AML/CFT Compliance Services

At CSB Group, our AML/CFT compliance specialists can support your business in your effort to build the necessary compliance capacity to fulfil your obligations and safely proceed with the attainment of their strategic objectives.

Recent Anti Money Laundering Directives

One of the most fundamental AML directives ever transposed into our national laws is without any doubt – the 4th AML Directive. The latter, as per Legal Notice 372 of 2017, paved the way for the Money Laundering and Funding of Terrorism Regulations, 2017 (‘PMLFTR’) to be introduced.

The PMLFTR presented new regulations with a greater emphasis on a risk-based approach to fulfilling AML/CFT obligations. The latter mainly refers to the manner in which customer due diligence shall be carried out.

On the other hand, the most recent AML directives, i.e the 5th and 6th AML Directives, also brought about certain fundamental changes within our national laws regulating money laundering within the country.

On the 7th of February 2020, Act I of 2020 was published in the Government Gazette highlighting a number of amendments intended to transpose the 5th AML Directive into Maltese legislation which brought about significant changes, including but not limited to:

On the other hand, the 6th AML Directive, being the most recent of the series, is expected to lay down a uniform interpretation of the criminal offence of money laundering across the EU.

Some of the main changes being made as a consequence to the introduction of the above directive include:

AML/CFT Legislation in Malta

The legislations in Malta founded with the sole aim of combating the offences of money laundering and the funding of terrorism are mainly three:

Penalties applicable to legal entities or/and individuals

According to the Prevention of Money Laundering Act, any person who is found guilty of an offence regarding money laundering by the criminal court, shall be liable to a punishment of imprisonment of not less than 4 years but not exceeding 18 years, or to a fine of not less than €50,000 but nor more than two million and €2,500,000.

On the other hand, if such conviction is given by the Court of Magistrates (both that of Malta and Gozo), after all the details provided by the attorney general with regards to the offender are evaluated, the term of imprisonment would vary from 12 months to 9 years and the fine cannot be less than €20,000 and not more than €250,000.

However, the above-mentioned periods of imprisonment and the amounts of fines only apply to general people and not to subject persons. In any case, where subject persons, fail to comply with any directive, order or request issued by the FIAU, they will be liable to a fine of not less than €1,000 but not more than €45,000 for every separate failure. However, one must mention the fact that in certain circumstances involving minor breaches of the regulation, the FIAU has the right to impose an administrative penalty of a lesser amount than that state above.

Nonetheless, this cannot be less than €250. Where a legal practitioner carries out a ‘relevant activity’ as defined in these regulations, said practitioner shall be liable, on conviction, to a fine of not more the €1,000,000 or where the benefit derived can be calculated, not more than double the amount derived. In the case that a legal practitioner carries out a ‘financial relevant activity’ as implied in these regulations, the administrative penalty, on conviction, cannot exceed €5,000,000 or not more than 10% of the benefit derived from that contravention.

‘Subject Persons’ according to the PML/FTR

According to the Prevention of Money Laundering and Funding of Terrorism Regulations, the following shall be considered as ‘Subject Persons’:

Financial Institutions AML/CFT Compliance Obligations

A financial institution intending to provide any of the activities referred to in the Schedules included within the Financial Institutions Act (including, but not limited to: Lending, Financial Leasing, Venture or risk capital, Guarantees and commitments, Money broking and issuing of electronic money etc..) through an agent or, in the case of an electronic money institution intending to appoint a distributor to distribute or redeem electronic money, shall communicate a description of the internal control mechanisms that will be used by the agent in order to comply with the obligations in relation to money laundering and the funding of terrorism under any anti-money laundering and combating the funding of terrorism legislation.

If the competent authority has reasonable grounds to suspect that, through such branch, agent or distributor, money laundering or the funding of terrorism is being or has been committed or attempted, or that the engagement of a branch or agent could increase the risk of money laundering or the funding of terrorism, it shall inform the Member State in which the financial institution is established, and may refuse to register the branch or agent, or may withdraw the registration of the branch or agent.

Know Your Customer (KYC) and due diligence

According to the PML/FTR, every subject person shall duly conduct customer due diligence. This includes but is not limited to:

Risk Management

Subject Persons shall also ensure that the risk management procedures are duly maintained and carried out. Subject persons shall, as far as reasonably possible, examine the purpose and background of all transactions/activities that:

Provided that in such cases subject persons shall increase the degree and nature of monitoring of the business relationship, to determine whether those transactions or activities are suspicious.

Record Keeping and Reporting Procedures and Obligations

Subject persons shall retain documents and information for the purposes of the prevention, detection, analysis and investigation of money laundering or funding of terrorism activities by the Financial Intelligence Analysis Unit, relevant supervisory authorities, or law enforcement agencies in accordance with the provisions of applicable law.

Our AML/CFT Compliance Services

CSB Group’s Compliance Team assists clients with their FIAU reporting requirements by focusing on the nature of the relevant activity being carried out and the context within which the subject person operates. For the Business Risk Assessment, a tailor-made evaluation of all relevant business risk areas faced by the company is prepared and clearly presented for the board to be informed and deliberate accordingly, before approval and submission to the FIAU.

A Risk Evaluation Questionnaires (REQs) submitted through the FIAU’s Compliance and Supervision Platform for Assessing Risk (CASPAR) is the Unit’s advanced monitoring system, utilised to assess regulatory compliance performance of subject persons. This requires the person/agent completing it to have intimate knowledge and access to all areas of the subject person’s business. CSB’s Compliance Team supports employees of subject persons tasked with the duty of collating the large volume of information in order to complete the REQ, by reviewing it before submission and providing clarity when and as may be needed.

CSB Group’s AML/CFT Services are further complemented by other compliance-related services such as: