On the 6th July 2017, the Financial Intelligence Analysis Unit (“FIAU”) launched an industry-wide consultation in connection with the proposed revision of the Prevention of Money Laundering and Funding of Terrorism Regulations (the “Regulations”). The revisions to the Regulations broadly aim to transpose the Fourth AML Directive into Maltese law, which Directive effectively incorporated new FATF recommendations to bring European legislation in line with international standards in combatting money laundering and the funding of terrorism with a view to bolstering the overall integrity of the financial system and internal market.
The revisions to the Regulations broadly aim to transpose the Fourth AML Directive into Maltese law … with a view to bolstering the overall integrity of the financial system and internal market
The revised Regulations are intended to substitute the current set of regulations in toto whilst retaining a degree of uniformity across both versions insofar as structure and numbering is concerned.
The main changes to the regulatory regime which will be brought about by the revised Regulations may be summarised as follows:
- Extension of definition of ‘subject person’ – The scope and applicability of the Regulations will be widened such that the definition of a ‘subject person’ will cover additional providers of gaming services and the threshold for payments in cash which would lead a trader in goods to be deemed a subject person has been revised downwards from €15,000 to €10,000. Moreover, the term ‘relevant financial business’ has been extended to cover, inter alia, the provision of advice on capital structure, industrial strategy as well as services related to mergers and acquisitions. Acting as qualified persons in terms of the Trusts and Trustees Act will also trigger compliance under the new Regulations.
- Widening of ‘beneficial owner’ definition – In cases where no person holds the required percentage of shares or voting rights or where no one else is deemed to be exercising control, the revised Regulations will require subject persons to identify those individuals who occupy senior management positions within the corporate entity concerned. Any beneficiary of a trust (irrespective of the extent of beneficial interest held) will be considered a beneficial owner for the purposes of the revised Regulations.
- Mandatory risk-based approach – Subject persons will be obliged to carry out a risk assessment to identify the ML/FT risks they are exposed to and to model their AML/CFT controls on the basis of such assessments while ensuring that their application in each individual case is also risk-based.
- EDD to be applied on all PEPs – Enhanced Customer Due Diligence measures (“EDD”) must be applied by subject persons in respect of both domestic and foreign Politically Exposed Persons (“PEPs”).
- Extension of scope of ‘reliance’ – The Regulations will allow subject persons to place reliance on any other subject person and any other entity which is subject to equivalent AML/CFT legislation and subject to supervision in a manner which is consistent with the requirements of the Fourth AML Directive.
- Enhanced sanctioning provisions – The Regulations will empower the FIAU to impose more effective penalties for serious, repeated and systematic AML breaches, in accordance with the Fourth AML Directive.
The FIAU consultation period closes on the 1st September 2017.