Prevention of Money Laundering and Funding of Terrorism

L.N. 464 of 2014

PREVENTION OF MONEY LAUNDERING ACT

(CAP. 373)

Prevention of Money Laundering and Funding of Terrorism

(Amendment) Regulations, 2014

IN exercise of the powers conferred by article 12 of the

Prevention of Money Laundering Act, the Minister for Finance has

made the following regulations:-

(1) The title of these regulations is the Prevention of Citation and

Money Laundering and Funding of Terrorism (Amendment) coming

force.

Regulations, 2014, and these regulations shall be read and construed

as one with the Prevention of Money Laundering and Funding of S.L. 373.01

Terrorism Regulations, hereinafter referred to as "the principal

regulations".

(2) The provisions of paragraph (b) of regulation 13 shall

come into force on such date as the Minister for Finance may, by

notice in the Gazette, establish and different dates may be so

established for different provisions of the said regulation 13(b).

Sub-regulation (1) of regulation 2 of the principal Amends

regulation 2 of

regulations shall be amended as follows

the principal

regulations.

(a) for the definition "Case 2" there shall be substituted

the following

" "Case 2" (suspicion) means any case where,

regardless of any exemption or threshold, in respect of any

transaction, any person handling the transaction knows or

suspects that the applicant for business may have been, is,

or may be engaged in money laundering or the funding or

terrorism, that the transaction is carried out on behalf of

another person who may have been, is, or may be engaged

in money laundering or the funding of terrorism, or that the

transaction involves property that may have derived

directly or indirectly from, or constitutes the proceeds of,

criminal activity;";

(b) for the definition "funding of terrorism" there shall

be substituted the following

" "funding of terrorism" means the

conduct described in articles 328B and 328F to

328I, both inclusive, of the Criminal Code;";

(c)

for the definition "money laundering" there shall be

substituted the following

" "money laundering" shall have the same meaning

assigned to it under the Act;";

(d) in paragraph (f) of the definition "relevant activity",

for the words "in terms of the Trusts and Trustees Act;" there

shall be substituted the words "in terms of the Trusts and

Trustees Act, other than persons acting as trustees in terms of

article 43A of the said Act;"; and

(e)

the definition "relevant financial business" shall be

amended as follows

(i) in paragraph (a) thereof, the words "or any

business of an electronic money institution" shall be

deleted;

(ii) in paragraph (c) thereof, immediately after

the words "or enrolled or required to be enrolled under the

provisions of the Insurance Intermediaries Act" there shall

be added the words "other than natural persons who are

enrolled as intermediaries and act on behalf of another

intermediary"; and

(iii) for paragraph (g) thereof, there shall be

substituted the following

"(g) any activity other than that of a

retirement scheme or a retirement fund, carried

on in relation to a retirement scheme, by a

person or institution registered or required to

be registered under the provisions of the

Retirement Pensions Act and for the purpose of

this paragraph "retirement scheme" and

"retirement fund" shall have the same meaning

as is assigned to them in the said Act;".

In paragraph (d) of sub-regulation (2) of regulation 3 of the

principal regulations, for the words "and not directly related to the

main activity" there shall be substituted the words "and directly

related to the main activity".

Regulation 4 of the principal regulations shall be amended Amends

regulation 4 of

as follows

the principal

regulations.

(a)

sub-regulation (1) thereof shall be amended as

follows

(i) for the words "No subject person shall form a

business relationship or carry out an occasional transaction

with an applicant for business unless that subject person"

there shall be substituted the words "Every subject person

shall ensure that it";

(ii) in the Maltese text of paragraph (a) thereof,

for the words "ma tadottax dawn il-miżuri u proċeduri"

there shall be subsituted the words "tadotta dawn il-miżuri

u proċeduri";

(iii) in paragraph (a) thereof, for the words

"established in relation to that business" there shall be

substituted the words "when forming a business

relationship or carrying out an occasional transaction";

(iv) for the Maltese text of paragraph (b) thereof,

there shall be substituted the following

"(b) tapplika l-miżuri u l-proċeduri

stabbiliti taħt il-paragrafu (a) inkluż meta tidħol

għal relazzjonijiet jew tagħmel operazzjonijiet li

ma jsirux wiċċ imb’wiċċ;";

