Tackling Beneficial Ownership Concealment and Submitting Tax-Related Suspicious Reports
News    ·   07-01-2022
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AUTHOR: Luke Mizzi; Peter Mizzi

On 31December 2021, the FIAU released an intelligence factsheet on the misuse of corporate vehicles registered in Malta, primarily focusing on the concealment of beneficial ownership (BO)[1]. This factsheet comes as part of a series of guidance documents issued by the FIAU, that seek to address the main findings following the FATF’s grey listing of Malta. Intelligence obtained through a strategic analysis on the misuse of Maltese registered companies, led to the compilation of certain money laundering and funding of terrorism (ML/FT) red flags intrinsically tied to the concealment of BO. The factsheet also contains an analysis of suspicious transaction reports (STR) submitted by subject persons in the form of case studies.

Subject persons are reminded of their obligation to ensure that beneficial ownership information is accurate and up-to-date, to address any BO-related discrepancies, and to consider reporting any ML/FT red flags to the FIAU when concealment is alleged.

The FIAU wishes to clarify and remind subject persons that red flag indicators do not automatically imply that ML/FT is occurring, but rather trigger further understanding and questioning the situation at hand. As a first step, the subject person should seek to obtain customer due diligence measures, for example, obtaining supporting documentation from the customer.

Red flags indicators revolved around company structures, submission of documentation, and invoicing. The FIAU has cited several red flags ranging from complex structures and frequent changes to the company name to false financial declarations and shareholder loans without justifications for repayments to generic invoices missing critical elements.

One case study cited an STR which uncovered the concealment of BO through shares held by a person on behalf of another individual – who has several international convictions. The individual portrayed as the BO was unable to answer basic questions on the company’s business and finances and this led to suspicion that another individual was in fact appearing and acting as the BO on his behalf.

The second case study involved an international complex structure whereby several transactions were sent to an individual, later being identified as the real BO. Following further research, it transpired that the individual was sentenced to prison in his country for embezzlement.

Additionally, subject persons are encouraged to refer to the joint FATF-Egmont Group report issued back in 2018 titled Concealment of Beneficial Ownership.[2]

Furthermore, on the same day, the FIAU also published a guidance note[3] intended to assist subject persons in reporting more accurately, tax-related suspicious reports via goAML.

The document aims to provide subject persons with important tax-related ML/FT indicators that are found on goAML platform that are to be used when reporting serious and complex tax crimes, alongside a separate excel file containing a list of indicators that were most commonly used in such cases:

  • Adverse media;
  • Suspected BO concealment;
  • Transactions without economic purpose;
  • Complex multi-jurisdictional structures without business rationale;

 

 

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