• AML Obligations

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AML Compliance Framework

 

EU Framework 

Directive (EU) 2018/843 (‘5AMLD’) of the European Parliament and of the Council of 30 May 2018 amended Directive (EU) 2015/849 (‘4AMLD’) on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. 

 

The substantial changes brought about by the 5AMLD were aimed to better equip the Union to prevent the misuse of the financial system for money laundering (‘ML’) or funding of terrorism (‘FT’) activities, inadvertently enhancing the legal requirements that are binding on subject persons across EU member states. 

 

The introduction of the 5AMLD was aimed at: 

  • Enhancing beneficial ownership transparency by legally enforcing publicly available registers for companies, trusts and other legal arrangements; 
  • Enhancing the powers of Financial Intelligence Units across the EU, primarily through the sharing of information for the carrying out of their tasks; 
  • Enhancing the assessment of high-risk third countries and improving the safeguards for financial transactions to and from such countries; 
  • Improving the cooperation between anti-money laundering supervisors and also that of the European Central Bank; 
  • Limiting the anonymity related to virtual currencies and wallet providers; and 
  • Setting up central bank account registries (or equivalent) in all Member States. 

 

Separately, Directive (EU) 2018/1673 of the European Parliament and of the Council of 23 October 2018 on combating money laundering by criminal law (commonly termed as the ‘6AMLD’) was brought into force to eliminate potential loopholes within the domestic legislation of member states by harmonizing the definition of money laundering, and ensuing penalties, across the EU. This directive also brings into scope cyber-crime, by listing it as a predicate offence for money laundering and further extends criminal liability to legal persons.  

 

Local Regulatory Framework 

In Malta, the Prevention of Money Laundering Act sets out the definitions of money laundering and predicate offences known to lead or to constitute the basis for the offence of money laundering. The offence of terrorist financing is set out under the Maltese Criminal Code. 

 

The Prevention of Money Laundering and Financing of Terrorism Regulations set out the obligations and procedures that must be fully implemented by subject persons. These procedures set out the requirement of implementing a risk-based approach (i.e. obtaining customer information and documentation that is proportionate to the inherent risks), reporting, training, and awareness. This legislation is further substantiated by general and sector-specific implementing procedures issued by the FIAU, that are binding on subject persons.  

 

Subject persons are those persons carrying out relevant activity or relevant financial business, and include: 

  • Company service providers 
  • Gaming licensees 
  • Real estate agents 
  • Notaries and legal professionals 
  • Insurance agents and intermediaries 
  • Financial Institutions