Funding of Terrorism Regulations, 2017

L.N. 372 of 2017

PREVENTION OF MONEY LAUNDERING ACT

(CAP. 373)

Prevention of Money Laundering and

Funding of Terrorism Regulations, 2017

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

Money Laundering and Funding of Terrorism Regulations, 2017.

(2) These regulations shall come into force on the 1st January,

2018. (3) The objective of these regulations is to implement the

provisions of Directive (EU) 2015/849 of the European Parliament

and of the Council of 20 May 2015 on the prevention of the use of the

financial system for the purposes of money laundering or terrorist

financing.

(1)

In these regulations, unless the context otherwise

requires -

"the Act" means the Prevention of Money Laundering Act;

"beneficial owner" means any natural person or persons who

ultimately own or control the customer and, or the natural person or

persons on whose behalf a transaction or activity is being conducted,

and

(a)

in the case of a body corporate or a body of

persons, the beneficial owner shall consist of any natural person

or persons who ultimately own or control that body corporate or

body of persons through direct or indirect ownership of twenty-

five per centum (25%) plus one (1) or more of the shares or

more than twenty-five per centum (25%) of the voting rights or

an ownership interest of more than twenty-five per centum

(25%) in that body corporate or body of persons, including

through bearer share holdings, or through control via other

means, other than a company that is listed on a regulated market

which is subject to disclosure requirements consistent with

European Union law or equivalent international standards which

ensure adequate transparency of ownership information

Provided that a shareholding of twenty-five per

centum (25%) plus one (1) share or more, or the holding of an

ownership interest or voting rights of more than twenty-five per

centum (25%) in the customer shall be an indication of direct

ownership when held directly by a natural person, and of

indirect ownership when held by one or more bodies corporate

or body of persons or through a trust or a similar legal

arrangement, or a combination thereof

Provided further that if, after having exhausted all

possible means and provided there are no grounds of suspicion,

no beneficial owner in terms of this paragraph has been

identified, subject persons shall consider the natural person or

persons who hold the position of senior managing official or

officials to be the beneficial owners, and shall keep a record of

the actions taken to identify the beneficial owner in terms of this

paragraph.

(b)

in the case of trusts the beneficial owner shall

consist of

(i)

the settlor;

(ii) the trustee or trustees;

(iii) the protector, where applicable;

(iv) the beneficiaries or the class of beneficiaries

as may be applicable; and

(v) any other natural person exercising ultimate

control over the trust by means of direct or indirect

ownership or by other means;

(c)

in the case of legal entities such as foundations, and

legal arrangements similar to trusts, the beneficial owner shall

consist of the natural person or persons holding equivalent or

similar positions to those referred to in paragraph (b);

''business relationship'' means a business, professional or

commercial relationship between two or more persons, at least one of

which is acting in the course of either relevant financial business or

relevant activity, and which has, or is expected to have at the time

when the contact is established, an element of duration;

''casino'' has the same meaning as is assigned to the term by

article 2 of the Gaming Act and ''casino licensee'' in these regulations Cap. 400

shall be construed accordingly;

''collective investment scheme'', and ''units'' have the same

meanings as are assigned to these terms respectively in the

Investment Services Act;

''company'' has the same meaning as is assigned to the term in

the Companies Act;

"competent authority" means

(a)

any supervisory authority;

(b)

the Comptroller of Customs when carrying out

duties under any regulation that may be issued or are in force

from time to time relating to the cross-border movement of cash

and other financial instruments;

(c)

the Commissioner for Revenue;

(d)

the Security Service; and

(e)

the Sanctions Monitoring Board;

"correspondent relationship" means

(a)

the provision of banking services by one bank as

the correspondent to another bank as the respondent, including

providing a current or other liability account and related

services, such as cash management, international funds

transfers, cheque clearing, payable-through accounts and

foreign exchange services;

(b)

the relationship between and among institutions

carrying out relevant financial business and activities equivalent

thereto, including where similar services to those under

paragraph (a) are provided by a correspondent institution to a

respondent institution, and including relationships established

for securities transactions or funds transfers;

''criminal activity'' has the same meaning as is assigned to the

term in the Act;

"customer" means a legal or natural person who seeks to form,

or who has formed a business relationship, or seeks to carry out an

occasional transaction with a person who is acting in the course of

either relevant financial business or relevant activity;

"electronic money" has the same meaning as is assigned to the

term in the Financial Institutions Act;

"European Supervisory Authorities" has the same meaning as is

assigned to the term in the Act;

''Financial Intelligence Analysis Unit'' has the same meaning as

is assigned to the term in the Act;

''funding of terrorism'' means the conduct described in articles

328F and 328I both inclusive, of the Criminal Code;

"gaming licensee" means any person authorised in terms of the

Lotteries and Other Games Act to provide a gaming service;

"gaming service" means making a game available for

participation by players, and "game" shall have the same meaning as

is assigned to the term in the Lotteries and other Games Act;

''group'' has the same meaning as is assigned to the term in the Cap. 386

Companies Act;

"long term insurance business" means the business of insurance

of any of the classes specified in the Second Schedule to the

Insurance Business Act;

"management body" means the board of directors or, where

there is no board of directors, the body having equivalent powers and

functions;

"Member State" has the same meaning as is assigned to the term

in the Act;

''money laundering'' has the same meaning as is assigned to the

term in the Act;

''non-reputable jurisdiction'' means any jurisdiction having

deficiencies in its national anti-money laundering and counter

funding of terrorism regime or having inappropriate and ineffective

measures for the prevention of money laundering and the funding of

terrorism, taking into account any accreditation, declaration, public

statement or report issued by an international organisation which lays

down internationally accepted standards for the prevention of money

laundering and for combating the funding of terrorism or which

monitors adherence thereto, or is a jurisdiction identified by the

European Commission in accordance with Article 9 of Directive (EU)

