year and should be exempt from duty on the first €200,000, increased from €175,000 on the value of the property.
• Second time buyers who sell their residential property in order to purchase another residential property should be eligible to receive a refund of duty up o €3,000 or €5,000 in instances of special needs.
• The reduction of stamp duty on the acquisition of property to 1.5% on the first €400,000 and the reduction of property transfer tax on the sale of property from 8% to 5% should be extended and should be applicable provided that the promises of sale is signed by March 2021 with the final deed of transfer being signed by 31 December 2021.
• No stamp duty should be charged on the first €250,000 (previously €200,000) of donations of immovable property from parents to their children where the immovable property being donated is used for the children’s residential purposes. The additional value of the immovable property is to continue being charged at 3.5%.
• Reduced rate of duty at 2.5% from 5% in relation to property purchased which is located in an Urban Conservation Area and reduced rate of duty at 2% from 5% in relation to property acquired in Gozo as one’s residential property.
• From 1 January 2021 up to 31 December 2021, any gains or profits arising on the assignment or cessation of any rights acquired under a promise of sale of immovable property or any rights thereon will be subject to a reduced rate of duty at 15%.

Environmental aspects

• Environmental measures introduced include extension of exemption for electric vehicles, refunds for bicycles and e-bicycles, increase in grants for changes in vehicles from petrol to gas. The continuation of the vehicle scrappage scheme with the maximum benefit to be received would amount to €7,000. A €10,000 grant should be granted to taxi drivers who purchase vehicles which are wheelchair friendly. Infrastructure regarding refund scheme of plastic bottle will be brought in whereby individuals may return plastic bottles in return for cash. The introduction of the ban of importing single-use plastics as from January 2021 and the ban on the sale of such products by January 2022. The offering of Green Bonds by the Malta Stock Exchange in order to assist projects which promote the use of renewable energy and low emissions.

Tourism

• Creation of the Aviation Policy and the enhancement of the Maritime Register.
• Long term implementation plan to assist the tourism industry to become a Net Zero Carbon Neutral Industry.

The EU issues black list of non-cooperative jurisdictions for tax purposes

On 6 October 2020, the EU issued the black list of non-cooperative jurisdictions for tax purposes and it has been updated as follows:

• Anguilla and Barbados were added to the EU list;
• Cayman Islands and Oman were removed from the list.

The list adopted by the Council became official on 7 October 2020 and is composed of: American Samoa, Anguilla, Barbados, Fiji, Guam, Palau, Panama, Samoa ,Trinidad and Tobago, US Virgin Islands, Vanuatu, Seychelles

Modification or Removal of a condition with respect to property transferred by the Government

Recently, Legal Notice 370 of 2020 had been published, entitled “Modification to, or Removal of, a Condition or Conditions imposed in a Contract of a Property Transferred by the Government, the Lands Authority or Ecclesiastical Entities through a Sale or Emphyteusis Regulations, 2020”

This Legal Notice should apply to any person who has a title of purchase by virtue of a public deed, or emphyteusis on property that would have been passed to the applicant by the Government or the Authority, or by an Ecclesiastical Entity (that subsequently passed the title to the Government), who  may, save as provided in the other provisions of this Legal Notice, ask the Authority to modify or remove a condition/s, imposed in the original contract.  This Legal Notice should apply only in case where the condition/s imposed in the original contract limited the amount of residences and, or garages, that could be built and where the applicant is requesting an increase in the amount of residences/garages that could have been built under the original contract.

There are three eligibility criteria:

1. That the applicant is an EU citizen;
2. That the applicant is recognised by the Lands Authority as an owner or emphyteuta of the land or building, as the case may be;
3. In the case of an emphyteusis, prove that there were no arrears payments of ground rent due to the Authority on the property in respect of which the application in being submitted pursuant to this Legal Notice.

The value of the modification/removal of condition in the original contract of sale or emphyteusis should be established by a perit/i appointed by the Lands Authority, which estimate shall be in line with article 79 of the Government Lands Act.

Any modification to, or removal of, a condition/s, in the original contract should be made by a public contract, following the approval of the Board of Governors of the Lands Authority and in accordance with the conditions imposed by the Board. 

Extension of Commercial Emphyteutical Concessions

The Ministry for Transport, Infrastructure and Capital Projects, has published Legal Notice 369 of 2020 entitled “Extension of Temporary Emphyteusis in a Contract for a Commercial Premises transferred from the Government, the Lands Authority or Ecclesiastical Entities by title of emphyteusis Regulations, 2020”.

