Prevention of Money Laundering (Amendment) Regulations,

L.N. 42 of 2006

PREVENTION OF MONEY LAUNDERING ACT

(CAP. 373)

Prevention of Money Laundering (Amendment) Regulations,

IN exercise of the powers conferred by article 12 of the Prevention

of Money Laundering Act, the Prime Minister and Minister of Finance,

has made the following regulations>-

The title of these regulations is the Prevention of Money Citation.

Laundering (Amendment) Regulations, 2006 and they shall be read and

construed as one with the Prevention of Money Laundering Regulations, L.N. 199 of 2003.

2003, hereinafter referred to as “the principal regulations”.

Immediately after the words “Money Laundering” in the title Amends the title of

the principal

of the principal regulations, there shall be inserted the words “and regulations.

Funding of Terrorism”.

Immediately after the words “Money Laundering” in regulation Amends regulation

1 of the principal

1 of the principal regulations there shall be inserted the words “and regulations.

Funding of Terrorism”.

Regulation 2 of the principal regulations shall be amended as Amends regulation

2 of the principal

follows>

regulations.

(a) in the definition “Case 2 (suspicion)” therein

immediately after the words “engaged in money laundering”,

wherever these occur, there shall be inserted the words “or the

funding of terrorism”<

(b) immediately after the definition “Case 4 (series of

transactions)” therein there shall be inserted the following new

definition>

“ “casino” shall have the same meaning as is assigned to

it by article 2 of the Gaming Act and “casino licensee” in

these regulations shall be construed accordingly<”<

(c) immediately after the definition “collective investment

scheme” therein there shall be inserted the following new definition>

“ “company” has the same meaning as is assigned to it

in the Companies Act<”<

(d) immediately after the definition “Financial Intelligence

Analysis Unit” therein there shall be inserted the following new

definition>

“ “funding of terrorism” means the conduct described in

articles 328F and 328I both inclusive, of the Criminal Code<”<

(e) immediately after the definition “one-off transactions”

therein there shall be inserted the following new definition>

“ “politically exposed persons” means natural persons

who are or have been entrusted with prominent public

functions and shall include their immediate family members

or persons known to be close associates of such persons, but

shall not include middle ranking or more junior officials<”<

(f) the definition “relevant activity” therein shall be amended

as follows>

(i) in paragraph (d) thereof the words “or trustees,”

immediately following the words “nominee shareholders”

shall be deleted<

(ii) immediately after paragraph (d) thereof there shall

be inserted the following new paragraphs>

“(e) any person providing trustee or any other

fiduciary service, whether authorised or otherwise, in

terms of the Trusts and Trustees Act<

(f) casino licensee<”<

(iii) paragraphs (e) and (f) thereof shall be renumbered

as paragraphs (g) and (h)< and

(iv) in paragraph (h) thereof as renumbered, for the

words “paragraphs (a) to (e) above” there shall be substituted

the words “paragraphs (a) to (g) above”<

(g) in the definition “reputable jurisdiction” therein

immediately after the words “for the prevention of money

laundering”, wherever these occur, there shall be inserted the words

“and for combating the funding of terrorism”<

(h) the definition “supervisory authority” shall be amended

as follows>

(a) the word “and” at the end of the paragraph (i)

thereof shall be deleted<

(b) In paragraph (j) thereof, the words “the Gaming

Act Regulations, 1998” shall be deleted< and

(c) immediately after paragraph (j) thereof there shall

be inserted the following new paragraph>

“(k) the Comptroller of Customs when carrying

out duties under any regulations that may be issued from

time to time in terms of aticle 7 of the External

Transactions Act.”< and

(i) immediately after the definition “supervisory authority”

therein there shall be inserted the following new definition>

“ “terrorism” means any act of terrorism as defined in

article 328A of the Criminal Code<”.

Regulation 3 of the principal regulations shall be amended as Amends regulation

3 of the principal

regulations.

