Affording more faith in the reporting system

21 March 2019

Only 10% of the millions of STRs filed within the EU are subject to further investigation after filing, a figure that is unchanged since 2006. New approaches lead by ‘intelligence’ to tackle money laundering and funding of terrorism are seen as necessary in the ever-changing financial industry we operate in.

 

Does filing a Suspicious Transaction Report conflict with the firm’s duty of secrecy?

The Regulations are clear in this respect: any boda fide disclosure made to the FIAU “shall not be treated as a breach of duty of professional secrecy or any other restriction (whether imposed by statute or otherwise)” on such disclosure of information as prescribed by the Regulations[1]. Furthermore, article 6A of the Professional Secrecy Act (Chapter 377 of the Laws of Malta) states that the duty of professional secrecy shall not be breached where a disclosure in good faith is “reasonably necessary for the purpose of preventing, revealing, detecting or prosecuting the commission” of criminal acts, including the crimes of money laundering and funding of terrorism.

 

Affording more faith in the reporting system

Looking at statistics: merely 10% of the millions of Suspicious Transaction Reports filed within the EU are subject to further investigation after filing, a figure that is unchanged since 2006[2]. New approaches lead by ‘intelligence’ to tackle money laundering and funding of terrorism are seen as necessary in the ever-changing financial industry we operate in. Some positive initiatives were seen with the currently in force Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (more commonly referred to as the 4th Directive): improving cooperation between Financial Intelligence Units around Europe and greater transparency with the creation of the central beneficial owners’ registers, leading to further initiatives in Directive (EU) 2018/843 (known as the 5th Directive) with the establishment of centralised bank registers and greater access to the central beneficial owners’ registers, which are to be transposed into Maltese law until 10 January, 2020. These should assist European FIUs, including Malta’s, and other competent authorities in investigating and tackling financial crime and cultivating data-sharing practices which would hopefully encourage subject persons to report and assist in detecting and deterring such crimes.

 

[1] Regulation 15 of the Regulations;

[2] Europol: ‘From Suspicion to Action – Converting financial intelligence into greater operational impact’; 2017;