CENTRAL AUTHORITY FOR REPORTING
Financial Intelligence Analysis Unit (the “FIAU”)
The FIAU is a governmental agency having a distinct legal personality. It is responsible for the collection, collation, processing, analysis and dissemination of information of suspected money laundering or terrorist financing activities in order to combat money laundering and terrorist financing in Malta.
ANTI-MONEY LAUNDERING REGULATOR(S)
While the authorities mentioned below are not anti-money laundering regulators as such, they fall under the definition of ‘supervisory authority’ under the Prevention of Money Laundering and Funding of Terrorism Regulations (Legal Notice 180 of 2008, as amended by Legal Notices 328 of 2009 and 202 of 2012) (the “PMLFTR”). The PMLFTR were enacted under the principal piece of legislation the Prevention of Money Laundering Act 1994, as subsequently amended (Chapter 373 of the Laws of Malta) (the “PMLA”). The below-mentioned authorities are themselves subject to the PMLFTR and are bound to report to the FIAU suspicious activities that may be linked to money laundering or the funding of terrorism:
- The Malta Financial Services Authority (the “MFSA”) is the single regulator for financial services. This is a fully autonomous public authority, which reports to the Maltese Parliament on a regular basis. In certain instances, the MFSA acts as an agent of the FIAU, in that it undertakes a number of on-site Anti-Money Laundering checks on its License Holders during its compliance visits. In fact, on 18 March 2014, the FIAU and the MFSA signed a Memorandum of Understanding aimed at enhancing the level of cooperation between them;
- The Central Bank of Malta, which is an independent, autonomous body, established by statute and responsible to Parliament;
- The Lotteries and Gaming Authority (LGA) is the single public regulator and supervisory body for all forms of gaming in Malta.
There are also other bodies which have the responsibility to regulate certain professions such as the:
- The Chamber of Advocates (the “CoA”), which regulates the legal profession;
- The Commission for the Administration of Justice, which is set up under the Maltese Constitution and which is also regulated by means of Chapter 369 of the Laws of Malta. Among its functions, it has the task of drawing up a Code of Ethics and Conduct for Advocates regulating the conduct of members of the legal profession and also oversees the legal profession and has the power to suspend and/or revoke a professional warrant issued to a legal professional;
- The Malta Institute of Accountants (MIA), which regulates the audit and accountancy profession;
- The College of Notaries, which regulates the notarial profession;
- The College of Legal Procurators, which regulates Legal Procurators.
While these are not specifically bound by the PMLFTR, they have an interest in ensuring that the professionals they regulate are complying with anti-money laundering (“AML”) and combating the funding of terrorism (“CFT”) legislation. However, they do not have any regulatory role as such.
The following bodies are also engaged in the continuous fight against money laundering and the funding of terrorism:
- The Malta Police Force also has a specific Economic Crimes Unit (responsible for the investigation of all financial related crimes) of which the Money Laundering Unit forms part. The Money Laundering Unit investigates reports sent by the FIAU, as well as reports from other sources. The police investigating officers also prosecute the cases which they investigate;
- There is a Money Laundering Unit established within the Office of the Attorney General which requests the courts to issue judicial orders (namely investigation and attachment orders, which are specifically designed to facilitate money laundering investigations and which could eventually be followed by freezing and confiscation orders);
- The Registry of the Criminal Courts and Tribunals has within it the Asset Management Unit which is entrusted with sending out notifications (generally via e-mail) requesting, for the purpose of collating, information/statements in relation to assets of individuals/entities made subject to a freezing order issued by the courts. Failure to reply (both positively or negatively) within the stipulated deadline will be brought to the attention of the court for it to take cognizance of the matter. Freezing orders are published in the Malta Government Gazette, and are also uploaded on the FIAU’s website for information purposes only pursuant to an informal arrangement between the FIAU and the Courts of Malta.
- The Minister responsible for Finance, in consultation with the Minister responsible for Justice, has the authority under the PMLA to make rules and regulations for the better application of the provisions of the PMLA;
- The Ministry for Foreign Affairs, in co-ordination with the Attorney General’s Office, takes action to issue the relevant Legal Notices relating to the implementation of the United Nations Security Council resolutions as subsidiary legislation to the National Interest (Enabling Powers) Act, Chapter 365 of the Laws of Malta (which Legal Notices are published in the supplement to the Malta Government Gazette). EU Council and Commission Regulations concerning restrictive measures are directly applicable in Malta as a Member State of the European Union. However, implementation regulations for their enforcement and the imposition of penalties are also made under the National Interest (Enabling Powers) Act;
- Within the Ministry for Foreign Affairs is the Sanctions Monitoring Board (the “SMB”), established by Legal Notice 562 of 2010 under the National Interest (Enabling Powers) Act. It has the overall function of monitoring the implementation and operation of sanctions legislation in Malta. Any person that freezes funds, assets or economic resources in accordance with the requirements of any sanctions is required to notify the SMB in writing. MFSA licence holders are also required to notify the MFSA of any action taken and any freezing made. The SMB is also empowered to give rulings on whether any action or transaction is prohibited by sanctions legislation.