2015/849;

''occasional transaction'' means any transaction or service

carried out or provided by a subject person for his customer, other

than a transaction or service carried out or provided within a business

relationship, and includes the following

(a)

a transaction amounting to fifteen thousand euro

(€15,000) or more, carried out in a single operation or in several

operations which appear to be linked;

(b)

a transfer of funds as defined under Regulation

(EU) 2015/847 of the European Parliament and of the Council

of 20 May 2015, which exceeds one thousand euro (€1,000) in a

single operation or in several operations which appear to be

linked;

(c)

a transaction in cash amounting to ten thousand

euro (€10,000) or more, carried out by a natural or legal person

trading in goods in a single operation or in several operations

which appear to be linked;

(d)

a transaction amounting to two thousand euro

(€2,000) or more, carried out by gaming or casino licensees in a

single operation or in several operations which appear to be

linked;

(e)

the provision of tax advice; and

(f)

the formation of a company, trust, foundation or a

similar structure.

"politically exposed persons" means natural persons who are or

have been entrusted with prominent public functions, other than

middle ranking or more junior officials. For the purposes of this

definition the term "natural persons who are or have been entrusted

with prominent public functions" includes the following

(a)

Heads of State, Heads of Government, Ministers,

Deputy or Assistant Ministers, and Parliamentary Secretaries;

(b)

Members of Parliament or similar legislative

bodies;

(c)

Members of the governing bodies of political

parties;

(d)

Members of superior, supreme, and constitutional

courts or of other high-level judicial bodies whose decisions are

not subject to further appeal, except in exceptional

circumstances;

(e)

Members of courts of auditors or of the boards of

central banks;

(f)

Ambassadors, charges d’affaires and high ranking

officers in the armed forces;

(g)

Members of the administrative, management or

supervisory boards of State-owned enterprises;

(h)

Anyone exercising a function equivalent to those

set out in paragraphs (a) to (f) within an institution of the

European Union or any other international body;

''relevant activity'' means the activity of the following legal or

natural persons when acting in the exercise of their professional

(a)

auditors, external accountants and tax advisors,

including when acting as provided for in paragraph (c);

(b)

real estate agents;

(c)

notaries and other independent legal professionals

when they participate, whether by acting on behalf of and for

their client in any financial or real estate transaction or by

assisting in the planning or carrying out of transactions for their

clients concerning the –

(i) buying and selling of real property or

business entities;

(ii) managing of client money, securities or other

assets, unless the activity is undertaken under a licence

issued under the provisions of the Investment Services Cap. 370

(iii) opening or management of bank, savings or

securities accounts;

(iv) organisation of contributions necessary for

the creation, operation or management of companies;

(v) creation, operation or management of

companies, trusts, foundations or similar structures, or

when acting as a trust or company service provider;

(d)

trust and company service providers;

(e)

nominee companies holding a warrant under the

Malta Financial Services Authority Act and acting in relation to Cap. 330

dissolved companies registered under the said Act;

(f)

casino licensees;

(g)

gaming licensees; and

(h)

any natural or legal person trading in goods, but

only where a transaction involves payment in cash in an amount

equal to ten thousand euro (€10,000) or more whether the

transaction is carried out in a single operation or in several

operations which appear to be linked;

''relevant financial business'' means –

(a)

any business of banking carried on by a person or

institution who is for the time being licensed, or required to be

licensed, under the provisions of the Banking Act;

(b)

any activity of a financial institution carried on by

a person or institution who is for the time being licensed, or

required to be licensed, under the provisions of the Financial

Institutions Act;

(c)

any long term insurance business other than

business of reinsurance carried on by a person or institution who

is for the time being authorised, or required to be authorised,

under the provisions of the Insurance Business Act;

(d)

any insurance intermediary activities carried out by

an insurance intermediary or by a tied insurance intermediary

related to long-term insurance business which person or

institution is enrolled or required to be enrolled under the

provisions of the Insurance Intermediaries Act, other than a

natural person who is registered or enrolled and acts on behalf

of a tied insurance intermediary or a person or institution

enrolled as a tied insurance intermediary that does not collect

premiums, or other amounts intended for the policyholder or the

beneficiary;

(e)

any long term insurance business other than

business of reinsurance carried on by a person in accordance

with the Insurance Business (Captive Insurance Undertakings

and Captive Reinsurance Undertakings) Regulations, by a cell

company in accordance with the provisions of the Companies

Act (Cell Companies Carrying on Business of Insurance)

Regulations or by an incorporated cell company and an

incorporated cell in accordance with the provisions of the

Companies Act (Incorporated Cell Companies Carrying on

Business of Insurance) Regulations;

(f)

investment services carried on by a person or

institution licensed or required to be licensed under the

provisions of the Investment Services Act;

(g)

administration services to collective investment

schemes provided by a person or institution recognised or

required to be recognised under the provisions of the Investment Cap. 370

Services Act other than administration services provided by

recognised incorporated cell companies in accordance with the

Companies Act (Recognised Incorporated Cell Companies) S.L. 386.15

Regulations;

(h)

a collective investment scheme marketing its units

or shares, licensed, recognised or notified, or required to be

licensed, recognised or notified, under the provisions of the Cap. 370

Investment Services Act;

(i)

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 licensed or required to be

licensed 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 Retirement Pension Act;

(j)

any activity of a regulated market and that of a

central securities depository authorised or required to be

authorised under the provisions of the Financial Markets Act;