(a) in the marginal note thereof, immediately after the words

“money laundering” there shall be inserted the words “and the

funding of terrorism”<

(b) in sub-regulation (1)(a)(i) thereof, for the words

“identification procedures” there shall be substituted the words

“customer due diligence, including identification procedures,”<

(c) immediately after paragraph (a) of sub-regulation (1)

thereof, there shall be inserted the following new paragraph>

“(b) applies the procedures established under sub-

paragraph (a) when entering into or undertaking non face-to-

face relationships or transactions<”<

(d) paragraph (b) of sub-regulation (1) thereof shall be

renumbered as paragraph (c) and sub-paragraph (ii) of the same

paragraph as renumbered shall be substituted by the following>

“(ii) the provisions of the Prevention of Money

Laundering Act< of the Sub-Title Of Acts of Terrorism,

Funding of Terrorism and Ancillary Offences of Title IVA of

Part II of Book First of the Criminal Code< and of these

regulations, and”< and

(e) paragraph (c) of sub-regulation (1) thereof shall be

renumbered as paragraph (d) and in the same paragraph as

renumbered immediately after the words “engaged in money

laundering” there shall be inserted the words “or the funding of

terrorism”.

Regulation 4 of the principal regulations shall be renumbered

as sub-regulation (1) and immediately thereafter as renumbered there

shall be added the following new sub-regulations>

“(2) Without prejudice to sub-regulation (1), where the

offence is committed by a body or other association of persons, be

it corporate or unincorporated, such body or association shall be

liable to an administrative penalty of not less than Lm500 (five

hundred Maltese liri) and not more than Lm2,000 (two thousand

Maltese liri).

(3) Administrative penalties under sub-regulation (2) shall

be imposed by the Financial Intelligence Analysis Unit without

recourse to a court hearing and may be imposed either as a one

time penalty or on a daily cumulative basis until compliance

provided that in the latter case the accumulated penalty shall not

exceed Lm20,000 (twenty thousand Maltese liri).”.

Regulation 5 of the principal regulations shall be amended as

follows>

(a) immediately before sub-regulation (1) thereof there shall

be inserted the following new sub-regulation>

“(1) Subject persons shall not keep anonymous

accounts or accounts in fictitious names such that the true

beneficial owner is not known.”<

(b) sub-regulation (1) thereof shall be renumbered as sub-

regulation (2) and for the sub-regulation as renumbered there shall

be substituted the following>

“(2) Subject to the provisions of regulations 6 and 8,

customer due diligence, including identification procedures

maintained by a Subject Person, shall be deemed to be in

accordance with the provisions of this regulation if in Cases

1 to 4 they require, as soon as it is reasonably practicable

after contact is first made between the Subject Person and the

applicant for business concerning any particular business

relationship or one-off transaction -

(a) the production by the applicant for business

of satisfactory evidence of his identity and the

verification of such identity< or

(b) the taking of such measures specified in the

procedures as will produce such evidence of identity,

and

where that evidence is not obtained, or where the Subject

Person knows or suspects that the transaction may be

related to money laundering or the funding of terrorism,

the procedures shall require that the business in question

shall not proceed or shall proceed only in accordance

with any direction made by the Financial Intelligence

Analysis Unit.

Without prejudice to the above, where to refrain in

such manner is impossible or is likely to frustrate efforts

of investigating a suspected money laundering or the

funding of terrorism operation that business shall proceed

on condition that a disclosure is immediately lodged with

the Financial Intelligence Analysis Unit in accordance

with regulation 11.”.

(c) sub-regulations (2) and (3) thereof shall be renumbered

as sub-regulations (3) and (4) respectively<

(d) sub-regulation (4) thereof shall be renumbered as sub-

regulation (5) and shall be amended by the insertion of the words

“customer due diligence, including” immediately before the words

“identification procedures” and as well as immediately before the

words ‘identification process’< and

(e) sub-regulation (5) thereof shall be substituted by the

following>

“(6) Subject Persons shall examine with special

attention, and to the extent possible, the background and

purpose of any complex or large transactions and any

transactions which are particularly likely, by their nature, to

be related to money laundering or the funding of terrorism.

(7) Subject Persons shall pay special attention to

business relationships and transactions with persons,

companies and undertakings, including those carrying out

relevant financial business or a relevant activity, from a non-

reputable jurisdiction, and, where the provisions of sub-

regulation (6) apply to such transactions, Subject Persons shall

proceed accordingly.

