ARTICLE
10 November 2021

Use Of Cash (Restriction) Regulations

CG
CSB Group

Contributor

Established in 1987, CSB Group offers diverse yet specialised business solutions and commercial services to a vast portfolio of corporate and private clients seeking to setup a business or relocate to Malta. With an 100+ team of qualified professionals we strive to be a partner of choice to our clients, providing them with tailor-made solutions, uniquely aimed at helping them succeed.
Back in March 2021, the use of Cash Regulations came into force on the 9th of March 2021 by virtue of Legal Notice 81 of 2021.
Malta Government, Public Sector
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Back in March 2021, the use of Cash (Restriction) Regulations (Subsidiary Legislation 373.04) (the “Regulations”) came into force on the 9th of March 2021 by virtue of Legal Notice 81 of 2021. These Regulations were introduced with the primary aim being to restrict the use of cash for certain payments and transactions in order to combat money laundering and other criminal activity within those particular economic sectors that are susceptible to be used for money laundering purposes.

Regulatory Context

According to these Regulations, it is now deemed a criminal offence to either make or receive any payment or carry out a transaction in cash amounting to or exceeding ten thousand euro (€10,000) or its equivalent in any other currency, whether in one single transaction or via several linked transactions. The term “linked transactions” is defined within the Regulations as consisting of two or more transactions which (i) are performed by the same individuals, (ii) have a similar purpose, and (iii) are carried out within a six-month period.

This prohibition applies with respect to the purchase or sale of the following:

  1. Antiques;
  2. Immovable property;
  3. Jewellery, precious metals, precious stones and pearls;
  4. Motor-vehicles;
  5. Sea-craft; and
  6. Works of art.

Any person who is in breach of the above, i.e. carries out a transaction in excess of the aforementioned cash limit of €10,000 would be guilty of a crime and liable, on conviction, to a fine (multa) of not less than 40% of the sum paid, received, or otherwise transacted in cash in excess of €9,999.99, or its equivalent in any other currency.

Should the person in contravention of these Regulations be a director, manager or other officer that exercises executive functions in a company or other undertaking, or body of persons, such a person can be held liable in solidum with the company, undertaking or body of persons in case of any such breach.

Nevertheless, the Regulations also provide an alternative to criminal proceedings for those who act in contravention of these Regulations. Therefore, a person who is in breach of these Regulations and hence exceeds the cash transaction limit may seek to pay an administrative penalty under the conditions set out by these Regulations. This administrative settlement would require the consent of the Attorney General and must take place prior to being charged in court.

According to the Regulations, where the sum transacted in cash amounts to not more than €50,000, the administrative penalty would be 10% of the sum transacted in cash in excess of €9.999.99. Furthermore, where the sum transacted in cash amounts to more than €50,000 but less than €100,000, a penalty of 25% of the amount transacted in excess of €9,999.99 would be imposed.

The payment of an administrative penalty does not apply to those cash transactions in excess of €100,000. The possibility of reaching an administrative settlement also cannot be availed of where the person concerned has committed an offence against the Regulation within the previous three years.

Despite the fact that a cash transaction may be in violation of these Regulations, it is important to note that the legal validity of such transaction, or on the contractual obligations in respect of which the transaction was carried out. Therefore, notwithstanding the breach, the parties to the transaction will still be bound by their contractual obligations.

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.

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