(k)

safe custody services provided by any person or

institution not covered under paragraph (a) or (f);

(l)

any activity under paragraphs (a) to (k) carried out

by branches established in Malta and whose head offices are

situated outside Malta;

"senior management" means an officer or employee with

sufficient knowledge of the subject person's money laundering and

terrorist financing risk exposure and sufficient seniority to take

decisions affecting its risk exposure, and need not be a member of the

management body;

''shell institution'' means an institution carrying out activities

equivalent to relevant financial business, incorporated in a

jurisdiction in which it has no physical presence, involving

meaningful mind and management, and which is not affiliated with a

regulated financial group;

''subject person'' means any legal or natural person carrying out

either relevant financial business or relevant activity;

''supervisory authority'' means –

(a)

the Central Bank of Malta;

(b)

the Malta Financial Services Authority;

(c)

the Registrar of Companies acting under articles

403 to 423 of the Companies Act;

(d)

the Malta Gaming Authority acting under the

Lotteries and Other Games Act and the Gaming Act, and any

regulations issued thereunder;

(e)

the Quality Assurance Oversight Committee

appointed by the Accountancy Board under the Accountancy

Profession Act;

''terrorism'' means any act of terrorism as defined in article

328A of the Criminal Code;

''trust and company service provider'' means any natural or legal

person who

(a)

provides trustee or other fiduciary services,

whether authorised or otherwise, in terms of the Trusts and

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

article 43A of the said Act;

(b)

acts as a company service provider, whether

registered or notified, in terms of the Company Service

Providers Act;

(c)

arranges, by way of business, for another person to

act as a trustee of an express trust or a similar legal

arrangement;

(d)

arranges, by way of business, for another person to

act as a fiduciary shareholder for another person other than a

company listed on regulated market that is subject to disclosure

requirements in conformity with the Financial Markets Act or

subject to equivalent international standards.

(2) Where these regulations are extended to professions and

other categories of undertakings other than those referred to in this

regulation and whose activities are particularly likely to be used for

the purposes of money laundering or the funding of terrorism, these

regulations shall apply in full or in part as may be established by such

extension in accordance with the provisions of the Act, and the

Financial Intelligence Analysis Unit shall inform the European

Commission accordingly.

(3) The Financial Intelligence Analysis Unit, in conjunction

with the relevant supervisory authority, may require entities issuing

electronic money or providing payment services whose head office is

situated in another Member State, and that are established in Malta in

forms other than a branch, to appoint a central contact point in Malta

to ensure on behalf of the appointing entity compliance with these

regulations and to facilitate the monitoring of such compliance,

including by providing the Financial Intelligence Analysis Unit and

supervisory authorities with information and documents upon

request.

(4) These regulations shall also apply where any ‘relevant

financial business’ or any ‘relevant activity’ as defined in this

regulation is undertaken or performed through the Internet or other

electronic means.

(5) The Financial Intelligence Analysis Unit shall cooperate

with the European Supervisory Authorities for the purposes of

Directive (EU) 2015/849 and it shall provide the European

Supervisory Authorities with any information which is necessary to

carry out their duties under Directive (EU) 2015/849 and under

Regulation (EU) No 1093/2010, Regulation (EU) No 1094/2010 and

Regulation (EU) No 1095/ 2010.

(1)

The Financial Intelligence Analysis Unit, in Specific gaming

conjunction with the relevant supervisory authority may, following an services.

appropriate risk assessment, determine that these regulations are not

to apply, in whole or in part, to specific gaming services on the basis

of proven low risk of money laundering and funding of terrorism

posed by the nature and, where appropriate, the scale of operations of

such services.

(2) Any exemption in terms of sub-regulation (1) shall be

revoked if the Financial Intelligence Analysis Unit, in conjunction

with the relevant supervisory authority, determines that the risk of

money laundering or funding of terrorism posed by such gaming

services can no longer be considered as low.

(3) Any exemption or revocation in terms of this regulation

shall be communicated to the European Commission.

(4) The provisions of sub-regulation (1) shall not be applicable

to casinos and/or to any casino type games provided via electronic

means of distance communication.

(1)

The Financial Intelligence Analysis Unit may

determine that legal and natural persons who engage in a financial

activity on an occasional or very limited basis and where there is little

risk of money laundering or the funding of terrorism occurring, are

not to be considered as subject persons for the purposes of these

regulations.

(2) For the purpose of reaching a determination under sub-

regulation (1) the Financial Intelligence Analysis Unit shall consider

a legal or natural person to be engaging in a financial activity on an

occasional or very limited basis where all of the following criteria are

met

(a)

the total annual turnover of the financial activity

does not exceed fifteen thousand euro (€15,000), and the

Financial Intelligence Analysis Unit may establish different

thresholds not exceeding this amount depending on the type of

financial activity;

(b)

each transaction per customer does not exceed five

hundred euro (€500) whether the transaction is carried out in a

single operation or in several operations which appear to be

linked, and the Financial Intelligence Analysis Unit may

establish different thresholds not exceeding this amount

depending on the type of financial activity;

(c)

the financial activity is not the main activity and in

absolute terms does not exceed five per centum (5%) of the total

turnover of the legal or natural person concerned;

(d)

the financial activity is ancillary and directly

related to the main activity;

(e)

the main activity is not an activity falling within

the definition "relevant financial business" or "relevant

activity"; and

(f)

the financial activity is provided only to the

customers of the main activity and is not generally offered to the

public

Provided that in making a determination under sub-

regulation (1) in relation to a person who engages in the

remittance and transfer of money, the Financial Intelligence

Analysis Unit shall only consider the criteria set out in

paragraphs (b) to (f).

