Updates to the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR)
News    ·   17-05-2021

AUTHOR: Diane Bugeja; Peter Mizzi

On the 30th of April 2021, several amendments to the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR), were brought about through L.N. 199 of 2021. The scope of this notice was to address shortcomings in relation to align with EU Directive 2015/849 as well as other amendments relating to new supervisory authorities and clarifications surrounding penalties.

1)      Inclusion of more Supervisory Authorities - Regulation 2 (1) of the PMLFTR has been broadened to include the following authorities as ‘supervisory authorities’:

a)      The Malta Business Registry;

b)     The Trading Licensing Unit limitedly to its licensing function in relation to dealer in precious metals and stones; and

c)      The Licensing Board established under the Real Estate Agents, Property and Property Consultants Act.

It is expected that such inclusions will encourage potential cooperation and collaboration between the FIAU and these bodies.

2)      Updating the Definition of ‘Trust and Company Service Provider’ - The Company Service Providers Act has brought about various amendments to the regulatory framework for Company Service Providers (“CSPs”) which will require all persons providing services as a CSP to apply for authorisation from the MFSA. Following this revamp, paragraph (b) has been amended to include the term ‘authorised’ – safeguarding any misinterpretation that an authorised CSP is still considered a subject person under the PMLFTR.

3)      Amendments to reflect the requirements of Directive (EU) 2015/849 – The European Commission noted that some provisions were not in line with Directive (EU) 2015/849 - namely, the possible exemptions for AML/CFT requirements in relation to money-transfer/remittance services (Reg 4(1)) and record-keeping requirements (Reg 13).

4)      Counter-measures on FATF blacklisted jurisdictions - When carrying out occasional transactions or business relationships or transactions involving non-reputable jurisdictions in respect of which there is an international call for counter measures, Regulation 11(11) of the PMLFTR sets out the obligated for subject persons. In addition to informing the FIAU in writing, the Regulation has been revised and reduced to one or more of the following EDD measures:

a)      carry out additional customer due diligence measures;

b)     introduce enhanced reporting mechanisms or systemic reporting of transactions; and

c)      limit occasional transactions or business relationships involving such non-reputable jurisdictions."

Furthermore, a sub-regulation was introduced to clarify the FIAU powers in such cases.

5)      Clarifications on quantification of penalties - This sub-paragraph has been amended, to make clarify the powers of the FIAU when it comes to imposing administrative penalties to subject persons who carry out relevant financial business. The FIAU is only allowed to endorse an administrative penalty not more than EUR5,000,000 in the case of serious, repeated or systematic breaches for any PMFTR requirement. Nevertheless, the FIAU may impose an administrative fine of not more than 10% of the subject persons turnover, should it deem the breaches to be so severe - given that this does in fact result in a penalty high than EUR5,000,000.

Subject persons should familiarise themselves with the amendments and make any alterations as applicable to them.

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