(v) in the Maltese text of paragraph (c) thereof,

for the words "ma tistabbilix policies u proċduri" there

shall be substituted the words "tistabbilixxi policies u

proċeduri";

(vi) in the Maltese text of paragraph (d) thereof,

for the words "ma tieħux miżuri" there shall be substituted

the words "tieħu miżuri";

(vii) in the Maltese text of paragraph (e) thereof,

for the words "ma tipprovdix lill-impjegati" there shall be

substitued the words "tipprovdi lill-impjegati"; and

(viii) in paragraph (e) thereof, immediately after

the words "the recognition and handling of transactions"

there shall be added the words "which may be related to

proceeds of criminal activity and transactions";

(b) in sub-regulation (5) thereof, for the words "the

provisions of this regulation" there shall be substituted the

words "the provisions of sub-regulation (1)(a) to (c)"; and

(c)

in sub-regulation (6) thereof, for the words "the

requirements of subregulation (1)" there shall be substituted the

words "the requirements of sub-regulation (1)(a) to (c)".

Regulation 5 of the principal regulations shall be amended

as follows

(a) in sub-regulation (1) thereof, for the words "Where

an offence against the provisions of regulation 4 is committed"

there shall be substituted the words "Where an offence against

the provisions of these regulations is committed";

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

"administrative penalty of not less than one thousand two

hundred euro (€1,200) and not more than five thousand euro

(€5,000)" there shall be substituted the words "administrative

penalty of not less than one thousand euro (€1,000) and not

more than forty-six thousand five hundred euro (€46,500)"; and

(c)

sub-regulation (3) thereof shall be deleted.

Regulation 7 of the principal regulations shall be amended

as follows

(a)

sub-regulation (1) thereof shall be amended as

follows

(i) in paragraph (b) thereof, the words "and in

accordance with subregulation (3)" shall be deleted;

(ii) in the Maltese text of paragraph (d) thereof,

for the words "li jmexxu sorveljanza kontinwa tar-

relazzjoni kummerċjali" there shall be substituted the

words

"s-sorveljanza

kontinwa

tar-relazzjoni

kummerċjali"; and

(iii) in paragraph (d) thereof, for the words

"customer due diligence shall proceed in accordance with

regulation 11(6) and (7)" there shall be substituted the

words "subject persons shall apply the measures applicable

under regulation 11(6)";

(b) in sub-regulation (9) thereof, for the words "on a

risk based approach, whether an applicant for business is a

politically exposed person" there shall be substituted the words

"on a risk-sensitive basis, whether an applicant for business or a

beneficial owner poses a higher risk of money laundering and

funding of terrorism, including whether an applicant for

business or a beneficial owner is a politically exposed person";

and

(c)

in sub-regulation (12) thereof, for the words

"Regulation (EC) No 1781/2006 of the European Parliament

and of the Council of 15 November 2006 on information on the

payee" there shall be substituted the words "Regulation (EC) No

1781/2006 of the European Parliament and of the Council of 15

November 2006 on information on the payer"; and for the words

"administrative penalty of not less than two hundred and fifty

euro (€250) and not more than two thousand five hundred euro

(€2,500) which shall be imposed by the Financial Intelligence

Analysis Unit without recourse to a court hearing" there shall be

substituted the words "administrative penalty of not less than

one thousand euro (€1,000) and not more than forty-six

thousand five hundred euro (€46,500) in respect of every

separate contravention".

Regulation 8 of the principal regulations shall be amended Amends

regulation 8 of

as follows

the principal

regulations.

(a) in sub-regulation (5) thereof, for the words

"consider making a suspicious transaction report" there shall be

substituted the words "consider disclosing that information in

accordance with regulation 15(6)"; and

(b) immediately after sub-regulation (5) thereof, there

shall be added the following new sub-regulation

"(6) Without prejudice to sub-regulation (5), a

subject person who is in possession of funds of a customer

or a potential customer who, pursuant to sub-regulation (5)

decides to terminate or not to establish a business

relationship, or not to carry out an occasional transaction

and to return, release or transfer those funds shall, unless

an order has been made or a notice has been issued in

terms of the Act or these regulations prohibiting the release

of such funds, return those funds to the same source from

where they originated and through the same financial

channels by which the subject person came into possession

of the funds.".