(3) In assessing the risk of money laundering or the funding of

terrorism for the purposes of sub-regulation (1), the Financial

Intelligence Analysis Unit shall pay particular attention to, and

examine any financial activity which is particularly likely, by its very

nature, to be used or abused for money laundering or the funding of

terrorism and the Financial Intelligence Analysis Unit shall not

consider that financial activity as representing a low risk of money

laundering or funding of terrorism if the information available

suggests otherwise.

(4) In making a determination under sub-regulation (1) the

Financial Intelligence Analysis Unit shall further state the reasons

underlying the decision and shall revoke such determination should

circumstances change.

(5) The Financial Intelligence Analysis Unit shall establish

risk-based monitoring mechanisms or other adequate measures as is

practicable to ensure that determinations under sub-regulation (1) are

not abused for money laundering or the funding of terrorism.

(6) The Financial Intelligence Analysis Unit shall inform the

European Commission accordingly of any determination made under

sub-regulation (1) or its subsequent revocation under sub-regulation

(4).

(1)

Every subject person shall take appropriate steps, Risk-

proportionate to the nature and size of its business, to identify and assessment.

assess the risks of money laundering and funding of terrorism that

arise out of its activities or business, taking into account risk factors

including those relating to customers, countries or geographical areas,

products, services, transactions and delivery channels and shall

furthermore take into consideration any national or supranational risk

assessments relating to risks of money laundering and the funding of

terrorism.

(2) Where the Financial Intelligence Analysis Unit considers

the risk of money laundering and the funding of terrorism inherent in

any particular relevant activity or relevant financial business to be

clear and understood, it may exempt subject persons carrying out

such relevant activity or relevant financial business from the

obligation to perform a risk assessment under sub-regulation (1).

(3) The risk assessment referred to in sub-regulation (1) shall

be properly documented, and shall be made available to the Financial

Intelligence Analysis Unit and any other relevant supervisory

authority upon demand.

(4) Subject persons shall ensure that the risk assessment

carried out in terms of sub-regulation (1) is regularly reviewed and

(5) Every subject person shall: –

(a)

have in place and implement the following

measures, policies, controls and procedures, proportionate to the

nature and size of its business, which address the risks identified

as a result of the risk assessment referred to in sub-regulation

(i) customer due diligence measures, record-

keeping procedures and reporting procedures;

(ii) risk management measures including

customer acceptance policies, internal control, compliance

management, communications, employee screening

policies and procedures;

(b)

take appropriate and proportionate measures from

time to time for the purpose of making employees aware of –

(i) the measures, policies, controls and

procedures under the provisions of paragraph (a) and any

other relevant policies that are maintained by the subject

person; and

(ii) the provisions of the Prevention of Money

Laundering Act and of these regulations; of the Sub-Title

IV A "Of Acts of Terrorism, Funding of Terrorism and

Ancillary Offences" of Title IX of Part II of Book First of

the Criminal Code; and of data protection requirements;

(c)

appoint, where appropriate with regard to the

nature and size of the business, an officer at management level

whose duties shall include the monitoring of the day-to-day

implementation of the measures, policies, controls and

procedures adopted under this regulation;

(d)

implement, where appropriate with regard to the

size and nature of the business, an independent audit function to

test the internal measures, policies, controls and procedures;

(e)

provide employees from time to time with training

in the recognition and handling of operations and transactions

which may be related to proceeds of criminal activity, money

laundering or the funding of terrorism;

(f)

monitor and where appropriate enhance the

measures, policies, controls and procedures adopted to better

achieve their intended purpose.

(6) To the extent that it may be applicable, any measures,

policies, controls, procedures and changes thereto shall be adopted

and implemented following senior management approval, and, where

applicable, the management board of the subject person may identify

one of its members who is to be responsible for the implementation of

these measures, policies, controls and procedures.

(7) In this regulation, the term ''employees'' means those

employees whose duties include the handling of either relevant

financial business or relevant activity.

(8) Where a natural person undertakes any of the professional

activities as defined under ‘relevant activity’ in regulation 2 as an

employee of a legal person, the obligations under this regulation shall

apply to that legal person.

(1)

Subject persons that are part of a group shall be Group-wide

required to implement group-wide policies and procedures that policies

procedures.

include the measures established under regulation 5(5), as well as

policies and procedures on data protection and the sharing of

information within the group for the prevention of money laundering

and the funding of terrorism. These policies and procedures shall be

implemented effectively at the level of branches and majority-owned

subsidiaries in Member States and third countries.

(2) Subject persons having branches or majority-owned

subsidiaries established in another Member State shall ensure that

those branches or majority-owned subsidiaries comply with the

national provisions of that Member State, transposing the provisions

of Directive (EU) 2015/849.

(3) Subject persons having branches or majority-owned

subsidiaries established in third countries where the anti-money

laundering and counter-funding of terrorism measures are less

stringent than those under these regulations shall ensure that those

branches or majority-owned subsidiaries implement the provisions of

these regulations in so far as that third country’s legislation permits

the implementation of such provisions.

(4) Where subject persons have branches or majority-owned

subsidiaries established in third countries, and the legislation of such

third countries does not permit the implementation of the policies and

procedures under sub-regulation (1), subject persons shall ensure that

those branches and majority-owned subsidiaries apply additional

measures to effectively handle the risk of money laundering and

funding of terrorism and shall immediately inform the Financial

Intelligence Analysis Unit about these circumstances and the

measures taken

Provided that where the additional measures are not

adequate, the Financial Intelligence Analysis Unit shall, in

collaboration with any relevant supervisory authority, exercise

additional supervisory actions, including requiring those subject

persons not to establish or to terminate existent business relationships

and not to undertake transactions and, where necessary require those

subject persons to close down their operations in the third country.

(5) Where the Financial Intelligence Analysis Unit is in

possession of information in accordance with sub-regulation (4) it

shall, where applicable, inform the relevant supervisory authority, the

relevant supervisory authorities of the other Member States, and the

European Supervisory Authorities.

(6) In fulfilling their obligations under sub-regulation (4),

subject persons carrying out relevant financial business shall comply

with any regulatory technical standards developed by the European

Supervisory Authorities in accordance with Article 45(6) of Directive

(EU) 2015/849 which may be adopted by the European Commission

setting out the minimum action to be taken.

(1)

Customer due diligence measures shall consist in

(a)

the identification of the customer, and the

verification of the identity of the customer on the basis of

documents, data or information obtained from a reliable and

independent source

Provided that where the customer is a body

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

arrangement, subject persons shall also verify the legal status of

the customer and shall also identify all directors and, where the

customer does not have directors, all such other persons vested

with its administration and representation;

(b)

the identification, where applicable, of the

beneficial owners, and the taking of reasonable measures to

verify their identity so that the subject person is satisfied of

knowing who the beneficial owners are, including, in the case of

a body corporate, foundations, trusts and similar legal

arrangements, the taking of reasonable measures to understand

the ownership and control structure of the customer;

(c)

assessing and, as appropriate, obtaining

information on the purpose and intended nature of the business

relationship, and establishing the business and risk profile of the

customer;

(d)

conducting ongoing monitoring of the business

relationship.

(2) The ongoing monitoring of a business relationship for the

purposes of sub-regulation (1) shall consist in

(a)

the scrutiny of transactions undertaken throughout

the course of the relationship to ensure that the transactions

being undertaken are consistent with the subject person’s

knowledge of the customer and of his business and risk profile,

including, where necessary, the source of funds; and

(b)

ensuring that the documents, data or information

held by the subject person are kept up-to-date.

(3) Where a person purports to act on behalf of a customer, in

addition to identifying and verifying the identity of the customer and,

where applicable, the beneficial owner, subject persons shall ensure

that such person is duly authorised in writing to act on behalf of the

customer and shall identify and verify the identity of that person.

(4) Subject persons shall not keep anonymous accounts or

accounts in fictitious names.

(5) Without prejudice to the provisions of regulation 8,

customer due diligence measures shall be applied to all customers

when

(a)

establishing a business relationship;

(b)

carrying out an occasional transaction; and

(c)

the subject person has knowledge or suspicion of

proceeds of criminal activity, money laundering or the funding

of terrorism, regardless of any derogation, exemption or

threshold.

(6) Customer due diligence measures under this regulation

shall also be applied, at appropriate times, to existing customers on a

risk-sensitive basis, including at times when the subject person

becomes aware that the relevant circumstances surrounding a

business relationship have changed.

(7) Customer due diligence measures under these regulations

shall be repeated whenever, in relation to a business relationship,

doubts arise about the veracity or adequacy of the previously obtained

customer identification information.

(8) The extent of the customer due diligence measures shall be

commensurate to the risks of money laundering and funding of

terrorism identified through the risk assessment carried out in terms

of regulation 5(1) and may vary from case to case.

(9) Subject persons providing long-term insurance business

shall, in addition to identifying and verifying the identity of the

customer and, where applicable, the beneficial owner in terms of sub-

regulations (1)(a) and (b), carry out the following customer due

diligence measures on the beneficiaries of long-term insurance

policies

(a)

where the beneficiaries are specifically named

natural persons, legal entities or arrangements, subject persons

shall identify such beneficiaries;

(b)

where the beneficiaries are designated by

characteristics, class or other means, subject persons shall

obtain sufficient information concerning those beneficiaries to

be able to identify them at the time of payout;

(c)

where the beneficiaries assign any of their rights

vested under the policy, subject persons shall, at the time of

becoming aware of the assignment, identify the natural persons,

legal entities or arrangements receiving for their own benefit the

value of the policy assigned;

(d)

verify the identity of the beneficiaries at the time of

payout.

(10) The Financial Intelligence Analysis Unit, with the

concurrence of the relevant supervisory authority may, on the basis of

an appropriate risk assessment which demonstrates a low risk of

money laundering and funding of terrorism, exempt subject persons

from the carrying out of customer due diligence measures under sub-

regulations (1)(a) to (c) with respect to electronic money as defined

under the Financial Institutions Act where all the following criteria

are met

(a)

the payment instrument is not reloadable, or has a

maximum monthly payment transaction limit of two hundred

fifty euro (€250) which can be used only in Malta;

(b)

the maximum amount stored electronically does

not exceed two hundred fifty euro (€250), or five hundred euro

(€500) where the electronic device can be used only in Malta;

(c)

the payment instrument is used exclusively to

purchase goods or services;

(d)

the payment instrument cannot be funded with

anonymous electronic money; and

(e)

the issuer carries out sufficient monitoring of the

transactions and the business relationship to enable the

detection of unusual or suspicious transactions

Provided that this exemption shall not be applied in

the case of redemption in cash or cash withdrawals of the

monetary value stored on the payment instrument where the

amount redeemed or withdrawn would exceed one hundred euro

(€100).

(11) A customer, or any person purporting to act on his behalf,

who makes a false declaration or a false representation or who

produces false documentation for the purposes of this regulation shall

be guilty of an offence and shall be 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.

(12) Subject persons carrying out relevant financial business

involving the transfer of funds shall comply with the provisions of

Regulation (EU) 2015/847 of the European Parliament and of the

Council of 20 May 2015 on information accompanying transfers of

funds and repealing Regulation (EC) No 1781/2006.

(1)

Subject persons shall verify the identity of the Verification of

customer and, where applicable, the identity of the beneficial owner, identification.

before the establishment of a business relationship or the carrying out

of an occasional transaction.

(2) Notwithstanding the provisions of sub-regulation (1),

subject persons may complete the verification after the establishment

of a business relationship where this is necessary so as not to interrupt

the normal conduct of business provided that the risk of money

laundering or the funding of terrorism is low and, provided further,

that the verification procedures be completed as soon as is reasonably

practicable after the establishment of the business relationship.

(3) Notwithstanding the provisions of sub-regulations (1) and

(2), subject persons carrying out relevant financial business may open

an account, including accounts that permit transactions in transferable

securities, as may be required by the customer provided that adequate

safeguards are put in place to ensure that no transactions are carried

out through the account until the verification procedures in

accordance with sub-regulation (1) have been satisfactorily

completed.

(4) Where the beneficiaries of a trust, legal entity or

arrangement are designated by particular characteristics or class, the

subject person shall identify and verify the identity of the

beneficiaries at the time of payout or at the time the beneficiaries

exercise their vested rights

Provided that, before the establishment of a business

relationship or the carrying out of an occasional transaction, the

subject person shall obtain sufficient information concerning the

beneficiaries to be able to identify and verify their identity at the time

of payout or at the time the beneficiaries seek to exercise their vested

rights.

(5) Where a subject person is unable to comply with regulation

7(1)(a), (b) and (c), the customer due diligence procedures shall

require that subject person not to carry out any transaction through

the account, not to establish the business relationship nor carry out

any occasional transaction, and to terminate any business relationship

and to consider disclosing that information in accordance with

regulation 15(3) to the Financial Intelligence Analysis Unit

Provided that, where to refrain in such manner is

impossible or is likely to frustrate efforts of investigating a suspected

money laundering or 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 15(3)

Provided further that subject persons carrying out a

relevant activity under paragraph (a) or paragraph (c) of the definition

''relevant activity'' shall not be bound by the provisions of this sub-

regulation if those subject persons are acting in the course of

ascertaining the legal position of their client or performing their

responsibilities of defending or representing that client in, or

concerning, judicial procedures, including providing advice on

instituting or avoiding procedures.

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

who is in possession of funds of a customer or a potential customer

and 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 as far

as reasonably possible 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, 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.

(1)

Notwithstanding the provisions of regulation 8(1) Additional

and without prejudice to the provisions of regulation 7(5)(c), casino provisions

customer due

and gaming licensees shall apply customer due diligence measures diligence for

when carrying out transactions that amount to or exceed two thousand casino

gaming

euro (€2,000) or more, whether carried out within the context of a licensees.

business relationship or otherwise.

(2) In addition to complying with the provisions of sub-

regulation (1) and regulation 8, 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 the Gaming Act;

(b)

ensure that the particulars relating to the identity of

a person exchanging chips or tokens to the value of two

thousand euro (€2,000) or more 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 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

(c)

ensure that the provisions of paragraph (b) 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 two thousand euro (€2,000) but which in aggregate

equal or exceed such amount.

(1)

Simplified customer due diligence may be applied

Simplified

customer due

diligence.

(a)

in relation to activities or services that are

determined by the Financial Intelligence Analysis Unit to

represent a low risk of money laundering and funding of

terrorism, having taken into consideration the findings of any

national risk assessment and any other relevant factors as may

be deemed appropriate; or

(b)

where, on the basis of the risk assessment carried

out in accordance with regulation 5(1), the subject person

determines that any occasional transaction or a business

relationship represents a low risk of money laundering and

funding of terrorism.

(2) Simplified customer due diligence shall not constitute an

exemption from all customer due diligence measures as envisaged

under regulation 7(1), but subject persons may determine the

applicability and extent thereof in a manner that is commensurate to

the low risk identified

Provided that subject persons shall carry out sufficient on-

going monitoring in terms of regulation 7(2)(a) to be able to detect

unusual and suspicious transactions.

(3) Nothing contained in this regulation shall apply where the

subject person has knowledge or suspicion of proceeds of criminal

activity, money laundering or the funding of terrorism.

(1)

In addition to the requirements under regulation 7,

subject persons shall apply enhanced customer due diligence

measures in the following situations

(a)

in relation to activities or services that are

determined by the Financial Intelligence Analysis Unit to

represent a high risk of money laundering or funding of

terrorism, having taken into consideration the findings of any

national risk assessment and any other relevant factors as may

be deemed appropriate;

(b)

where, on the basis of the risk assessment carried

out in accordance with regulation 5(1), the subject person

determines that an occasional transaction, a business

relationship or any transaction represents a high risk of money

laundering or funding of terrorism;

(c)

when dealing with natural or legal persons

established in a non-reputable jurisdiction as defined in

regulation 2, other than branches or majority-owned

subsidiaries which comply with group-wide policies and

procedures as required under regulation 6 in which cases

enhanced due diligence measures shall be applied where there is

a high risk of money laundering or funding of terrorism; and

(d)

in the cases referred to in sub-regulations (3) to (9).

(2) Subject persons shall ensure that the enhanced customer

due diligence measures applied in the cases referred to in paragraphs

(a) to (c) of sub-regulation (1) are appropriate to manage and mitigate

the high risk of money laundering or funding of terrorism.

Provided that when undertaking occasional transactions

for, or establishing a business relationships, or acting in the course of

a business relationship with a natural or legal person established in a

jurisdiction as is referred to in sub-regulation (1)(c) in respect of

which there has been an international call for counter-measures,

subject persons shall inform the Financial Intelligence Analysis Unit

which may, in collaboration with the relevant supervisory authority,

require a business relationship not to continue or a transaction not to

be undertaken or apply any other counter-measure as may be

adequate under the respective circumstances.

(3) With respect to correspondent relationships with

institutions from a country other than a Member State, subject

persons shall ensure that –

(a)

they gather sufficient information about the

respondent institution to understand fully the nature of the

respondent’s business and to determine from publicly available

information the reputation of the institution and the quality of

supervision on that institution;

(b)

they assess the adequacy and effectiveness of the

respondent institution’s measures, policies, controls and

procedures for the prevention of money laundering and the

funding of terrorism;

(c)

the prior approval of senior management for the

establishment of new correspondent relationships is obtained;

(d)

they document the respective responsibilities of

each institution for the prevention of money laundering and the

funding of terrorism;

(e)

with respect to payable-through accounts, they are

satisfied that the respondent institution has verified the identity

of and performed on-going due diligence on the customers

having direct access to the accounts of the respondent institution

and that they are provided with relevant customer due diligence

data upon request.

(4) Subject persons carrying out relevant financial business

shall –

(a)

not enter into, or continue, a correspondent

relationship with a shell institution;

(b)

take appropriate measures to ensure that they do

not enter into, or continue, a correspondent relationship with a

respondent institution which is known to permit its accounts to

be used by a shell institution.

(5) Subject persons shall ensure that the risk management

procedures maintained in accordance with regulation 5(5)(a) are

conducive to determine whether a customer or a beneficial owner is a

politically exposed person, and when undertaking occasional

transactions for, or establishing or continuing business relationships

with politically exposed persons shall:-

(a)

require the approval of senior management;

(b)

take adequate measures to establish the source of

wealth and source of funds; and

(c)

conduct enhanced ongoing monitoring of such

business relationships.

(6) In addition to the requirements under sub-regulation (5), in

case of long-term insurance business subject persons shall take

reasonable measures to determine whether the beneficiaries of a

policy and, where applicable, the beneficial owner of the beneficiary

are politically exposed persons, which measures shall be taken no

later than the time of payout or the time of the assignment, in whole

or in part, of the policy

Provided that where the beneficiaries of the policy or,

where applicable, the beneficial owner of the beneficiary are

politically exposed persons, subject persons shall inform senior

management before proceeding with the payout under the policy and

shall conduct enhanced scrutiny of the entire business relationship

with the policy holder.

(7) Without prejudice to the application of enhanced customer

due diligence measures on a risk sensitive basis, where a politically

exposed person is no longer entrusted with a prominent public

function, subject persons shall be required to apply enhanced due

diligence measures in accordance with sub-regulations (5) and (6) for

at least twelve months after the date on which that person ceased to be

entrusted with a prominent public function.

(8) Sub-regulations (5) and (6) shall also be applicable to

family members or persons known to be close associates of politically

exposed persons, and, for the purposes of this sub-regulation

"family members" includes

(i) the spouse, or a person considered to be

equivalent to a spouse;

(ii) the children and their spouses, or persons

considered to be equivalent to a spouse; and

(iii) the parents.

"persons known to be close associates" means

(i) a natural person known to have joint

beneficial ownership of a body corporate or any other form

of legal arrangement, or any other close business relations,

with that politically exposed person;

(ii) a natural person who has sole beneficial

ownership of a body corporate or any other form of legal

arrangement that is known to have been established for the

benefit of that politically exposed person.

(9) Subject persons shall, as far as reasonably possible,

examine the purpose and background of all complex and unusually

large transactions and all unusual patterns of transactions, which have

no apparent economic or lawful purpose and shall in such cases

increase the degree and nature of monitoring of the business

relationship, in order to determine whether those transactions or

activities are suspicious in terms of regulation 15(3).

(1)

Subject persons may rely on another subject person Reliance on

or a third party to fulfil the customer due diligence requirements performance

other subject

provided for under regulation 7(1)(a) to (c), with the subject person persons

parties.

placing reliance remaining ultimately responsible for compliance

with those requirements.

(2) For the purposes of this regulation "third party" shall mean

any person or institution, including member organisations or

representative bodies of such person or institution, situated in a

Member State other than Malta or a third country that

(a)

apply customer due diligence requirements and

record keeping requirements that are consistent with those laid

down under these regulations; and

(b)

have their compliance with anti-money laundering

and counter-financing terrorism requirements monitored in a

manner which is consistent with Section 2 of Chapter VI of

Directive (EU) 2015/849

Provided that subject persons may not rely on third

parties from a non-reputable jurisdiction, unless such third

parties are branches or majority-owned subsidiaries of persons

or institutions established in a Member State subject to national

provisions implementing Directive (EU) 2015/849 and which

comply fully with group-wide policies and procedures

equivalent to those mentioned under regulation 6.

(3) Subject persons relying on another subject person or a

third party shall obtain from that other subject person or third party

the information required in accordance with the provisions under

regulation 7(1)(a) to (c).

(4) Subject persons relying on another subject person or a

third party shall take adequate steps to ensure that, upon request, that

other subject person or third party shall immediately forward to them

relevant copies of the identification and verification data relevant to

the customer and the beneficial owner and other relevant

documentation required in terms of regulation 7(1)(a) to (c).

