A new law to regulate the use of cash in certain sectors of the economy is planned to be finalised in the coming months, the Financial Intelligence Analysis Unit (FIAU) has said.
In a document detailing its achievements during the months of January and July, the FIAU notes that 2020 saw significant changes to strengthen Anti-Money Laundering/Counter Financing of Terrorism (AML/CFT) practices in Malta and to improve local legislation in-line with the highest international standards and practices.
The document read that in January 2020, the FIAU met with another EU Member State to learn about the implementation of cash restrictions rules applied in their jurisdiction. Following this, a new law to regulate the use of cash in certain sectors of the economy was initiated in April 2020 and is planned to be finalised in the coming months.
“With several international studies citing cash as a preferred means to launder proceeds of crime or fund terrorism, the introduction of a cash restriction policy in Malta will constitute another useful tool in combatting these crimes. Presently, although the EU AML/CFT framework does not require EU Member States to have in place cash payment limits, an increasing number of countries have introduced cash restriction policies in recent years in an attempt to mitigate the ML/ FT risk which cash poses to states.
"More recently, in May 2020, the EU Commission indicated in its Action Plan for a comprehensive Union policy on preventing ML/FT the possibility of introducing such a measure at an EU-wide level. The FIAU is currently devising a plan to set-up an operational team responsible and tasked with monitoring enforcement of the law, as well as to inform and educate the general public on the said use of cash restrictions.”
The document reads that being able to tap accurate, up-to-date financial information on companies and individuals in a timely manner is a key advantage in the fight against money laundering. “As such, EU Member States are required under the 5th Anti-Money Laundering Directive (5AMLD) to maintain centralised databases of all bank accounts in their territories.”
The FIAU said that it is also presently developing such a database called the Centralised Bank Account Registry (CBAR) that will list all IBAN accounts issued by Maltese banks. Tax authorities, law enforcement and other bodies will be able to access the registry for data in a matter of seconds, greatly speeding up investigations and audits, the FIAU document read.
“The FIAU has been instrumental in the drafting of legislation to support the launch of CBAR. Drafting of the law is close to complete and a final version of the regulations is expected to be forwarded to the Minister for Finance and Financial Services in the coming days.”
To support the establishment of the system, the FIAU has arranged a series of meetings with key business analysts to ensure that the CBAR functions match the relevant legal requirements, security and operational processes, the FIAU said. “Following a successful first demo of the CBAR system, the FIAU invited selected Credit and Financial institutions to the initial pilot testing in August 2020, ahead of its official launch in September.”
140 examinations
During the period 1 January to 15 July, the FIAU, together with the Malta Financial Services Authority or the Malta Gaming Authority, executed just over 140 examinations, mainly offsite. Entities that were subject to examinations included credit institutions, financial institutions, gaming companies, firms providing investment services, as well as trustees and company services providers.
“We are also pleased to report that after extending the submission deadline to account for COVID delays, only 5% of Maltese subject persons failed to submit their so-called Risk Evaluation Questionnaire within the stipulated time period.”
On the enforcement side, the FIAU’s Compliance Monitoring Committee (the Committee), during the period from January to July 2020, held 37 meetings and took various enforcement measures on companies, such as the imposition of pecuniary penalties and the issuance of directives on subject persons for remedial action to address AML/CFT failings. “During this period, a total of 9 remediation directives have been issued on subject persons operating in various sectors of the economy. Moreover, the Committee also issued 5 administrative penalties on a number of subject persons for failures to meet their AML/CFT obligations, which failures were identified during onsite examinations amounting to €568,373.”