HAS THE THIRD EU MONEY LAUNDERING DIRECTIVE BEEN IMPLEMENTED? IF NOT, WHEN IS IT EXPECTED TO BE IMPLEMENTED?
Legal Notice 42 of 2006 (The Prevention of Money Laundering (Amendment) Regulations, published in Government Gazette Number 17,886 on the 28 February 2006) amended the former Prevention of Money Laundering and Funding of Terrorism Regulations 2003 (Legal Notice 199 of 2003) and transposed many of the provisions of the EU’s Third Anti-Money Laundering Directive (including the extension of the 2003 Regulations to cover the funding of terrorism).
However it was the Prevention of Money Laundering and Funding of Terrorism Regulations, 2008 (which came into force on 31 July 2008 and were published in Government Gazette Number 18,289) that transposed all the remaining provisions of the EU’s Third Anti-Money Laundering Directive into Maltese law. Due to the number of amendments that were made, the legislator opted to repeal the 2003 Regulations rather than amend them. The original Legal Notice 180 of 2008 was further amended by Legal Notices 328 of 2009 and 202 of 2012. If and when the proposed EU’s Fourth Anti-Money Laundering Directive comes into force, the PMLFTR would undoubtedly have to be amended again to transpose it into Maltese law.
ARE LAWYERS COVERED By ANTI-MONEY LAUNDERING LEGISLATION?
LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS.
- The Prevention of Money Laundering Act 1994, as subsequently amended (Chapter 373 of the Laws of Malta);
- The Dangerous Drugs Ordinance 1939, as subsequently amended (Chapter 101 of the Laws of Malta);
- The Prevention of Money Laundering and Funding of Terrorism Regulations 2008 (Legal Notice 180 of 2008, as amended by Legal Notices 328 of 2009 and 202 of 2012);
- The Medical and Kindred Professions Ordinance 1901, as subsequently amended (Chapter 31 of the Laws of Malta);
- The Criminal Code (Chapter 9 of the Laws of Malta) and especially (though not exclusively) Subtitle IVA of Title IX of Part II of Book First (Of Acts of Terrorism, Funding of Terrorism and Ancillary Offences, which was introduced by means of Act VI of 2005 and was published in Government Gazette Number 17,776).
The PMLFTR is the legislative instrument which, inter alia, specifically applies to lawyers who are Subject Persons for the purposes of the said regulations. The PMLFTR essentially lay down the various obligations that lawyers have insofar as they are Subject Persons under these regulations. It must be understood, however, that the other laws mentioned above apply to all persons generally, irrespective of their profession, insofar as they are aimed at combating money laundering and the funding of terrorism (which, ultimately, are criminal offences that every person is obliged not to commit).
ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?
A ‘Subject Person’ is defined in the PMLFTR as meaning “any legal or natural person carrying out either relevant financial business or relevant activity”.
‘Relevant activity’ is then defined as meaning “the activity of the following legal or natural persons when acting in the exercise of their professional activities:
… notaries and other independent legal professionals when they participate, whether by acting on behalf of and for their client in any financial or real estate transaction or by assisting in the planning or execution of transactions for their clients concerning the:
- Buying and selling of real property or business entities;
- Managing of client money, securities or other assets, unless the activity is undertaken under a license issued under the provisions of the Investment Services Act [Chapter 370 of the Laws of Malta];
- Opening or management of bank, savings or securities accounts;
- Organisation of contributions necessary for the creation, operation or management of companies;
- Creation, operation or management of trusts, companies or similar structures, or when acting as a trust or company service provider”.
Therefore, while in Malta, as long as a visiting lawyer is acting in the exercise of his or her professional activities and participating in one of the above transactions (to the extent permitted by Maltese law and by the law regulating his or her profession), it is reasonable to conclude that she or he would be subject to Maltese laws regarding AML and CFT insofar as the obligations of a Subject Person are concerned.
LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE.
