Amendments to FIAU Implementing Procedures

On the 5th February 2013, the Malta Financial Services Authority (MFSA) issued a Circular addressed to the investment services industry regarding the Prevention of Money Laundering and Funding of Terrorism (Amendment) Regulations, 2009, in connection with the revision of Part I of the Implementing Procedures, issued by the FIAU in terms of Regulation 17 of the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR), which changes are being introduced through the inclusion of a new Chapter 9 and additional paragraphs to Section 6.1 of the FIAU Implementing Procedures.

AIFMD

The amendments to the Implementing Procedures align the interpretation of the phrase “marketing its units or shares” as used in paragraph (f) of the definition of “relevant financial business” in the PMLFTR with the definition of the said term in the Alternative Investment Fund Managers Directive (Directive 2011/61/EU) and effectively broaden the scope of applicability of the PMLFTR to cover all collective investment schemes (CIS), the units or shares in which are offered to or placed with investors, whether directly or indirectly, by the CIS itself or by other third parties on behalf of the CIS. The said change means that all such CISs are now deemed to be “subject persons” for the purposes of the PMLFTR.

CIS

The revisions provide for an exception to the above-stated general rule whereby CISs which only have a limited physical operational setup in Malta (being those CISs which have no physical presence in Malta other than their registered address and a board of directors, which do not engage any employees and which are not involved in the acceptance and processing of subscriptions and the collection of funds from investors) may outsource the implementation of the measures and procedures applicable to them under the PMLFTR to the MLRO of the administrator of the CIS.

The practical implications of the above-mentioned amendments for existing licensed CISs are that they will now:

• be deemed to fall within the definition of ‘subject person’ for the purposes of the PMLFTR.
• be required to comply with the relative provisions of the PMLFTR and, save for the exception set out above in respect of CISs having a limited physical operational setup in Malta, must appoint a Money Laundering Reporting Officer (MLRO), who must be duly approved as such by the MFSA;
• be required to submit an updated prospectus relating to the CIS to the MFSA;
• be required to submit an Annual Compliance Report to the FIAU by not later than 30th June of every year.

CISs have until 30th April 2013 to comply with the new requirements of the implementing procedures set out above.