Money Laundering

Legal Notice 199 of 2021 and the changes it brought to the Prevention of Money Laundering and Funding of Terrorism Regulations 

by , on Nov 15, 2021 07:00:34 AM

 A number of amendment with regards to the principal regulations, the Prevention of Money Laundering and Funding of Terrorism Regulations, were issued by virtue of LN 199 of 2021 on the 30th April of 2021. The following amendments have taken place: 

  • Regulation 2 of the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR), has been amended. The definition of ‘Supervisory Authority’ in the main regulation has been slightly expanded by virtue of the legal notice. The Malta Business Registry (MBR), the Licensing board formed under the Real Estate Agents, Property Brokers and Property Consultants Act, and the Trade Licensing Unit have now been added to the list of Authorities considered Supervisory Authorities with regards to the PMLFTR, restricted to its licensing role in terms of dealers in precious metals and stones. The inclusion of the aforesaid Authorities within the list issued within the regulation will help to clarify any future cooperation and collaboration amongst the FIAU and these new authorities.  
  • The legal notice also changed the definition of ‘Trust and Company Service Provider’. The Company Service Providers (CSP) Act has undergone significant revisions, with existing and prospective Service Providers now demanding approval from the Malta Financial Services Authority (MFSA), rather than simply being registered with the MFSA or having informed the FIAU. To ensure that there is no ambiguity, the term ‘authorised’, has been added to paragraph (b) of this definition via the legal notice. As a result, each and every entity authorised under the CSP Act as amended is still deemed to be performing relevant activity and is subsequently subject to the PMLFTR.  
  • Amendments to Regulations 4 and 13 of the PMLFTR – The European Commission had noted that, following the transfer of Directive (EU) 2015/849 into Maltese legislation, several of the PMLFTR’s provisions were not exactly in line with the Directive’s requirements. As a result, the legal notice makes additional changes to the PMLFTR to reflect the Directive’s requirements for possible exemptions from AML/CFT requirements and subject individuals’ record-keeping duties.  
  • Regulations 11(11) of the PMLTR was amended to clarify the obligations that subject individuals must follow when conducting occasional transactions, setting up business relationships, or conducting transactions within the context of a business relationship with non-reputable jurisdictions for which there is an international call for countermeasures. Prior to these modifications, this provision details as well the powers that the FIAU held in such circumstances. Regulation 11(11) is now restricted to defining the obligations of subject people, and a new sub-regulation defining the FIAU’s powers within such instances was added as a result of modifications.   
  • Amendments to Regulation 21 of the PMLFTR have been made to Article 21(4)(b)(ii) of the legal notice in order to clarify the authorities of the FIAU in respect to the imposition of administrative penalties on subject individuals who engage within relevant financial operations. Following such revisions to the PMLFTR, the FIAU is now authorised to impose an administrative penalty of up to €5,000,000 in the event of substantial, recurrent, or systematic violations of any of the PMLFTR’s criteria. If the breaches are so serious that a fine of €5,000,000 is not enough, the FIAU can take into account the subject person’s turnover and impose an administrative penalty of not more than 10% of the turnover, as long as the administrative penalty is not more than €5,000,000. 


Author: Maila Cimino