Regulation 10 of the principal regulations shall be

amended as follows

(a)

sub-regulation (1) thereof shall be amended as

follows

(i) for the words "Without prejudice to the

provisions of subregulation (5) and subregulation (6),

subject persons shall not apply customer due diligence

measures" there shall be substituted the words "Without

prejudice to the provisions of sub-regulation (5) and sub-

regulation (6), subject persons shall not be required to

apply customer due diligence measures";

(ii) in sub-paragraph (iv) of paragraph (d)

thereof, for the words "the activity of the applicant;" there

shall be substituted the words "the activity of the

applicant."; and

(iii) paragraph (e) thereof shall be deleted;

(b)

sub-regulation (2) thereof shall be deleted;

(c)

sub-regulations (3) and (4) thereof shall be

renumbered as sub-regulations (2) and (3) respectively;

(d) sub-regulation (2), as renumbered, shall be amended

as follows

(i) in paragraph (e) thereof, for the words "the

Banking Act" there shall be substituted the words "the

Financial Institutions Act" and for the words "one hundred

and fifty euro (€150)" there shall be substituted the words

"two hundred and fifty euro (€250)"; and

(ii) in paragraph (f) thereof, for the words "in

accordance with subregulation (4)" there shall be

substituted the words "in accordance with sub-regulation

(3)";

(e)

sub-regulation (3) thereof, as renumbered, shall be

amended as follows

(i) for the words "for the purposes of

subregulation (3)(f) where" there shall be substituted the

words "for the purposes of sub-regulation (2)(f) where";

(ii)

in sub-paragraph (i) of paragraph (d) thereof,

for the words "does not exceed that laid down in

subregulation 3(a) and (b);" there shall be substituted the

words "does not exceed that laid down in sub-regulation

(2)(a) and (b);" and

(f)

immediately after sub-regulation (3) thereof, as

renumbered, there shall be added the following new sub-

regulation

"(4) Without prejudice to the provisions

of sub-regulation (5) and sub-regulation (6), a

subject person carrying on affiliated insurance

business in accordance with paragraph (c) of

the definition "relevant financial business",

shall not be required to apply customer due

diligence measures in accordance with

regulation 7 and regulation 8(1) where the

applicant for business satisfies all the

following criteria

(a)

is a legal person representing

a low risk of money laundering and

funding of terrorism and where the

business relationship and the insurance

product provided also represent such low

risk;

(b) is a shareholder of, or is a

person or entity connected with the

subject person as determined by the

applicable Insurance Rules issued by the

Malta Financial Services Authority under

the Insurance Business Act; and

(c)

carries out a relevant activity

under paragraphs (a) to (f) of the

definition "relevant activity" or an

equivalent activity in another Member

State of the Community or in a reputable

jurisdiction

Provided that, notwithstanding the

provisions of sub-regulation (6), in making a

determination as to whether an applicant for

business or a business relationship or an

insurance product represents a low risk of

money laundering or funding of terrorism, the

subject person shall consult with the Financial

Intelligence Analysis Unit, which may request

the opinion of the Malta Financial Services

Authority, and which may determine what

alternative customer due diligence measures

may need to be applied.".

Regulation 11 of the principal regulations shall be

amended as follows

(a)

sub-regulation (2) thereof shall be amended as

follows

(i) for the words "Subject persons shall apply

one or more of the following additional measures", there

shall be substituted the words "Subject persons shall apply

one or more of the following measures, in addition to the

requirements under regulation 7,"; and

(ii) in paragraph (c) thereof, for the words "a

relevant financial activity" there shall be substituted the

words "relevant financial business";

(b) in the English text of paragraph (b) of sub-regulation

(4) thereof, for the word "corresponding" there shall be

substituted the word "correspondent"; and

(c)

in paragraph (a) of sub-regulation (6) thereof,

immediately after the words "establishing such business

relationships" there shall be added the words "or undertaking

any occasional transaction".

In tsub-regulation (7) of regulation 12 of the principal

regulations, for the words "Subject persons carrying out an activity

falling with the scope of paragraph (b)" there shall be substituted the

words "Subject persons carrying out an activity falling within the

scope of paragraph (b)".

