Posted on 11 May 2020

FIAU Updates from Q1 2020

Increase in Human Resources, Reorganisation and Restructuring

The FIAU is in the process of undergoing reorganizational changes and a restructuring process. There is a four year plan for human resources to be increased.

The structural changes in the Intelligence and Analysis Unit have enabled it to focus on the processing and prioritising of suspicious transaction reports (“STRs”), operations and strategic analysis. The Supervision and Enforcement Unit have also gone through significant changes focusing mainly on the identification and assessment of money laundering and terrorist financing risks, the supervision of compliance with anti-money laundering and combatting financing of terrorism (“AML/ CFT”) obligations and enforcement where there are identified breaches. The Supervisory Unit has been split to focus on three main areas being credit and financial Institutions, investments and virtual financial assets, and designated non-financial businesses and professions.

The FIAU Board of Governors now includes additional members who are nominated by the Malta Gaming Authority and the Commissioner of Revenue. The Attorney General is no longer a member of the Board.
 

Increased FIAU Activity

The FIAU as the national AML/CFT supervisor, increased pecuniary fines for AML/CFT breaches by 190% in 2019. It imposed €3.9 million on subject persons. During Q4 2019, the FIAU’s Compliance Monitoring Committee (“CMC”), which is responsible for considering potential breaches of AML/CFT obligations and determining appropriate measures, was strengthened with the roll out of an enforcement categorisation tool to help decide which administration measures must be applied in response to AML/CFT breaches. At the same time, a sanctions tool was introduced to assist the CMC decide what pecuniary fines to impose. The sanctions tool has already been used in five cases.

The FIAU has also reported that it received 2,778 STRs in 2019, representing a 65% increase over 2018. In preparation for the new STR submission system, the FIAU has published the test environment for the use of the reporting entities to test the system and train their internal staff. By the 29 April 2020 all the reporting entities must then register on the new production environment in preparation of the data migration of the FIAU system.

The existing STR submission system should be used until end of June 2020 and another FIAU communication will published to confirm the details for the Go Live date.
 

Amendments to the Prevention of Money Laundering Act (“PMLA”) (Cap. 373 of the Laws of Malta) and the Prevention of Money Laundering and Funding of Terrorism Regulations (“PMLFTR”) (S.L. 373.01)

Several amendments were made to the PMLA, by virtue of Act No.1 of 2020. The amendments seek to transpose a number of provisions of the 5th AMLD. Amendments have also been made to clarify certain provisions and to enhance the legislative framework in place for the prevention of money laundering and funding of terrorism.

There have also been a series of amendments to the PMLFTR seeking to transpose the provisions of  the 5th AMLD.

These include the:

  • Widening of the definition of “relevant activity” to include non-financial businesses.
  • Revision of definitions such as “occasional transaction” and “beneficial owner.”
  • Amendment to the definition of “politically exposed person” to include an exhaustive list of prominent public functions.
  • Amendments to Regulation 7 on Customer Due Diligence (“CDD”) and an additional Regulation 7A dealing with CDD for electronic money;
  • Revision to Regulation 11 to harmonise the obligation of conducting enhanced due diligence measures particularly when dealing with nonreputable jurisdictions; and
  • Amendments to Regulation 16(2) which clarifies the instances when subject persons are allowed to share information on suspicious transactions submitted to the FIAU.

The FIAU has also issued a consultation paper on proposed Amendments to the PMLFTR and the FIAU Implementing Procedures Part 1, which seek to address shortcomings identified by the MONEYVAL assessors in Malta’s Fifth Round Mutual Evaluation Report. In this regard the proposed amendments seek to revise the time-frames for submission of STRs as well as impose administrative sanctions on persons who have a senior managerial role and who are found to be responsible for breaches of AML/CFT obligations.

Contact

Chris Casapinta

Country Executive Malta; Italy

+356 22 05 1000

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