Amendments to the Prevention of Money Laundering and Funding of Terrorism Regulations

NEWS

12 May 2021

Legal Notice 199 of 2021, entitled ‘Prevention of Money Laundering and Funding of Terrorism (Amendment) Regulations’ (“Amendments”) issued on 30th April 2021, introduces a series of amendments to the Prevention of Money Laundering and Funding of Terrorism Regulations, also known as PMLFTR (“Principal Regulation”).

The prominent amendments carried out to the PMLFTR are the following:

Reference

Principal Regulations

Amendments

Article 2(1)

The PMLFTR defines ‘supervisory authority’ as follows:

  1. Central Bank of Malta
  2. Malta Financial Services Authority (MFSA)
  3. Registrar of Companies acting under articles 403 t0 423 of the Companies Act
  4. The Malta Gaming Authority acting under the Gaming Act, and any regulations issued thereunder
  5. The Accountancy Board acting under the Accountancy Profession Act

By means of the Amendments, ‘supervisory authority' is now defined as follows:

  1. Central Bank of Malta
  2. Malta Financial Services Authority (MFSA)
  3. Malta Business Registry
  4. The Malta Gaming Authority
  5. The Accountancy Board
  6. Trade Licensing Unit limitedly to its licensing function in relation to dealers in precious metals and stones
  7. Licensing Board established under the Real Estate Agents, Property Brokers and Property Consultants Act

Article 2(1)

The PMLFTR defines ‘trust and company service provider’ as follows:

(a) provides trustee or other fiduciary services, whether authorised or required to be authorised, in terms of the Trusts and Trustees Act, other than persons acting as trustees in terms of article 43A of the said Act;

(b) acts as a company service provider, whether registered or notified, or required to be registered or notified in terms of the Company Service Providers Act;

(c) arranges, by way of business, for another person to act as a trustee of an express trust or a similar legal arrangement;

(d) arranges, by way of business, for another person to act as a fiduciary shareholder for another person other than a company listed on regulated market that is subject to disclosure requirements in conformity with the Financial Markets Act or subject to equivalent international standards.

By means of the Amendments, ‘trust and company service provider’ is defined as follows:

(a) provides trustee or other fiduciary services, whether authorised or required to be authorised, in terms of the Trusts and Trustees Act, other than persons acting as trustees in terms of article 43A of the said Act;

(b) acts as a company service provider, whether authorised, registered or notified, or required to be authorised, registered or notified in terms of the Company Service Providers Act;

(c) arranges, by way of business, for another person to act as a trustee of an express trust or a similar legal arrangement;

(d) arranges, by way of business, for another person to act as a fiduciary shareholder for another person other than a company listed on regulated market that is subject to disclosure requirements in conformity with the Financial Markets Act or subject to equivalent international standards.

Article 11(11)

This article used to set out the obligations that subject persons must adhere to when carrying out occasional transactions, establishing a business relationship or carrying out transactions involving non-reputable jurisdictions in respect of which there is an international call for countermeasures. This article used to also set out the powers the Financial Intelligence Analysis Unit (FIAU) enjoyed in these scenarios.

Whilst keeping the same wording, the Amendments clarified the provision whereby article 11(11) sets out the obligations of subject persons whilst the newly introduced sub-regulation 11(12) provides the FIAU powers in such scenarios.

Article 21(4)(b)(ii)

This clause provided the administrative penalty that the FIAU could impose in case of subject persons carrying out relevant financial business.

The Amendments provide more clarity to the powers provided to the FIAU when imposing an administrative penalty.

The Amendments ensure that the FIAU is enabled to impose an administrative penalty of not more than €5,000,000 in the case of serious, repeated or systematic breaches of any of the requirements arising from the PMLFTR.

It is only when the FIAU deems that the imposition of an administrative penalty of €5,000,000 is deemed not to be effective and dissuasive, that it can impose an administrative penalty of not more than 10% of the subject person total annual turnover.

In such case, the administrative penalty would result in a penalty higher than €5,000,000.