The Malta Independent 12 May 2021, Wednesday

Suspicious transaction reports tripled from 2018 to 2020, FIAU Annual Report finds

Bettina Borg Tuesday, 4 May 2021, 16:53 Last update: about 7 days ago

Suspicious transaction reports have tripled from 2018 to 2020, the Financial Intelligence Analysis Unit (FIAU) Annual Report for 2020 has found.

The report, published on Tuesday, presented the collection, analysis and dissemination of intelligence and reflects on how money laundering and funding of terrorism in Malta has fared over in 2020. It considered data from January to June of 2020.

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Despite the Covid-19 pandemic, the FIAU hailed 2020 “as a successful year”, the report reads. Although the FIAU was tasked with shifting online, supervision continued uninterrupted and a total of 206 supervisory examinations were carried out in conjunction with the Malta Financial Services Authority (MFSA) and the Malta Gaming Authority (MGA).

“The International Monetary Fund (IMF) set a conservative estimate that as of 2018, around 5% of the Global Gross Domestic Product was laundered money”, the report reads. This figure, it says, is steadily rising.

While 1,679 reports of suspicious transactions were filed in 2018, a staggering 5,175 reports were filed in 2020. 2019 saw 2,778 reports filed.

The majority of suspicious transaction reports received by the FIAU in 2020 were filed by remote gaming companies, with a total number of 2,485 reports (48%), followed by credit institutions with 1,975 reports (38%).

Reports received by gaming companies have risen by 72% when compared to reports received in 2019 (1,445 reports received) and credit institutions have risen by 105% from 2019 (962 reports received).

The FIAU shared 4,535 intelligence reports with national and international competent authorities, as well as counterpart financial intelligence units.

It also submitted 70 analytical reports to the police containing reasonable suspicion of money laundering and financing of terrorism and 173 disseminations consisting of additional intelligence reports and spontaneous intelligence reports.

The types of persons subject to suspicious reports were 75% natural persons, meaning an individual about whom a suspicious report was received, and 25% legal persons, meaning an organisation or entity about which a suspicious report was received.

On a global scale, 65% of legal persons about who a suspicious report was received originated from Malta. On the other hand, 18% of natural persons about who a suspicious report was received originated from Malta.

These statistics make Malta one of the most popular countries to receive suspicious reports about natural and legal persons in 2020.

61% of requests for information by the FIAU originated from credit institutions, while 36% of requests came from other subjected persons and 3% came from supervisory and competent authorities.

From the main suspected predicate offences reported in 2020, 31% of offences were tax crimes, 29% of crimes were fraud and 19% of crimes had predictable offences which could not be established.

The main reasons for suspicion in 2020 were transaction activities which were unexplained or inconsistent with the known customer profile (33%), customers being uncooperative (14%) and unusual or suspicious identification documents or lack of documents (11%). 

A total of €3,805,061 administrative penalties were imposed per sector following a supervisory examination by the FIAU. The vast majority of this total was imposed on investment services (€1,329,273) were imposed on investment services and gaming operators (€791,917).

In addition, €529,950 worth of administrative penalties was imposed following failure to carry out periodic reporting or late submissions in 2019. 301,050 of these penalties were imposed on gaming operators.

The FIAU also strived to implement every recommendation suggested by the reviews and assessments from the European Banking Authority, the European Commission, the International Monetary Fund and MONEYVAL.

Addressing the MONEYVAL recommended actions in 2020, the FIAU increased its human resources, jumping from 43 employees in 2018 to 98 employees by the end of 2020. 157 employees are expected to be working with the FIAU by the end of 2021. A heavy investment of €8.5 million was directed into the FIAU to increase resources, the report says.

Additionally, the FIAU has seen an increased investment in technical resources in 2020, particularly with investments in the Compliance and Supervision Platform for Assessing Risk (CASPAR), the goAML Intelligence Database and various analytic tools.

It has also had an overhaul of the Risk Assessment Process, with the launch of the CASPAR Risk System and Sector Specific Risk Evaluation Questionnaires which provide the FIAU with an extensive risk understanding to improve its risk-based supervision.

FIAU Director Kenneth Farrugia confirmed with this newsroom that the recent €10,000 transaction limit introduced on property and other transactions has not affected the 2020 annual report, since the law was passed in 2021. He said, however, that FIAU plans to set up a specific team to tackle any cases which breach this law.

Farrugia also said that the law will discourage the use of physical cash, which is the cause for most money laundering incidents due to its untraceable nature.

The report closed by stressing the impact that money laundering has on the financial system, as well as Malta as a whole.

“Money laundering undermines the integrity of the financial system, the wellbeing of the economy and a country’s reputation, leaving society at large as the biggest victim”, it reads.

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