A set of amendments to the Prevention of Money Laundering Act (Cap 373) have come into force today, the 7th February 2020, upon the publication of Act No. I of 2020 in Government Gazette No. 20,344.

The amendments seek to transpose a number of provisions of Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Directives 2009/138/EC and 2013/36/EU (referred to as the '5AMLD').

Other amendments have been made to implement recommendations made by MONEYVAL in its Fifth Round Mutual Evaluation Report on Malta, as well as to address concerns expressed under the Venice Commission's opinion on Malta's constitutional arrangements and separation of powers and the independence of the judiciary and law enforcement of the 17 December 2018.

Amendments have also been made to clarify certain provisions and to enhance the legislative framework in place for the prevention of money laundering and funding of terrorism.

The FIAU would like to inform subject persons and interested parties of the most significant changes to the PMLA. This notice is not a comprehensive list describing all of the changes and it is essential that subject persons and interested parties read the law itself. A copy of this notice is available on the news section of the FIAU website.

Summary of amendments

Management of a Central Bank Account Registry ('CBAR')

The FIAU has been vested with the power to administer a central bank account registry for Malta. Such a registry is being established pursuant to a requirement introduced by the 5AMLD, which obliges Member States to establish centralised automated mechanisms to allow the retrieval of information on anyone holding or controlling payment and bank accounts identifiable by IBAN, as well as safe-deposit boxes held by credit institutions. The purpose of this mechanism is to allow Financial Intelligence Units and other national competent authorities to have timely access to information on bank and payment account holders, and on owners of safety deposit boxes, so as to improve the efficiency with which they discharge their functions.

Through this power, the FIAU shall be the authority responsible for establishing and managing this centralized automated mechanism for Malta. This will be complemented by subsidiary legislation to set out the functional requirements of the mechanism and to list the authorities that are to have access to it, and under which conditions. Reference is made to Article 16(1)(n).

Power to enforce cash restrictions

The amendments to the PMLA further empower the FIAU to supervise the implementation and enforcement of any future legislative provisions on cash restrictions. This power has been granted in the context of a recent policy decision taken by the Government of Malta during the Ministry for Finance's Budget 2020 speech, and which seeks to limit cash payments to €10,000 for the acquisition of certain goods such as immovable property, cars, boats and yachts, diamonds, precious stones, and works of art. The FIAU is presently working towards proposing the relevant regulation. Reference is made to Article 16(1)(m).

Time frames for cases heard before the Court of Appeal

A revision to Article 13A introduces time frames to limit the duration of the appeals process before the Court of Appeal (Inferior Jurisdiction), in relation to appeals against administrative penalties imposed by the FIAU. Through this amendment, the hearing of an appeal filed pursuant to Article 13A shall be held within three months of the date of filing, and a final judgment must be given by the Court within six months of the date of the hearing. This means that the process from the date of filing to the issuance of the judgment shall last no longer than nine months, unless there is an agreement by both parties to permit a delay, or in exceptional circumstances. This amendment addresses a key recommendation by MONEYVAL on the duration of such procedures, which is seen to dilute the effectiveness of penalties imposed for breaches of anti-money laundering regulations.

Significant amendments to the publication regime

A number of amendments have been made to Article 13C to strengthen the regime surrounding the publication of administrative penalties, including to ensure the effectiveness and proportionality of such a measure.

Through these amendments, the threshold for the publication of administrative penalties has been increased from €10,000 to €50,000. Penalties below this new threshold will only be published anonymously and in a manner which will not permit the identification of the subject person in question.

Previously, penalties could only be published on the FIAU website upon becoming final and due. The FIAU is now granted the power to publish such penalties upon their notification to the subject person, even in cases where the subject person appeals the penalty in terms of Article 13A. However, the publication notice shall clearly state whether the penalty is still subject to such an appeal, and, if such an appeal is filed, the publication notice shall be duly updated to reflect this fact and further updated to state the outcome of the proceedings upon their conclusion.

The previous publication policy, which was publicly available on the FIAU website, envisaged some exceptions to the publication rules. These exceptions are now being included directly within the PMLA. The publication policy has been updated accordingly and is available on the FIAU website.

New authorities on the FIAU Board of Governors

The FIAU's Board of Governors sets out the general policies to be implemented by the FIAU in fulfilling its functions. These policies evolve to reflect developments within the Maltese financial system, including changes in the risks to which the system is exposed to. Through an amendment to Article 19, the Malta Gaming Authority and the Commissioner for Revenue shall be represented on the FIAU's Board of Governors. The Office of the Attorney General shall no longer be represented on the Board. This latter change addresses concerns raised by the Venice Commission in its December 2018 report. These changes will bring the total number of Board members to five. The Board of Governors is not involved in the operational work of the FIAU.

Improved standards for selection of FIAU officials and staff

Article 23 has been amended to stipulate certain requirements relating to the appointment and selection of the Director and other employees of the FIAU. The Director may only be appointed following a public call, ensuring a higher degree of transparency and accountability in the process. The recruitment of FIAU staff was previously vested in the Board of Governors, and is now solely the responsibility of the Director of the FIAU. This ensures that the FIAU remains operationally independent and autonomous. A provision has been introduced to make it explicitly clear that all FIAU staff must be persons of integrity and good conduct.

A list of local prominent public functions

The 5AMLD requires Member States to draw up a list of those public functions in its jurisdiction which are considered to be prominent public functions, to assist subject persons in determining whether their customer is a politically exposed person (PEPs). Article 12 has been duly amended to require the Minister responsible for Finance to publish, by means of an order in the Government Gazette, a list of those functions in Malta and of functions held within international organisations accredited in Malta, which are considered be prominent public functions.

Amendments to enhance cooperation and exchange of information

A set of amendments were made to enhance the FIAU's powers for cooperation and the exchange of information between authorities within and outside Malta. Reference is made to Article 16(1)(k), Article 27, Article 27A, Article 27B, Article 34.

A number of other amendments throughout the PMLA are intended to clarify the powers and functions already vested in the FIAU.

Amendments to the Prevention of Money Laundering and Funding of Terrorism Regulations (Subsidiary Legislation 373.01) are expected to be published in the coming days.

7th February 2020

Source: FIAU Malta

Originally published February 11, 2020.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.