On 20 May 2011, the FIAU issued Part I of the Implementing Procedures, in terms of regulation 17 of the PMLFTR, which came into force on that same day. The Implementing Procedures, subsequently amended a number of times, are binding on all Subject Persons with immediate effect, providing them with guidance on understanding and complying with their obligations under the PMLFTR. Compliance with these procedures provides an effective implementation of the PMLFTR provisions. Any Subject Person who does not observe the Implementing Procedures shall be liable to an administrative penalty of not less than €250 and not more than €2,500, which shall be imposed by the FIAU without recourse to a court hearing and may be imposed either as a one time penalty or on a daily cumulative basis until compliance, provided that in the latter case the accumulated penalty shall not exceed €12,500. The Implementing Procedures prepared the path for a second part to cater for covering sector-specific guidance on the PMLFTR, intended to cover various sectors, including the legal profession. To date, only sectoral guidance in relation to the banking sector have been issued, specifically on 18 November 2011. However, other sectoral guidance are in the pipeline, and bodies representing the various sectors in Malta falling with the definition of ‘relevant activity’ and ‘relevant financial business’ are working on their respective sectoral guidance for eventual final approval by the FIAU.
The Malta Institute of Financial Services Service Practitioners (the “IFSP”) has also issued Guidance Notes on the Prevention of Money Laundering and the Funding of Terrorism (published on 6 August 2010) that would apply to lawyers insofar as these are members of the IFSP. Since these were superseded by Part I of the Implementing Procedures issued by the FIAU, the IFSP Guidance Notes were re-written to avoid unnecessary repetition and to ensure stylistic continuity and to eventually form part of the FIAU’s Implementing Procedures Part II. The IFSP’s revised version is complete, and is currently awaiting the FIAU’s approval.
If and when the proposed EU’s Fourth Anti-Money Laundering Directive comes into force, the FIAU’s Implementing Procedures (Part I and Part II) would naturally be amended to the extent necessary.
IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?
The CoA clearly has a vested interest in ensuring that its members comply with their AML and CFT obligations. In fact, the CoA regularly circulates notices as may be required, to all its members for notification purposes of various obligations, such as annual reporting obligations to the FIAU. The CoA may also take disciplinary action against its members in various instances.
However, the CoA has no regulatory role as such and it is the FIAU that retains the primary responsibility to supervise and enforce compliance with the PMLFTR and the PMLA.
DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS
Customer Due Diligence measures must be applied both to new customers and also, at the appropriate moments, to existing ones on a risk-sensitive basis. In addition, when doubts have arisen in the lawyer’s minds about the veracity or adequacy of the previously obtained customer identification information or changes have occurred in the circumstances surrounding that established business relationship, then the Customer Due Diligence measures must be repeated.
Generally, lawyers are obliged to:
- Determine and verify the identity of the potential client on the basis of documents, data or information obtained from a reliable and independent source;
- Determine and verify the identity of the beneficial owner so that the lawyer is satisfied that he or she knows who the beneficial owner is, including, in the case of bodies corporate, trusts and similar legal arrangements, the taking of reasonable measures to understand their ownership and control structure;
- Obtain information on the purpose and intended nature of the business relationship, such that the lawyer is able to establish the business and risk profile of the customer.
Lawyers are also bound to carry out on-going monitoring in the case of an existing business relationship which shall include:
- The scrutiny of transactions undertaken throughout the course of the relationship to ensure that the transactions being undertaken are consistent with the Subject Person’s knowledge of the customer and of his business and risk profile, including, where necessary, the source of funds;
- Ensuring that the documents, data or information held by the Subject Person are kept up to date.
There are additional obligations in the case of the potential customer being or appearing to be acting otherwise than as principal.
According to regulation 4 of the PMLFTR, a Subject Person is precluded from forming a business relationship or carrying out an occasional transaction with an applicant for business unless Customer Due Diligence measures are maintained and applied. Customer Due Diligence is required to be applied to all new clients for business when contact is first made between the Subject Person and the client concerning any particular business relationship or occasional transaction.
According to regulation 8 of the PMLFTR, the Subject Person is obliged to verify the identity of the applicant for business and, where applicable, the identity of the beneficial owner, before the establishment of a business relationship or the carrying out of an occasional transaction. Under the amended PMLFTR, however, it is specifically provided that Subject Persons may complete the verification process during the establishment of the business relationship where this is necessary for the continued normal conduct of business provided that the risk of money laundering or funding of terrorism is low and that verification procedures are completed as soon as is reasonably practicable after initial contact.
DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?
Yes. Lawyers, as Subject Persons, must apply Customer Due Diligence measures to all new customers as well as to existing customers, at appropriate times, on a risk-sensitive basis – Subject Persons (including lawyers) are also specifically authorised by the PMLFTR to determine the extent of the application of Customer Due Diligence requirements on a risk-sensitive basis (depending on the type of customer, business relationship, product or transaction). This notwithstanding, Subject Persons must be able to demonstrate to the FIAU (or any other supervisory authority acting on its behalf) that the extent of the application on a risk-sensitive basis is appropriate in view of the risks of money laundering and the funding of terrorism.
Lawyers are also obliged to develop and establish effective customer acceptance policies and procedures that are not restrictive in allowing the provision of services to customers but that are conducive to determine, on a risk-based approach, whether an applicant for business is a ‘politically exposed person’ (“PEP”). As a minimum, this will include:
- A description of the type of customer that is likely to pose higher than average risk;
- The identification of risk indicators such as the customer background, country of origin, business activities, products, linked accounts or activities and public or other high profile positions;
- The requirement for an enhanced Customer Due Diligence for higher risk customers.
The PMLFTR defines PEPs as natural persons who are or have been entrusted with prominent public functions, including their immediate family members or persons known to be close associates of such persons, but shall not include middle ranking or more junior officials.
Lawyers, as Subject Persons, are also required to establish policies and procedures on internal control, risk assessment, risk management, compliance management and communications which are adequate and appropriate to prevent the carrying out of operations that may be related to money laundering or the funding of terrorism. These policies and procedures will clearly assist lawyers in implementing a risk-based approach to Customer Due Diligence.
ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?
Yes. Enhanced Customer Due Diligence measures, on a risk-sensitive basis, are required for persons who, and in situations which, by their nature, can present a higher risk of money laundering or the funding of terrorism. Subject Persons (including lawyers) are also expected to apply one or more of the stipulated additional measures in order to compensate for the higher risk presented where the applicant for business has not been physically present for identification purposes. PEPs are typically included in the category of higher risk clients and therefore enhanced Customer Due Diligence measures must be carried out in their respect.
ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?
Yes. Simplified Customer Due Diligence measures do apply to clients who are considered to be low-risk. These low-risk clients include persons who are authorised to undertake relevant financial business or persons who are licensed or otherwise authorised in Malta, in another EU Member State (including EEA States) or under the laws of a ‘reputable jurisdiction’ to carry out an activity which is equivalent to ‘relevant financial business’ (as defined in the PMLFTR), as well as authorised legal persons listed on a regulated market.
A ‘reputable jurisdiction’ means “any country having appropriate legislative measures for the prevention of money laundering and the funding of terrorism, taking into account that country’s membership of, or any declaration or accreditation by, any international organisation recognised as laying down internationally accepted standards for the prevention of money laundering and for combating the funding of terrorism, and which supervises natural and legal persons subject to such legislative measures for compliance therewith”.
The full list of clients considered to be low-risk is found in regulation 10 of the PMLFTR and generally includes (subject to certain conditions being met) any other applicant for business who is a legal person and who represents a low risk of money laundering or the funding of terrorism as stipulated therein.
Clearly, simplified Customer Due Diligence does not apply to situations where suspicions of money laundering or the funding of terrorism exist.
ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.
In terms of regulation 12 of the PMLFTR, lawyers may rely on another Subject Person or on third parties to fulfil the Customer Due Diligence requirements (excluding the ongoing monitoring obligation) provided that the third party is a person undertaking activities equivalent to ‘relevant financial business’ or certain categories of ‘relevant activity’ and is situated in a EU Member State (including EEA States) or in a ‘reputable jurisdiction’ and is also subject to authorisation or to mandatory professional registration recognised by law.
In terms of this regulation, a ‘third party’ is defined as a person undertaking activities equivalent to ‘relevant financial business’ or ‘relevant activity’ who is situated in another EU Member State (including EEA States) or in a ‘reputable jurisdiction’ and who is subject to authorisation or to mandatory professional registration recognised by law.
However, it must be noted that the ultimate responsibility for compliance with the required Customer Due Diligence measures lies not with the person being relied upon but with the lawyers (as Subject Persons) placing reliance.
Lawyers relying on a third party or another Subject Person shall ensure that the third party or other Subject Person shall make the information required for Customer Due Diligence immediately available to them, and upon request, the third party or other Subject Person must immediately forward to lawyers relevant copies of the identification and verification data and other relevant documentation of the applicant for business or the beneficial owner.