(8) In addition to complying with the other provisions

of this regulation, a casino licensee shall>

(a) not allow any person to enter the casino unless

such person has been satisfactorily identified pursuant

to the provisions of article 25 of the Gaming Act<

(b) identify, by the production of an identification

document, in accordance with the provisions of

paragraph (i), any person who, whilst in the casino

exchanges cash, a cheque or bank draft, whether such is

drawn on a local or a foreign credit institution, or who

otherwise makes a credit or a debit card payment in

exchange for chips or tokens in excess of Lm2,000 (two

thousand Maltese liri) for use in the casino<

(c) identify, by the production of an identification

document, in accordance with the provisions of

paragraph (i), any person who, whilst in the casino

exchanges cash, exchanges chips or tokens after playing

a game or games, the value of which exceeds Lm2,000

(two thousand Maltese liri)<

(d) ensure that the particulars relating to the

identity of a person exchanging chips or tokens the value

of which exceeds Lm 2,000 (two thousand Maltese liri)

is matched with, and cross referred to, the particulars

relating to the identity of the person exchanging cash,

cheques or bank drafts, or making a credit or debit card

payment in exchange for those chips or tokens, and shall

further ensure that chips or tokens are derived from

winnings made whilst playing a game or games at the

casino< and

(e) ensure that the provisions of paragraphs (ii)

to (iv) are also applied in cases where in any one gaming

session a person carries out transactions which are

individually for an amount of less than Lm2,000 (two

thousand Maltese liri) but which in aggregate exceed

such amount.

(9) Notwithstanding the provisions of sub-regulation

(8) and without prejudice to the provisions of regulation 11,

the casino licensee shall further record the particulars relating

to the identity of a person playing a game or games in the

casino where the casino licensee or any casino employee has

any knowledge or suspicion that such person is, or may be,

engaging in money laundering or the funding of terrorism.”.

Immediately following regulation 5 of the principal regulations Addition of new

regulations 5A, 5B

there shall be inserted the following new regulations>

and 5C to the

principal

regulations.

“Correspondent

5A. (1) In addition and without prejudice to the

customer

due diligence, including identification procedures

branches and

required by these regulations, in establishing cross-border

correspondent banking and other similar relationships, Subject

Persons carrying out relevant financial business shall ensure

that they fully understand and document the nature of the

business activities of their correspondent institution, including

the adequacy and effectiveness of their internal controls for

the prevention of money laundering and the funding of

terrorism.

(2) The procedures for the establishment of

correspondent relationships in accordance with sub-regulation

(1) shall require the prior approval of senior management for

the establishment of such relationships in, or with respondent

institutions from, a non-reputable jurisdiction.

(3) Subject Persons shall ensure that the principles

of regulation 3(1) are applied to their branches or subsidiaries

that are not located in a reputable jurisdiction to the extent

that is allowed by the relevant national laws and, where this

is not possible, Subject Persons shall immediately inform the

Financial Intelligence Analysis Unit and the relevant

supervisory authority as applicable.

5B. (1) Subject Persons shall develop and establish

effective customer acceptance policies and procedures that

are not restrictive in allowing the provision of financial and

other services to the public in general but that, as a minimum,

include>

(a) a description of the type of customer that is

likely to pose higher than average risk<

(b) the identification of risk indicators such as the

customer background, country of origin, business

activities, linked accounts or activities and public or other

high profile positions< and

(c) the requirement for an enhanced customer due

diligence for higher risk customers.

(2) The Financial Intelligence Analysis Unit may,

in consultation with the relevant competent supervisory

authority, where applicable, and on a non-discriminatory basis,

determine that Subject Persons, or a category of Subject

Persons, apply simplified measures in compliance with these

regulations where the risk of money laundering or the funding

of terrorism appears low and where adequate checks and

controls are already otherwise applied.

(3) Any simplified measures as may be

determined and applied under sub-regulation (2) shall not be

applied in circumstances falling within Case 2 (suspicion).

5C. (1) Customer acceptance policies established

under regulation 5B shall be conducive to enabling Subject

Persons to determine whether an applicant for business is a

politically exposed person.

(2) With regards to politically exposed persons

residing in a foreign country, the procedures established under

sub-regulation (1) shall require the approval of senior

management for establishing such business relationships.

(3) In conducting enhanced ongoing monitoring

of business relationships established under sub-regulation (2),

Subject Persons shall ensure that the internal procedures

include adequate measures to establish the source of wealth

and funds that are involved in these business relationships or

transactions.”.

