The Malta Financial Services Authority (MFSA) has issued a Circular on the 5th February 2013 addressed to the investment services industry regarding the Prevention of Money Laundering and Funding of Terrorism (Amendment) Regulations, 2009, following the revision of Part I of the Implementing Procedures, issued by the FIAU in terms of Regulation 17 of the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR), on 4th February 2013, which changes are being introduced through the inclusion of a new Chapter 9 and additional paragraphs to Section 6.1 of the Implementing Procedures.
The amendments to the Implementing Procedures concern, inter alia, the interpretation of the phrase “marketing its units or shares” as used in paragraph (f) of the definition of “relevant financial business” as provided in the PMLFTR and effectively broaden the scope of applicability of the PMLFTR to cover all collective investment schemes, the units or shares in which are offered to or placed with investors, whether directly or indirectly, by the Scheme itself or by other third party/ies on behalf of the Scheme. Accordingly, all such collective investment schemes are deemed to be “subject persons” for the purposes of the PMLFTR. The said change in interpretation aligns the said definition with the definition of the term “marketing” in terms of the Alternative Investment Fund Managers Directive (Directive 2011/61/EU).
By way of derogation, the revisions provide for an exception whereby collective investment schemes which only have a limited physical operational setup in Malta may outsource the implementation of the measures and procedures applicable to them under the PMLFTR to the MLRO of the administrator of the Scheme. Schemes having a ‘limited physical operational setup in Malta’ are those which have no physical presence in Malta other than their registered address and a board of directors, which do not engage any employees and which are not involved in the acceptance and processing of subscriptions and the collection of funds from investors.
Practical Implications for existing CISs
Licensed collective investment schemes will now:
- be considered to fall within the definition of ‘subject person’ under the PMLFTR.
- be required to comply with the relative provisions of the PMLFTR and, as such, must appoint a Money Laundering Reporting Officer (MLRO) in terms thereof, which MLRO must be duly approved as such by the MFSA, save to the extent outlined above where the relative CIS is deemed to have a limited physical operational setup in Malta;
- be required to submit to the MFSA an updated prospectus relating to the Scheme;
- be required to submit an Annual Compliance Report to the FIAU by not later than 30th June of every year.
A transitory period ending on 30th April 2013 is being granted for compliance with the requirements under the Implementing Procedures as duly amended, meaning that licensed collective investment schemes effectively have until 30th April 2013 to comply with the requirements set out above.