Where the FIAU determines that a jurisdiction does not meet the criteria of a reputable jurisdiction and the criteria for a third party, or where the FIAU is otherwise informed that a jurisdiction is not considered as meeting the criteria of a reputable jurisdiction and that for a third party, it shall, in collaboration with the relevant supervisory authorities, prohibit Subject Persons from relying on persons and institutions from that particular jurisdiction for the performance of Customer Due Diligence requirements.
WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?
Article 28 of the PLMA states that when a Subject Person is aware of or suspects that a transaction which is to be executed may be linked to money laundering or the funding of terrorism that Subject Person must inform the FIAU before executing the transaction, giving all the information concerning the transaction including the period within which it is to be executed. Such information may be given by telephone but must be forthwith confirmed by fax or by any other written means and the FIAU is obliged at law to promptly acknowledge the receipt of the information.
Where the matter is serious or urgent and it considers such action necessary, the FIAU may even oppose the execution of such transaction before the expiration of the period within which the transaction is to be executed. Notice of such opposition shall be immediately notified by fax or by any other written means. This will halt the execution of the transaction for twenty-four hours from the time of the notification to the FIAU. However, according to article 29 of the PMLA, where any Subject Person is aware or suspects that a transaction which is to be executed may be linked to money laundering or funding of terrorism but is unable to inform the FIAU before the transaction is executed, either because it is not possible to delay executing the transaction due to its nature, or because delay in executing the transaction could prevent the prosecution of the individuals benefiting from the suspected money laundering or funding of terrorism, the Subject Person is obliged at law to inform the FIAU immediately after executing the transaction, giving the reason why the FIAU was not so informed before executing the transaction. Articles 28 and 29 are also similarly respectively reflected in regulations 15(6) and (7) of the PLMFTR.
Regulation 15 of the PMLFTR also provides for the setting up, by a Subject Person, of internal reporting procedures. In this case, it is the responsibility of the person who first became suspicious (that a person may have been, is or may be engaged in money laundering or the funding of terrorism) to inform the Money Laundering Reporting Officer within the organisation. The Money Laundering Reporting Officer will then consider the internal report and will need to decide whether or not to inform the FIAU about it by filing a suspicious transaction report (“STR”). Any such report must be filed with the FIAU as soon as it is reasonably practicable to do so, but not later than five working days from when the suspicion first arose. Subject Persons must therefore act fast.
An exemption from the obligation to report exists for lawyers if “such information is received or obtained in the course of ascertaining the legal position for their client or performing their responsibility of defending or representing that client in, or concerning judicial proceedings, including advice on instituting or avoiding proceedings, whether such information is received or obtained before, during or after such proceedings.”
A lawyer is not obliged to report a suspicion of money laundering or the funding of terrorism, as described above, in all cases (regulation 15 (10)) but only when carrying out certain activities (namely the relevant activities defined in subparagraphs c (i) to (v) of regulation 2 of the PMLFTR). Such a disclosure is not deemed to breach the duty of professional secrecy.
DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?
This is, understandably, a controversial and delicate matter in legal circles where attorney/client privilege is held in high regard and considered to be a fundamental pillar of the legal profession. Attorney/client privilege and the duty of professional secrecy which lawyers are bound by are absolute, even during proceedings in relation to money laundering or the funding of terrorism. It is clear that the exemption for information if “such information is received or obtained in the course of ascertaining the legal position for their client or performing their responsibility of defending or representing that client in, or concerning judicial proceedings, including advice on instituting or avoiding proceedings, whether such information is received or obtained before, during or after such proceedings” is based on the concepts of attorney/client privilege and confidentiality.
DOES LOCAL LAW PROVIDE ANY CRIMINAL AND/OR CIVIL INDEMNITY TO A LAWYER WHO HAS REPORTED A SUSPICIOUS TRANSACTION?
The PMLFTR provide that any bona fide communication or disclosure made by a Subject Person, which includes lawyers, in accordance with these regulations, shall not be treated as a breach of the duty of professional secrecy or any other restriction (whether imposed by statute or otherwise) upon the disclosure of information and shall not involve that lawyer in any liability of any kind.
ONCE A SUSPICIOUS TRANSACTION REPORT HAS BEEN FILED, IS A LAWYER ALLOWED TO PROCEED WITH THE LEGAL ADVICE/TRANSACTION, AND, IF SO, MUST CONSENT FROM AUTHORITIES BE OBTAINED FIRST?