This legal notice applies to any natural or legal person who holds a title of temporary emphyteusis on  a property transferred to the applicant from the Government, the Lands Authority or an Ecclesiatical entity (which subsequently passed on the title to the Government) for commercial purposes and that the term will expire after the 31 August 2025. In this case, the emphyteuta may request the Lands Authority to rescind the contract and to grant a new contract holding a title of temporary empyhteusis, which term starts to run from the date of the new contract and this until the terms of the concession is in force, with the proviso that the term of the new concession shall be equivalent to that in force and provided further that where the term of the concession in force is greater than sixty five years, the term of the new concession shall be equivalent to 65 years.

The applicant emphyteuta for the extension should need to prove, through a detailed business plan, that he needs the land for a commercial project thereby satisfying the Authority of the benefit of the project for the national economy and that it will generate adequate employment.

The eligibility criteria are the following:

1. The applicant should be recognised by the Authority as the emphyteuta of the land/building;
2. The concession in force should not have as its subject the execution of works, the supply of goods or the supply of services, which before the concession, were in the hands of the State before it was granted to the applicant;
3. There are no arrears on ground rent payments.

Every public deed of the extension of the emphyteusis done in terms of this Legal Notice should be subject to the approval of the House of Representatives after a special resolution of the House in terms of article 31(c) of the Government Lands Act, Chapter 573 of the Laws of Malta.

Applications can be accepted from the 5th October 2020.

FIAU publishes revised version of Implementing Procedures – Part II for the Virtual Financial Asset Sector

On 18 September 2020 the Financial Intelligence Analysis Unit (the “FIAU”) published a revised version of the Implementing Procedures – Part II on the ‘Application of Anti-Money Laundering and Countering the Funding of Terrorism Obligations to the Virtual Financial Assets Sector’(the ‘VFA Procedures’).

The newly introduced changes relate to:

• The submission of Suspicious Transaction Reports (‘STRs’):-

Following amendments to the ‘Prevention of Money Laundering and Funding of Terrorism Regulations’ (Subsidiary Legislation 373.01 of the Laws of Malta), STRs should be promptly submitted to the FIAU.  Save for the exceptions as provided in the ‘Implementing Procedures – Part I’, STRs should be submitted on the same day when the Money Laundering Reporting Officer knows or suspects money laundering or funding of terrorism; and

• The red flags associated with the Virtual Financial Asset Sector:-

The FIAU encourages subject persons in the Virtual Financial Asset Sector to familiarise themselves with the FATF’s report on ‘Virtual Assets – Red Flag Indicators of Money Laundering and Terrorist Financing’ issued on September 2020 (the ‘Report’), as well as any updates and related documents.  The Report contains a non-exhaustive list of red flag indicators relating amongst others, to transactions, source of funds or wealth, and geographical risks.  The Report should assist the detection of unusual transactions, activities or behaviour by subject persons working in the Virtual Financial Asset Sector.

For more information kindly contact us on info@gmxlaw.com .

Link to the revised VFA Procedures:

FIAU publishes Revision Version of the Implementing Procedures – Part 1

Following the conclusions of Malta’s Mutual Evaluation Report, the Financial Intelligence Analysis Unit (the “FIAU”), published a revised version of the Implementing Procedures – Part 1 (the “Procedures”) on 15 September 2020.

The newly introduced amendments are expected to expedite both the internal and external reporting procedures of subject persons.  Employees of subject persons who become aware of any information which in their opinion gives rise to knowledge or suspicion of money laundering or funding of terrorism (“ML/FT”), should start filing an internal report with the Money Laundering Reporting Officer (the “MLRO”) by not later than the next working day. 

Subsequently, Suspicious Transaction Reports (“STRs”) should start being submitted to the FIAU on the same day as when the MLRO knows or suspects ML/FT, save for exceptional circumstances as provided in the Procedures. 

The above-mentioned new time frames shall be complimented by a possible delegation of the MLRO’s functions to employees under his/her supervision.  In addition, the Procedures reiterate the need to equip the MLRO with the necessary resources to be able to effectively carry out his role.

The Procedures are issued by the FIAU to assist subject persons in fulfilling their obligations under the ‘Prevention of Money Laundering and Funding of Terrorism Regulations’ (Subsidiary Legislation 373.01 of the Laws of Malta).

For more information kindly contact us on info@gmxlaw.com .

Link to the revised Procedures: