Restrictive measures in response to the crisis in Ukraine 

In March 2022, the Financial Intelligence Analysis Unit (“FIAU”) published a guidance note in relation to the recent sanctions and restrictive measures imposed on individuals and entities due to the recent conflict in Ukraine. Key obligations for Subject Persons (“SPs”) include:

• regularly checking relative Sanction lists and screen on a regular basis client database against the same;
• immediately notifying the Sanctions Monitoring Board (“SMB”) of any identified targeted property and the action taken by the SP;
• ensuring the institution has robust internal controls and procedures; and
• refraining from tipping off.

The guidance note can be accessed through this link.

Further information on these measures can be accessed through the dedicated webpage maintained by the SMB. 

Submission of reports via go AML 

The FIAU has issued a guidance note in relation to the submission of reports through its goAML tool outlining a new procedure which allows for the submission of one transaction report in relation to more than one pending transaction. The guidance note also stipulates other information to be submitted with the report including:

• transactional details to where the funds are moving to;
• suspicion identified;
• any supporting documentation; and
• a ticked report indicator as applicable.

The guidance note can be accessed through this  link. 

The FIAU has also recently issued an updated guidance document on reporting through goAML in relation to:

• reporting transactions connected to Iran;
• difference in report types;
• submission of reports via goAML in line with Regulation 15(4) of the Prevention of Money Laundering and Funding of Terrorism Regulations (“PMLFTR”); and
• further clarification in relation to XML uploads.

Further information on this regulation can be accessed through this link. 

Common issues relating to the Money Laundering Reporting Officer (“MLRO”)

In April 2022, the FIAU issued a guidance note on the role of the MLRO which summarises some of the most common issues, concerns and queries raised by SPs in relation to the MLRO. These relate to (i) independence and autonomy, (ii) conflicts of interest (iii) outsourcing, secondment and employment (iv) knowledge, skills and expertise (v) personal liability and (vi) record keeping. The aim of this guidance note is to enhance SPs’ understanding of the importance of this role and ensure that anyone appointed as MLRO, or holding the said position, is able to exercise the linkassociated functions in an effective manner. This document is to be read together with the Implementing Procedures (“IP”) and any other related guidance issued by the FIAU.

Further information can be accessed through this . 

Source of Wealth Information related to Parties other than the Customer

The FIAU published a guidance note, in relation to ‘Source of Wealth Information relating to parties other than the customer’, with the aim of providing more clarity on the Source of Wealth (“SoW”) information to be obtained beyond the customer. This guidance note provides clarity on the information and documentation to be collected in relation to (i) body corporates undertaking commercial activities with reference to beneficial owners, senior managing officials as Beneficial Owners (“BOs”), SoW of shareholders, (ii) trusts and foundations, (iii) associations and (iv) individuals.

The full guidance note can be accessed through this link. 

The Use of Cash and the Banking Sector

This guidance note on the use of cash and the banking sector is intended to provide Credit Institutions with clarity on how they can comply with their obligations under the PMLFTR and the relevant IP with respect to cash deposits and withdrawals. This guidance note also takes into account the use of Cash (Restriction) Regulations (“CRR”). While addressed to the Banking Sector, any SP carrying out activities involving cash deposits and/or withdrawals is to equally consider the directions, examples and red flags provided herein when implementing its obligations at law. The guidance note provides further clarity on the process for cash deposits and cash withdrawals and ways of reporting as well as cash-related red flags which institutions should be aware of.

This guidance note can be accessed through this link.

Compliance with Beneficial Ownership Obligations by Company Service Providers (“CSPs”)

The FIAU runs thematic examinations, targeting specific aspects of SPs to assess and analyse AML/CFT obligations at SP level. The thematic examination preformed during the last quarter of 2021 involved assessing a number of CSPs in evaluating compliance against BO obligations in accordance with the requirements stipulated in the PMLFTR. As part of the the review, 933 customer relationships (Maltese registered companies) serviced by 40 CSPs were examined. The testing conducted focused on the controls design testing in relation to the CSPs’ controls, policies and procedures to address BO related obligations and compliance thereto as well as the controls in place by the CSPs to fulfill BO related obligations. The report provides an overview on the examination process and the Thematic Review’s key findings as well as suggested improvements in relation to:

• Policies and procedures;
• Customer Due Diligence (“CDD”) – Identification and Verification;
• CDD – ongoing monitoring of business relationship; and
• Reporting.

The Thematic Review report can be accessed through the following link.

MONEYVAL

In its annual report, MONEYVAL makes reference to the actions required to enhance regulation and supervision for both traditional Money Laundering (“ML”) methods and newer trends. The report also refers to “gatekeeper” professions which include professions such as lawyers, accountants and other services providers. It also indicates that it is on track to complete its current 5th round mutual evaluations cycle by 2024 which is in line with the 2025 deadline set for MONEYVAL by the Financial Action Task Force (“FATF”).

The MONEYVAL report highlights newer ML trends - the virtual assets sector, the increased use of cryptocurrencies and the rapidly evolving ecosystem of so-called “decentralised finance” (“DeFi”). The report claims that supervisory co-operation is in its initial stages and as yet not keeping pace with the swift evolution of technology – however, new tools will be introduced to enhance supervision of the “gatekeepers” and virtual asset providers, while boosting cross-border co-operation among supervisors.

The 2021 MONEYVAL report can be accessed through this link. 

Malta Financial Services Authority (“MFSA”)

In its 2021 annual report, the MFSA published an update on its AML/CFT strategy, to provide information on the changes which the Authority carried out during that year to strengthen its AML compliance framework.

The MFSA conducted various supervisory inspections on behalf of the FIAU and the SMB including both comprehensive and targeted inspections. In 2021, the MFSA undertook 416 supervisory inspections with 80 focused on AML/CFT. 76 enforcement actions were taken resulting in an increase of 46% over 2020, with administrative penalties amounting to over €900,000.

The MFSA also contributed towards the National Risk Assessment (“NRA”), by working closely with the FIAU and the SMB on the assessment of threats and vulnerabilities with regards to the financial sector for AML and proliferation financing.

The MFSA 2021 annual report can be accessed through this link.

Financial Intelligence Analysis Unit 

The 2021 FIAU Annual Report notes that during the second half of the year, the Authority focused its efforts on addressing the FATF action plan. The report also notes that the supervision section strengthened its risk assessment process through enhancements to the Risk Evaluation Questionnaire (“REQ”) and the Compliance and Supervision Platform Assessing Risk (“CASPAR”) system, as well as the introduction of a Remediation Team, and the Cooperation and Quality Team. The report also highlights:

• additional enhancements to the goAML system were carried out in 2021;
• FIAU’s intelligence sharing with the Malta Police Force, as well as other domestic supervisory and competent authorities have increased; 
• a significant increase in Suspicious Transaction Reports (“STRs”) across most of the sectors in 2021, with remote gaming operators submitting almost double the number of reports submitted in 2020;
• the supervision team was involved in providing guidance through replies to queries received through the dedicated queries mailbox which accounted to 250 AML related queries and 265 REQ or CASPAR related queries; 
• the setup of a supervision committee in the 1st quarter of 2021;
• the issuance of 28 administrative measures (including administrative penalties and/or directives to take remedial actions) by the Enforcement Section; and
• the top 10 suspected predicate offences as well as the top 10 reasons for suspicion

The FIAU 2021 annual report can be accessed through this link.