Regulation 13 of the principal regulations shall be

amended as follows

(a)

in paragraph (c) of sub-regulation (2) thereof, for the

words "relationships and transactions therein." there shall be

substituted the words "relationships and transactions therein;"

and immediately thereafter there shall be added the following

new paragraphs

"(d) a record of any disclosures made to the

Financial Intelligence Analysis Unit in accordance with

regulation 15(6);

(e) a record of any internal reports made in

accordance with regulation 15(4)(a);

(f) a record of any written determinations made

in accordance with regulation 15(8);

(g) a record of any training provided in

accordance with regulation 4(1)(e); and

(h) any other document, record or information

which the Financial Intelligence Analysis Unit may require

to be maintained in accordance with procedures issued in

terms of regulation 17.";

(b)

sub-regulation (3) thereof shall be amended as

follows

(i) in the Maltese text of paragraph (a) thereof,

for the words "relattivament għal dawk ir-records" there

shall be substituted the words "fir-rigward ta’ dawk ir-

records";

(ii) in paragraph (a) thereof, for the words

"relevant financial business or relevant activity was

completed; and" there shall be substituted the words

"relevant financial business or relevant activity was

completed;";

(iii) in the Maltese text of paragraph (b) thereof,

for the words "relattivament għal dawk ir-records" there

shall be substituted the words "fir-rigward ta’ dawk ir-

records";

(iv) in paragraph (b) thereof, for the words "the

transaction in question were completed:" there shall be

substituted the words "the transaction in question were

completed; and"; and

(vi) immediately after paragraph (b) thereof, there

shall be added the following new paragraph

"(c) in relation to such records as are

described in paragraphs (d), (e), (f) and (g), the

date on which the event referred to therein took

place:";

(c)

in sub-regulation (6) thereof, for the words "all

customer identification, due diligence records and transaction

records and other relevant information" there shall be

substituted the words "all records maintained in accordance

with this regulation".

Regulation 15 of the principal regulations shall be

amended as follows

(a)

in sub-regulation (1) thereof, for the words "and

make such findings available to the Financial Intelligence

Analysis Unit and to the relevant supervisory authority in

accordance with applicable law" there shall be substituted the

words "maintain such findings on record and ensure that, upon

request, such findings are made available to the Financial

Intelligence Analysis Unit, the relevant supervisory authority,

other relevant competent authorities in accordance with

applicable laws, and to the internal or external auditors

appointed or otherwise engaged to carry out internal control

functions under regulation 4(1)(c)";

(b) in the Maltese text of sub-regulation (2) thereof, for

the words "għall-operazzjonijiet ma’ persuni, kumpanniji u

xogħlijiet" there shall be substituted the words "għall-

operazzjonijiet ma’ persuni, kumpanniji u impriżi";

(c)

in sub-regulation (2) thereof, for the words "and,

where the provisions of subregulation (1) apply to such

transactions, subject persons shall proceed as provided for in

subregulation (1)", there shall be substituted the words "and,

where those transactions have no apparent economic or visible

lawful purpose, the background and purpose of such

transactions should, as far as possible, be examined, and the

findings should be maintained and made available, upon

request, to the Financial Intelligence Analysis Unit, the relevant

supervisory authority, other relevant competent authorities in

accordance with applicable laws, and to the internal or external

auditors appointed or otherwise engaged to carry out internal

control functions under regulation 4(1)(c)";

(d)

sub-regulation (4) thereof shall be amended as

follows

(i) in paragraph (a) thereof, for the words "that a

transaction may be related to money laundering or the

funding of terrorism" there shall be substituted the words

"that a transaction may be related to proceeds of criminal

activity, money laundering or the funding of terrorism";

(ii) in the Maltese text of paragraph (b) thereof,

for the words "imdaħħla fil-money laundering jew fl-

iffinanzjar ta’ terroriżmu jew ma tkunx" there shall be

substituted the words "imdaħħla fil-money laundering jew

fl-iffinanzjar ta’ terroriżmu,";

(iii) in paragraph (b) thereof, immediately after

the words "is or may be engaged in money laundering or

the funding of terrorism" there shall be added the words

"or that a transaction may be related to proceeds of

criminal activity, money laundering or the funding of

terrorism"; and

(iv) in paragraph (d) thereof, immediately after

the words "engaged in money laundering or the funding of

terrorism" there shall be added the words "or that a

transaction may be related to proceeds of criminal activity,

money laundering or the funding of terrorism";

