FIAU Enforcement Factsheet: Common observations across sectors subject to AML/CFT Supervision

Colin Calleja , Manager, Risk Advisory Services |

04 May 2021

BDO-FIAU-AML-CFT-Malta-Facts

The Financial Intelligence Analysis Unit (FIAU) has published an “Enforcement Factsheet:  Common observations across sectors subject to AML/CFT Supervision”. This Publication sheds light on findings and observations that were identified in respect of the more salient AML/CFT obligations outlined in the Prevention of Money Laundering and the Financing of Terrorism Regulations and the FIAU’s Implementing Procedures, with the aim of providing insight to subject persons on the types of deficiencies that are being encountered by the FIAU Supervisory Function.

 

The FIAU has significantly increased its supervisory coverage and, consequently, has been taking more meaningful enforcement action including heftier pecuniary sanctions and the imposition of numerous remediation directives. These initiatives, coupled with more regular and qualitative guidance, as well as increased investment by subject persons in AML/CFT resources, have notably improved the level of compliance with AML/CFT obligations in Malta.

 

The Publication, which can be accessed here, aims at providing more insights on ML/CFT compliance trends with an analysis on the enforcement actions undertaken by the FIAU in 2019 and 2020. The Publication is also intended to assist subject persons to further align their internal AML/CFT controls with the legal obligations and the FIAU’s expectations, while ensuring that the controls they have in place are adequate and robust to protect their services, and ultimately, the Maltese economy from being abused for money laundering/funding of terrorism (ML/FT) purposes.

 

The most common finding noted across all sectors relates to the appreciation of risk, both at the institutional level and at the customer level. The FIAU notes that, while understanding risks is essential, the transposition of such understanding into effective methodologies to determine the risk exposure both at the business and customer level is crucial.

 

Other common findings relate to the requirement to have in place comprehensive customer risk profiles, transaction monitoring procedures and the need to consider occasional transactions within the context of all that is known about the customer, including past activity.

 

Particular reference is made to robust AML/CFT controls which are a must to protect the reputation of the subject person and the local jurisdiction. Effective measures to monitor customer relationships and transactions that take place through business relationships are indispensable. Should such controls be absent, the possibility that the local economy will be abused for ML/FT purposes will increase with financial and economic consequences for all concerned.

 

The FIAU’s publication should be regarded as an exercise intended to contribute to subject persons’ knowledge on the proper implementation of AML/CFT requirements.

 

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Our Compliance Advisory Department can provide organizations with a tailor-made compliance review and the setting up of any necessary compliance and training programs. Through a compliance review, testing is carried out on internal systems, controls and procedures in order to assess the organization’s current processes and assess whether its people are both knowledgeable and enforcing the established regulatory requirements, or whether problems have been identified within a particular process.

 

Our Compliance Review is tailored to the sector-specific requirements of the particular organization, predominantly focused at enabling such organization to assess its compliance function and regulatory universe, identify gaps and as a follow up, provide an implementation plan to address those gaps. We believe that an independent evaluation is essential to ensure that the business is following external laws, rules, and regulations, and internal guidelines, such as internal controls, and policies and procedures.

 

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