In November 2022, the Financial Intelligence Analysis Unit (“FIAU”) published its Strategy for 2023 – 2026 which sets out, inter alia, its commitment to protecting the Maltese financial system and community from financial crime by combatting Money Laundering and Funding of Terrorism (“ML/FT”), through the generation and dissemination of useful intelligence and the application of effective and proportionate preventative measures.
Indeed, the FIAU often provides guidance to assist subject persons to understand their Anti-Money Laundering/Combating the Funding of Terrorism (“AML/CFT”) related obligations, communicate its expectations in terms of implementation of these obligations, and to promote a strong culture of compliance throughout the Maltese financial system.
During the last year, the FIAU has in fact published various sets of guidance which have served to assist subject persons in the implementation of their AML/CFT related obligations in effort of fostering effective compliance.
Some of the key takeaways from the sources published by the FIAU in 2022 are as follows:
Compliance with Beneficial Ownership Obligations by Company Service Providers – Thematic Review 2021
On 30th March 2022, the FIAU issued its findings following a thematic review of Company Service Providers’ (“CSPs”) compliance with beneficial ownership obligations, with the overall conclusion being a positive one in that non-compliance was only identified in a few exceptional cases. Among the various key findings which the FIAU set out in its communication include those on CSPs’ (i) policies and procedures, (ii) customer due diligence identification and verification processes implemented to identify and verify beneficial owenrs of customers; (iii) customer due diligence on going monitoring of business relationships processes implemented to ensure that information on their customers are kept up to date; and (iv) record-keeping efforts. The FIAU also set out some typologies of BO concealment practices identified during the thematic review.
FIAU Guidance Note on Common Issues related to the Money Laundering Reporting Officer
On 6th April 2022, the FIAU published a guidance note, which outlined the role of the Money Laundering Reporting Officer (“MLRO”) in effort of addressing the most common issues, concerns and queries which it noted have arisen in practice. The main issues addressed include those concerning the (i) independence & autonomy of MLROs, (ii) need for MLROs to avoid (both actual and potential) conflicts of interest, (iii) outsourcing, secondoment and/or employment of MLROs; (iv) knowledge, skill & expertise expected of MLROs; (iv) personal liability attaching to individuals who carry out the role of MLRO; and (v) record-keeping requirements which MLROs must adhere to.
FIAU Annual Report for 2021
On 21st June 2022, the FIAU published its annual report for 2021, highlighting the challenges faced in the first half of the year as it worked to implement recommendations made by MONEYVAL, as well as the extensive work which was performed in order to implement an action plan agreed with the Financial Action Task Force (“FATF”). The Annual Report concluded by declaring that 2021 was, despite the challenges faced in order to ensure that Malta is voted off the FATF’s grey list, a “successful” year following several achievements and improvements. The FIAU also reported an increase in suspicious reports filed by subject persons, as well as an uptick in intelligence reports shared with national and international competent authorities.
FIAU Guidance Note on the Use of Cash and the Banking Sector
On 8th July 2022, the FIAU published a Guidance Note entitled “The Use of Cash and the Banking Sector”, aimed at providing additional guidance to the Banking sector and other Subject Persons (“SPs”) on how to comply with their obligations under the Prevention of Money Laundering & Funding of Terrorism Regulations and the Use of Cash (Restriction) Regulations when dealing in cash. The Note provides examples of cash-associated ML/FT risks and red flags and offers pointers on how to identify and mitigate these risks, through monitoring cash deposits and withdrawals, whilst applying a risk-based approach to ongoing monitoring to identify any unusual patterns in customers’ behaviour.
FIAU Guidance Note on Obtaining Source of Wealth Information related to Parties other than the Customer
On 15th July 2022, the FIAU published a guidance note, which provides practical examples of instances when SPs would be expected to ask questions and obtain information and supplementary documentation on the source of wealth or activities of third parties which are not their customers. The guidance note focuses on requirements for SPs to assess and obtain information on the purpose and intended nature of a business relationship, as well as establishing the business and risk profile of their customers in order to ascertain whether additional information or documentation may need to be obtained on parties other than their customers.
FIAU Guidance Document about Reporting through goAML.
On 19th July 2022, the FIAU issued guidance regarding reporting through the goAML portal. The guidance clarifies the reporting process related to dealings with natural or legal persons linked to Iran and provides clarity on the different types of reports available. MLROs are reminded of their obligation to notify the FIAU of transactions from non-reputable jurisdictions, such as Iran, which fall under the FATF Category 1. The guidance also provides details on different types of reports that MLROs can file via the goAML portal, including Suspicious Transaction Reports, Suspicious Activity Reports, and Terrorist Financing Reports. SPs were also reminded of their obligation to report suspicious transactions and breaches of the Use of Cash (Restriction) Regulations.
Provision of Directorship Services by Corporate Service Providers – Thematic Review 2020
On 13th October 2022, the FIAU issued its findings following a thematic review of CSPs compliance with AML/CFT obligations when providing directorship services. Through this document, the FIAU aims to shed light on how CSPs structure their AML/CFT frameworks to evaluate and reduce the inherent risk associated with providing directorship services and in doing so, sets out various good and bad practices which CSPs adopt when, for instance, carrying out its Business and Customer Risk Assessments, carrying out Customer Due Diligence exercises and when monitoring transactions on an on-going basis.