(e)

in sub-regulation (6) thereof, for the words "has

reasonable grounds to suspect that a transaction" there shall be

substituted the words "has reasonable grounds to suspect that

funds are the proceeds of criminal activity, that a transaction"

and for the words "but not later than five working days from

when the suspicion first arose" there shall be substituted the

words "but not later than five working days from when the

knowledge or suspicion first arose";

(f)

in sub-regulation (7) thereof, for the words "related

to money laundering or the funding of terrorism" there shall be

substituted the words "related to proceeds of criminal activity,

money laundering or the funding of terrorism" and for the words

"shall accordingly inform the Financial Intelligence Analysis

Unit immediately the transaction is effected" there shall be

substituted the words "shall accordingly inform the Financial

Intelligence Analysis Unit immediately after the transaction is

effected";

(g) in sub-regulation (9) thereof, for the words "that

could be related to money laundering or the funding of

terrorism" there shall be substituted the words "that is related to

funds which are known or suspected to be proceeds of criminal

activity, or that could be related to money laundering or the

funding of terrorism";

(h) in sub-regulation (14) thereof, for the words "who

report suspicions of money laundering or the funding of

terrorism" there shall be substituted the words "who report

suspicions of money laundering or the funding of terrorism, or

suspicions that funds are the proceeds of criminal activity";

(i)

in sub-regulation (15) thereof, for the words "of not

less than two hundred and fifty euro (€250) and not more than

two thousand five hundred euro (€2,500)" there shall be

substituted the words "of not less than one thousand euro

(€1,000) and not more than forty-six thousand five hundred euro

(€46,500) in respect of every separate contravention of any

provision referred to in this sub-regulation"; and

(j)

sub-regulation (16) thereof shall be deleted.

Regulation 16 of the principal regulations shall be

amended as follows

(a) for sub-regulation (1) thereof there shall be

substituted the following

"(1) A subject person, a supervisory authority, any

official or employee of a subject person or a supervisory

authority, or any other person from whom the Financial

Intelligence Analysis Unit has demanded information, who

discloses to the person concerned or to a third party, other

than as provided for in this regulation, the fact that

information has been demanded by the Financial

Intelligence Analysis Unit or that information has been or

may be transmitted to the Financial Intelligence Analysis

Unit pursuant to these regulations or article 30 of the Act,

or that an analysis or an investigation has been, is being, or

may be carried out, shall be guilty of an offence and liable

on conviction to a fine (multa) not exceeding fifty

thousand euro (€50,000) or to imprisonment for a term not

exceeding two years or to both such fine and

imprisonment.";

(b)

sub-regulation (2) thereof shall be amended as

(i) in paragraph (d) thereof, for the words, "the

prevention of money laundering or the funding of

terrorism." there shall be substituted the words "the

prevention of money laundering or the funding of

terrorism;"; and

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

shall be added the following new paragraphs

"(e) disclosures by a subject person to a

competent court, tribunal or other judicial authority

in or outside Malta, including disclosures made in

any written pleadings or submissions, that the

subject person refrained from carrying out a

transaction as required by the proviso to article

28(1) of the Act

Provided that disclosures under this

paragraph shall not constitute a breach of sub-

regulation (1) only in the case where the execution

of the transaction under article 28(1) of the Act has

not been opposed by the Financial Intelligence

Analysis Unit and the period of time referred to in

the proviso to that sub-article has lapsed, and such

disclosures are made in the course of proceedings

instituted against the subject person for, or as a

consequence of, the failure or delay in carrying out

the transaction;

(f) disclosures by a subject person to a

supervisory authority or professional body

exercising supervision or regulatory oversight over

that subject person that the subject person refrained

from carrying out a transaction as required by the

proviso to article 28(1) of the Act

Provided that disclosures under this

paragraph shall not constitute a breach of sub-

regulation (1) only in the case where the execution

of the transaction under article 28(1) of the Act has

not been opposed by the Financial Intelligence

Analysis Unit and the period of time referred to in

the proviso to that sub-article has lapsed, and such

disclosures are made in response to an enquiry or

action by that supervisory authority or professional

body with respect to the subject person’s failure or

delay in carrying out the transaction;

