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Prevention of Money Laundering and Funding of Terrorism (Amendment) Regulations

The definition of ‘business relationship’ has been amended in order to include transactions

that involve property that may have been derived directly or indirectly from, or constitutes the

proceeds of criminal activity in “Case 2” (suspicion) scenario.

The definition of ‘funding of terrorism’ has been amended in order to include the conducts

relating to (i) use and possession; and (ii) funding arrangements; and (iii) facilitating retention or

control of terrorism property as defined in articles 328G to 328I of the Criminal Code.

The definition of ‘relevant activity’ has been amended in order to exclude the activities of

persons acting as private trustees and notarial procedure when acting in the exercise of their

professional activities.

In case of PEPs, an effective customer acceptance policies based on a risk-sensitive basis should

be taken. Previously, it was based on a risk-based approach.

Amendment to the administrative penalty

The FIAU may impose an administrative penalty of not less than one thousand euro (€1,000)

and not more than forty-six thousand five hundred euro (€46,500) in respect of every separate

contravention.

The following sub-regulation has been added:

A subject person who is in possession of funds of a customer or a potential customer who

decides to terminate or not to establish a business relationship, release or transfer those funds

shall, unless an order has been made or a notice has been issued prohibiting the release of such

funds, return those funds to the same source from where they originated and through the same

financial channels by which the subject person came into possession of the funds.

Amendments to due diligence procedure

A subject person carrying on affiliated insurance business shall not be required to apply customer

due diligence measures where the applicant for business satisfies certain criteria.

Subject persons shall apply enhanced due diligence and customer due diligence where the

applicant for business has not been physically present for identification purposes.

Subject persons shall not apply customer due diligence measures where the limit of the electronic

device which cannot be recharged the maximum amount stored is two hundred and fifty euro or

less, previously it was one hundred and fifty.

Record keeping procedure

With respect to record keeping procedure, the following documents/ information should be kept,

apart from the previous documents that were required:

1. a record of any disclosures made to the FIAU

2. a record of any internal records

3. a record of any written determinations

4. a record of any training

5. any other document, record or information which the FIAU may require to be maintained

6. the date on which the event referred to therein took place

Jurisdictions that does not meet the criteria of a reputable jurisdiction

Subject persons shall pay special attention to business relationships and transactions with

persons, companies and undertakings, including those carrying out relevant financial business or

a relevant activity, from a jurisdiction that does not meet the criteria of a reputable jurisdiction

and where those transactions have no apparent economic or visible lawful purpose, the

background and purpose of such transactions should, as far as possible, be examined, and the

findings should be maintained and made available, upon request, to the FIAU, the relevant

supervisory authority, other relevant competent authorities in accordance with applicable laws,

and to the internal or external auditors appointed or otherwise engaged to carry out internal

control functions.

Disclosure which does not constitute a breach

1. disclosure by a subject person to a competent authority, tribunal or other judicial

authority in or outside Malta, provided certain conditions are satisfied

2. disclosure by a subject person to a supervisory authority or professional body exercising

supervision or regulatory oversight over that subject person, provided certain conditions

are satisfied

Power to terminate a business relationship

The following new regulations have been added:

Where the FIAU knows or has reasonable grounds to suspect that, in connection with a business

relationship established by a subject person, money laundering or funding of terrorism is taking

place, has taken place or has been attempted, or that such business relationship could increase

the risk of money laundering or funding of terrorism, the FIAU may, where the circumstances

so warrant, require such subject person to terminate that business relationship within a stipulated

period of time.

Periodical reporting

In fulfilment of its supervisory functions under the Act, the FIAU may require subject persons to

submit periodical reports on the internal policies and procedures they maintain and apply and any

other information or documents as the FIAU may consider necessary.

Format of information

Where a subject person is required to provide information to the FIAU under the Act, these

regulations and any implementing procedures issued thereunder, the FIAU may demand that the

information is produced electronically and may establish the format within which the

information is to be provided.

Penalties

Any subject person who fails to comply with any lawful requirement, order or directive issued

by the FIAU under these regulations or the Act shall be liable to an administrative penalty of not

less than one thousand euro (€1,000) and not more than forty-six thousand five hundred euro

(€46,500) in respect of every separate failure to comply with such lawful requirement, order or

directive.

Unless otherwise specifically provided for under any other regulation, a subject person who

contravenes any provision of these regulations shall be liable to an administrative penalty of not

less than one thousand euro (€1,000) and not more than forty-six thousand five hundred euro

(€46,500) in respect of every separate contravention.

Administrative penalties under these regulations shall be imposed by the FIAU without recourse

to a court hearing and may be imposed either as a one time fixed penalty or as a daily cumulative

penalty, or both:

Provided that administrative penalties imposed on a daily cumulative basis shall not be less

than two hundred and fifty euro (€250) and the accumulated penalty shall not exceed forty-six

thousand five hundred euro (€46,500).

Notwithstanding any provision imposing an administrative penalty under these regulations,

the FIAU may, where the circumstances so warrant, issue a reprimand in writing instead of an

administrative penalty.