Prevention of Money Laundering in Malta

Malta’s commitment to the fight against money laundering and the funding of terrorism is firmly rooted in the country’s interest in safeguarding its role as a reputable financial services centre, and reinforced by the country’s status as a full member of the European Union and signatory to the main international multilateral treaties intended to tackle the affliction of money laundering in the world’s financial markets. Malta does not appear on any international blacklist whatsoever and co-operates fully with the FATF and the OECD.

Legislation on Prevention of Money Laundering and Funding of Terrorism Activities

Malta’s prevention of money laundering regime is summed up in two statutory instruments, namely the Prevention of Money Laundering Act (PMLA) and the Prevention of Money Laundering and Funding of Terrorism Regulations (The Regulations). The PMLA establishes the foundations for the legal framework by introducing basic legal definitions, laying down the procedures for the investigation and prosecution of money laundering offences, and establishing the Financial Intelligence Analysis Unit. The Regulations, on the other hand serve to flesh out the substantive provisions relating to the offences, throwing light on the systems and procedures to be adopted by subject persons in the course of their business activities.

Material elements of the offence

The material element of the offence must consist in any of the following actions and must be accompanied by the associated intentional element as indicated below:

• Converting or transferring property, with the knowledge that such property is derived from criminal activity or participation in such activity, for the purpose of concealing or disguising the origin of the property or assisting a person involved in criminal activity.
• Concealing or disguising the true nature, source, location, disposition, movement, right over or the ownership of property with the knowledge that such property is derived from criminal activity or any participation therein.
• Acquiring property with the knowledge that such property is derived from criminal activity or any participation therein.
• Retaining without reasonable excuse property with the knowledge that such property is derived from criminal activity or any participation therein.
• Any attempt at or complicity in any of the above matters or activities.

Money laundering offences may be committed by any person including companies or other legal persons. In the latter case, guilt is attributed by way of vicarious liability to every person who, at the time the offence was committed, was a director, manager, secretary or other similar officer. However, it is possible for such person to raise the defence that the offence was committed without his/her knowledge and that s/he exercised all due diligence to avoid its commission.

Subject Persons

Subject persons include auditors; accountants; tax advisors; real estate agents; notaries and lawyers; fiduciary service providers; casino licensees; dealers in precious stones or metals, or works of art or similar goods and auctioneers, whenever payment is made in cash in an amount exceeding €11,647; and persons involved in the business of banking, life insurance, stock-broking, investments services and other related financial services. This classification is expected to be widened somewhat to include every person trading in any goods whenever payment is made in cash and exceeds € 15,000.

Duty to inform on suspicious activities/ Other Obligations

The Regulations impose a number of duties on the subject person namely identification and customer due diligence, internal record keeping, internal and external reporting and employee instruction and training.

A subject person is obliged to designate a reporting officer who will determine whether the facts reported to him raise a suspicion of money laundering or funding of terrorism. Records of identity and records of all business transactions carried out by subject persons must be kept for at least five years from the date on which the relevant financial business or relevant activity was completed.

Financial Intelligence Analysis Unit

The Financial Intelligence Analysis Unit is the national central agency responsible for the collection, collation, processing, analysis and dissemination of information of suspected money laundering or terrorist financing related activities, thus supporting the domestic and international prevention of money laundering and financing of terrorism law-enforcement efforts.

The FIAU has three main responsibilities:

1. it receives information from subject persons in respect of transactions suspected to be involved with money laundering or related to the financing of terrorism, analyses such information and report thereon.
2. It exchanges information and co-operates with local and international authorities and with other international authorities, either spontaneously or through memoranda of understanding;
3. It oversees compliance by subject persons with the provisions of the PMLA and the Regulations.

The Attorney’s General Office

The Attorney General may apply to the Criminal Court for such Order if he has reasonable cause to suspect that a person is guilty of a money laundering offence, requesting the issue of an Investigation Order providing access to any place for the purpose of searching for any material relevant to the said offence. Such Investigation Order cannot be opposed by the issue of a warrant of prohibitory injunction.

Penalties

A person found guilty of such an offence is liable, on conviction, to a fine not exceeding €2,330,000, or to imprisonment for a period not exceeding 14 years, or to both such fine and imprisonment. Non- compliance with the obligations imposed on subject persons in the Regulations entails a fine not exceeding €46,600 or to imprisonment for a period not exceeding 2 years, or to both such fine and imprisonment.

For further information about how GVZH Advocates can help you with your prevention of money laundering requirements, kindly contact us on finance@gvzh.mt.