(g) disclosures by a subject person to a

competent court, tribunal or other judicial authority

in or outside Malta, including disclosures made in

any written pleadings or submissions, that the

execution of a transaction had been suspended by

the Financial Intelligence Analysis Unit in

accordance with article 28 of the Act

Provided that disclosures under this

paragraph shall not constitute a breach of sub-

regulation (1) only in the case where such

disclosures are made upon the lapse of the period

of time referred to in sub-article (2) or the extended

period referred to in sub-article (3) of article 28 of

the Act and such disclosures are made in the course

of proceedings instituted against the subject person

for, or as a consequence of, the failure or delay in

carrying out the transaction;

(h) disclosures by a subject person to a

supervisory authority or professional body

exercising supervision or regulatory oversight over

that subject person that the execution of a

transaction had been suspended by the Financial

Intelligence Analysis Unit in accordance with

article 28 of the Act

Provided that disclosures under this

paragraph shall not constitute a breach of sub-

regulation (1) only in the case where such

disclosures are made upon the lapse of the period

of time referred to in sub-article (2) or the extended

period referred to in sub-article (3) of article 28 of

the Act and such disclosures are made in response

to an enquiry or action by that supervisory

authority or professional body with respect to the

subject person’s failure or delay in carrying out the

transaction.".

In sub-regulation (2) of regulation 17 of the principal

regulations, for the words "shall be liable to the administrative

penalties as provided for under regulation 15(15) and (16)" there shall

be substituted the words "shall be liable to an administrative penalty

of not less than one thousand euro (€1,000) and not more than forty-

six thousand five hundred euro (€46,500) in respect of every separate

failure to comply with such provisions".

Regulation 18 of the principal regulations shall be re- Adds new

numbered as regulation 22 thereof, and immediately after regulation regulations

to

the principal

17 there shall be added the following new regulations

regulations.

" Power to

Where the Financial Intelligence

terminate a

Analysis Unit knows or has reasonable

business

grounds to suspect that, in connection with a

relationship.

business relationship established by a subject

person, money laundering or funding of

terrorism is taking place, has taken place or has

been attempted, or that such business

relationship could increase the risk of money

laundering or funding of terrorism, the

Financial Intelligence Analysis Unit may,

where the circumstances so warrant, require

such subject person to terminate that business

relationship within a stipulated period of time.

In fulfilment of its supervisory

Periodical

reporting.

functions under the Act, the Financial

Intelligence Analysis Unit may require subject

persons to submit periodical reports on the

internal policies and procedures they maintain

and apply pursuant to regulation 4 and any

other information or documents as the

Financial Intelligence Analysis Unit may

consider necessary.

Where a subject person is required

Format of

information.

to provide information to the Financial

Intelligence Analysis Unit under the Act, these

regulations and any implementing procedures

issued thereunder, the Financial Intelligence

Analysis Unit may demand that the

information is produced electronically and may

establish the format within which the

information is to be provided.

(1) Any subject person who fails

Penalties.

to comply with any lawful requirement, order

or directive issued by the Financial Intelligence

Analysis Unit under these regulations or the

Act shall be liable to an administrative penalty

of not less than one thousand euro (€1,000) and

not more than forty-six thousand five hundred

euro (€46,500) in respect of every separate

failure to comply with such lawful

requirement, order or directive.

(2) Unless

otherwise

specifically

provided for under any other regulation, a

subject person who contravenes any provision

of these regulations shall be liable to an

administrative penalty of not less than one

thousand euro (€1,000) and not more than

forty-six thousand five hundred euro (€46,500)

in respect of every separate contravention.

(3) Administrative penalties under these

regulations shall be imposed by the Financial

Intelligence Analysis Unit without recourse to

a court hearing and may be imposed either as a

one time fixed penalty or as a daily cumulative

penalty, or both

Provided

that

administrative

penalties imposed on a daily cumulative basis

shall not be less than two hundred and fifty

euro (€250) and the accumulated penalty shall

not exceed forty-six thousand five hundred

euro (€46,500).

(4) Notwithstanding any provision

imposing an administrative penalty under these

regulations, the Financial Intelligence Analysis

Unit may, where the circumstances so warrant,

issue a reprimand in writing instead of an

administrative penalty.".

€1.44