Immediately after sub-regulation (3) of regulation 6 of the

principal regulations there shall be inserted the following new sub-

regulations>

“(4) For the purposes of sub-regulation (1)(b) details of

payment shall include the name, address and account number of

the applicant for business and, where an account number is not

available, then a unique identifying number which allows the

transaction to be traced back to the applicant for business shall be

used whilst the address may be also substituted by the national

identity card number as verified.

(5) The details of payment accompanying a transfer of funds

as required under sub-regulation (4) shall be verified against

independently sourced documents>

Provided that for payments under Lm500 (five hundred

Maltese liri) the paying institution may determine the extent of

such verification.

(6) Where information required under sub-regulation (4) is

missing or incomplete when receiving inward funds, Subject

Persons may either reject the transfer or ask for complete

information to be submitted>

Provided that where the transfer is rejected or where

circumstances warrant that the funds be made available to the

beneficiary and the missing information is not received, Subject

Persons shall proceed as provided for in regulation 5(2).

(7) The provisions of sub-regulations (4), (5), and (6) shall

not apply where>

(a) the funds are transferred through a transaction

carried out by the use of a credit or debit card or any other

similar payment instrument where a unique identifying

number allowing the transaction to be traced to the payer

accompanies the transfer<

(b) both the payer and the payee are acting on their

own behalf and are persons authorised to undertake relevant

financial business or who are licensed or otherwise authorised

under the laws of a reputable jurisdiction to carry out any

activity which is equivalent to relevant financial business.”.

Regulation 7 of the principal regulations shall be amended Amends regulation

7 of the principal

as follows>

regulations.

(a) in sub-regulation (2)(a) thereof, immediately after the

words “for the purpose of establishing” there shall be inserted the

words “and verifying” and, immediately after the words “in addition

to” there shall be inserted the word “the”<

(b) in sub-regulation (2)(b) thereof for the words “regulation

5(1)” there shall be substituted the words “regulation 5(2)”<

(c)

in sub-regulation (4) thereof>

(i) for sub-paragraph (i) of the proviso thereto there

shall be substituted the following>

“(i) where the principal is a body corporate, a

body of persons, or any other form of legal entity or

arrangement, satisfactory identification shall also be

disclosed of all directors, and where such principal does

not have directors, of all such other persons vested with

its administration and representation, and, other than in

the case of a company listed on a recognised stock

exchange, a domestic public authority, a state

corporation, or any other category of customers where

such customers present a low risk of money laundering

or the funding of terrorism as may be determined by the

Financial Intelligence Analysis Unit in terms of

regulation 5B(2), satisfactory identification shall also be

disclosed of all persons having a qualifying interest in

such principal, including, where applicable, the identity

of the beneficial owners or beneficiaries of the qualifying

interest<”<

(ii) immediately after sub-paragraph (ii) of the

proviso thereto there shall be inserted the following>

“(iii) For the purposes of this regulation a

qualifying interest means a shareholding of 25% or more

of the equity shares in the principal, or a share of 25% or

more of the total contributions made to the principal or

of the total assets of the principal, as the case may be.”<

(d) in sub-regulation (5)(a) thereof>

(i) for the words “Where the applicant for business”

to “held under a nominee,” both phrases included, there shall

be substituted the words “Where the applicant for business is

acting on behalf of a body corporate, a body of persons, trust

or any other form of legal entity or arrangement in which

there is a qualifying interest as defined in sub-regulation (4)

held under a nominee,”< and

(ii) for the words “beneficiaries of the qualifying

shareholding” there shall be substituted the words

“beneficiaries of the qualifying interest”< and

(e) in sub-regulation (5)(b) thereof, the words “nominee

shareholder,” immediately before the words “trustee or under any

other fiduciary arrangement,” shall be deleted.

In sub-regulation 8(1) of the principal regulations, Amends regulation

immediately before the words “identification procedures” there shall 8 regulations.

be inserted the words “customer due diligence, including”.

Regulation 9 of the principal regulations shall be amended Amends

9 of the principal

as follows>

regulations.