Subject Persons are only specifically obliged by the PMLFTR to refrain from carrying out transactions which are suspected or known to be related to money laundering or the funding of terrorism until they have informed the FIAU. No specific mention is made of their obligations after a STR has been filed with the FIAU (other than their obligation to collaborate with the FIAU). This notwithstanding, article 28(4) of the PMLA does specifically provide that where, within the period during which the FIAU has the authority to oppose a transaction, no opposition has been made by the FIAU, the Subject Person concerned may proceed to the execution of the transaction in question. It also provides that even where opposition has been made by the FIAU, the Subject Person concerned may proceed to the execution of the transaction in question upon the lapse of the twenty-four hours referred to above, unless in the meantime an attachment order has been served on the Subject Person. Clearly, however, whilst guarding itself against the risk of tipping off, in considering whether to proceed with the execution of a transaction (or whether to provide assistance in relation thereto) Subject Persons need to be careful that they will not end up being deemed to be an accomplice in a money laundering or funding of terrorism offence.
The FIAU, in acknowledging receipt of a disclosure, will usually provide guidance as to how to proceed.
IS THERE A TIPPING-OFF PROHIBITION? IF YES, PLEASE DESCRIBE.
Tipping-off is not permitted and constitutes a criminal offence; a specific regulation exists in this sense: regulation 16(1) of the PMLFTR.
The offence of tipping-off applies not only in respect of STRs that may have been filed by a Subject Person but also in respect of various judicial orders that may have been issued in connection with money laundering or funding of terrorism investigations.
DESCRIBE ANY RESTRICTIONS ON ACCEPTING A NEW CLIENT.
Customer Due Diligence measures must be applied to new customers. Lawyers, as Subject Persons, must apply Customer Due Diligence measures to all new customers on a risk-sensitive basis – Subject Persons (including lawyers) are also specifically authorised by the PMLFTR to determine the extent of the application of Customer Due Diligence requirements on a risk-sensitive basis (depending on the type of customer, business relationship, product or transaction). This notwithstanding, Subject Persons must be able to demonstrate to the FIAU (or any other supervisory authority acting on its behalf) that the extent of the application on a risk-sensitive basis is appropriate in view of the risks of money laundering and the funding of terrorism.
ARE THERE ONGOING MONITORING REQUIREMENTS FOR EXISTING CLIENTS? IF YES, PLEASE DESCRIBE.
Yes. Regulation 7(2) of the PMLFTR states that ongoing monitoring of a business relationship shall include:
“(a) the scrutiny of transactions undertaken throughout the course of the relationship to ensure that the transactions being undertaken are consistent with the Subject Person’s knowledge of the customer and of his business and risk profile, including, where necessary, the source of funds; and
(b) ensuring that the documents, data or information held by the Subject Person are kept up to date.”
DESCRIBE ANY OTHER WAYS IN WHICH LAWYERS ARE AFFECTED BY ANTI-MONEY LAUNDERING LEGISLATION.
Clearly lawyers, just like any citizens, are themselves obliged to comply with the provisions of the PMLA, PMLFTR and related legislation and to refrain from committing the crime of money laundering or the funding of terrorism whether as principal or accomplice (and not only, therefore, in their capacity as Subject Persons for the purposes of the PMLFTR, to assist the authorities in combating money laundering and the funding of terrorism).
HAVE LAWYERS IN YOUR JURISDICTION BEEN IMPLICATED IN MONEY LAUNDERING, INCLUDING ANY TYPE OF COMPLAINT, ARREST OR PROSECUTION?
Not that we know of. However, these matters are highly confidential and would not be in the public domain.
HAS THE FINANCIAL ACTION TASK FORCE (FATF) CONDUCTED A MUTUAL EVALUATION OF THIS COUNTRY, AND, IF SO, WHAT WERE THE FINDINGS CONCERNING LAWYERS’ COMPLIANCE WITH THE FATF RECOMMENDATIONS?
Malta is not a member of the FATF. However, it is a member of the Council of Europe Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures (MONEYVAL), an Associate Member of the FATF. MONEYVAL has conducted a number of assessment reports on Malta, the latest being in 2012, whereby the fourth round of mutual evaluations was essentially a follow-up on the third round (click here to see the report). This report concluded that Malta was Partially Compliant, Compliant or Largely Compliant with the vast majority of the FATF Recommendations. There were no Non-Compliant findings.
Therefore, Malta can be said to be compliant with the FATF’s Recommendations.
Last Updated: 20/05/2014