(a) immediately after paragraph (b) of sub-regulation (1)

thereof there shall be inserted the following new paragraph>

“(c) in relation to regulations 5(6) and 5(7) a record of

the findings of the examination of the background and purpose

of such relationships and transactions.”<

(b) in sub-regulation (2)(a) thereof, immediately after the

words “relevant financial business” there shall be inserted the words

“or relevant activity”<

(c) in sub-regulation (2)(b) thereof, the words “paragraph

(b)” shall be substituted by the words “paragraphs (b) and (c)”<

(d) in sub-regulation (3) thereof, for the words “relevant

business”, wherever they occur, there shall be substituted the words

“relevant financial business or relevant activity”< and

(e) immediately after sub-regulation (3) thereof there shall

be inserted the following new sub-regulations>

“(4) Without prejudice to sub-regulations (1) to (3),

both inclusive, a casino licensee shall also maintain records

in relation to all identification processes under regulation 5(7)

in accordance with the provisions of article 25(2) of the

Gaming Act.

(5) Subject Persons shall ensure that all customer

identification, due diligence records and transaction records

and information are made available on a timely basis to the

Financial Intelligence Analysis Unit and, as may be allowed

by law, to other relevant competent authorities, for the

purposes of the prevention of money laundering and the

funding of terrorism.”.

Regulation 10 of the principal regulations shall be amended

as follows>

(a)

in sub-regulation (1) thereof> .

(i) for the words “a reporting officer employed” there

shall be substituted the words “a reporting officer designated”<

and

(ii) immediately after the words “in money laundering”

wherever they occur, there shall be inserted the words “or the

funding of terrorism”< and

(b) for sub-regulation (2) thereof, there shall be substituted

the following>

“(2) It shall be lawful for the reporting officer or other

designated employee of the Subject Person to disclose

information obtained in the course of internal reporting

procedures under these regulations to the reporting officer or

other designated employee of another Subject Person or

Persons>-

(a) forming part of the same group of companies

of the former Subject Person< or

(b) where the Subject Persons are acting in terms

of a principal and broker or principal and agent

relationship.”.

Regulation 11 of the principal regulations shall be amended

as follows>

(a) in the marginal note thereto, immediately after the words

“money laundering” there shall be inserted the words “or the

funding of terrorism”<

(b) in sub-regulation (1) thereof, immediately after the words

“money laundering” there shall be inserted the words “or the

funding of terrorism” and for the words “reasonably practicable,”

there shall be substituted the words “reasonably practicable, but

not later than three (3) working days from when the suspicion first

arose,”< and

(c) immediately after sub-regulation (2) thereof there shall

be added the following new sub-regulations>

“(3) Where, following a submission of a disclosure as

in sub-regulation (1), or for any other reason as is allowed by

law, the Financial Intelligence Analysis Unit demands

additional information, a Subject Person shall comply as soon

as is reasonably practicable but not later than five (5) working

days from when the demand is first made unless that Subject

Person makes representations justifying why the requested

information cannot be submitted within the said time and the

Financial Intelligence Analysis Unit, at its discretion and after

having considered such representations, extends such time as

is reasonably necessary to obtain the information, whereupon

the Subject Person shall submit the information requested

within the time as extended.

(4) A Subject Person who contravenes the provisions

of this regulation, or who fails to disclose information as

required by sub-regulation (1) or who fails to submit

information demanded under sub-regulation (3), shall be liable

to an administrative penalty of not less than Lm100 (one

hundred Maltese liri) and not more than Lm1,000 (one

thousand Maltese liri).

(5) Administrative penalties under sub-regulation (4)

shall be imposed by the Financial Intelligence Analysis Unit

without recourse to a court hearing and may be imposed either

as a one time penalty or on a daily cumulative basis until

compliance provided that in the latter case the accumulated

penalty shall not exceed Lm 5,000 (five thousand Maltese

liri).”.

In regulation 12 of the principal regulations for the words Amends regulation

12 of the principal

“money laundering activities” there shall be substituted the words regulations.

“money laundering and, or funding of terrorism activities”.

Regulation 15 of the principal regulations shall be amended

as follows>

(a) immediately before the words “the identity of the person”

there shall be inserted the words “the due diligence including”<

and

(b) in the proviso thereof, immediately before the words

“the identification process” there shall be inserted the words “the

customer due diligence including”.

Mitbug[ fl-Istamperija tal-Gvern — Printed at the Government Printing Press