(5) Subject persons that are branches or majority owned

subsidiaries of persons or institutions established in a Member State

or a third country other than Malta and subject persons that have

branches or majority owned subsidiaries in a Member State or a third

country shall be considered to comply with the provisions of sub-

regulations (2) to (4) through the group’s policies and procedures,

where all the following conditions are met

(a)

the subject person relies on information provided

by a third party that is part of the same group;

(b)

that group applies customer due diligence

measures, record keeping measures and anti-money laundering

and counter-funding of terrorism policies and procedures

equivalent to those under these regulations;

(c)

the effective implementation of the measures and

requirements referred to in paragraph (b) at group level is

subject to supervision by a relevant authority.

(6) This regulation shall not apply to outsourcing or agency

relationships where, on the basis of a contractual agreement, the

outsourcing service provider or agent is to be regarded as part of the

subject person.

(1)

Subject persons shall retain the following Record keeping

documents and information for the purposes of the prevention, procedures.

detection, analysis and investigation of money laundering or funding

of terrorism activities by the Financial Intelligence Analysis Unit,

relevant supervisory authorities, or law enforcement agencies in

accordance with the provisions of applicable law

(a)

in relation to any business relationship that is

formed or an occasional transaction that is carried out, the

customer due diligence documentation, data and information

obtained in fulfilment of the requirements under regulations 7 to

12;

(b)

supporting evidence and records necessary to

reconstruct all transactions carried out by that person in the

course of a business relationship or any occasional transaction,

which shall include original documents or other copies

admissible in court proceedings;

(c)

a record of any disclosures made to the Financial

Intelligence Analysis Unit in accordance with regulation 15(3);

(d)

a record of any internal reports made in accordance

with regulation 15(1)(a);

(e)

a record of any written determinations made in

accordance with regulation 15(1)(b);

(f)

a record of any training provided in accordance

with regulation 5(5)(e); and

(g)

any other document, data or information which the

Financial Intelligence Analysis Unit may require to be

maintained in accordance with procedures and guidance issued

in terms of regulation 17.

(2) The documentation, data or information referred to in sub-

regulation (1) shall be kept for a period of five years commencing

on –

(a)

in relation to the documentation, data or

information described in paragraph (a), the date when the

business relationship ends or when the occasional transaction is

carried out, and where the formalities necessary to end a

business relationship could not be observed, the date on which

the last transaction in the course of that business relationship

was carried out;

(b)

in relation to the supporting evidence and records

described in paragraph (b), the date when all dealings taking

place in the course of the transaction in question were

completed;

(c)

in relation to the records described in paragraphs

(c) to (e), the later between the following

(i) the date when the business relationships ends

or the occasional transaction is carried out; or

(ii) the date when the report or determination is

submitted or drawn up, as the case may be;

(d)

in relation to the records described in paragraph (f),

the date when the event referred to therein took place

Provided that, in relation to records relating to an

occasional transaction consisting in several operations which

appear to be linked, the aforesaid period of five years shall

commence on the date on which the last operation took place

Provided further that, the period of five years may

be further extended, up to a maximum retention period of ten

years, where such extension would be considered necessary for

the purposes of the prevention, detection, analysis and

investigation of money laundering or funding of terrorism

activities by the Financial Intelligence Analysis Unit, relevant

supervisory authorities or law enforcement agencies.

(3) Subject persons shall ensure that, upon request, all records

maintained in accordance with this regulation are made available to

the Financial Intelligence Analysis Unit and, as may be allowed by

law, to relevant supervisory authorities and law enforcement

agencies, for the purposes of the prevention, detection, analysis and

investigation of money laundering and the funding of terrorism.

(4) Subject persons shall have systems in place that enable

them to respond fully and efficiently, through secure means that

ensure confidentiality, to enquiries from the Financial Intelligence

Analysis Unit, relevant supervisory authorities or law enforcement

agencies, in accordance with applicable law, as to –

(a)

whether they maintain or have maintained during

the previous five years a business relationship with a specified

natural or legal person; and

(b)

the nature of that relationship.

(5) The retention of personal data shall no longer be deemed

necessary for the purposes of these regulations beyond the period

established in terms of sub-regulation (2) or any extension thereof as

may become applicable in terms of the second proviso to sub-

regulation (2).

(6) For the purpose of this sub-regulation the term "personal

data" shall have the same meaning as is assigned to the term under the

Data Protection Act.

(7) The provisions of this regulation shall be without prejudice

to the right of any other authority in terms of applicable law to access

the documents, data and information described in sub-regulation

(1)(a) and (b).

(1)

The Financial Intelligence Analysis Unit, Statistical data.

competent authorities, law enforcement agencies and any other

relevant department, agency, authority or body, shall maintain

comprehensive statistical data on the national system to combat

money laundering or the funding of terrorism to assist in the review

of such system and the carrying out of national risk assessments.

(2) Comprehensive statistical data maintained under sub-

regulation (1) shall include

(a)

the number of entities and persons conducting a

relevant activity or a relevant financial business;

(b)

the kind of activity conducted by the entities and

persons referred to in (a) above;

(c)

economic indicators for each relevant activity and

relevant financial business;

(d)

the number of suspicious transaction reports made

to the Financial Intelligence Analysis Unit and the follow up

given to these reports including, where available, data

identifying the number and percentage of reports resulting in

further investigation;

(e)

the number of persons and cases investigated;

(f)

the number of persons and cases prosecuted;

(g)

the number of persons convicted for the offence of

money laundering or the funding of terrorism;

(h)

the types of predicate offences, where such

information is known;

(i)

details and value of property that has been

attached, frozen, seized or confiscated;

(j)

statistics relevant to the exchange of information

between the Financial Intelligence Analysis Unit and foreign

counterparts, including data on requests for information made,

received, refused and answered in full or in part.

(3) The Financial Intelligence Analysis Unit shall publish

consolidated reviews of the statistical data gathered in accordance

with this regulation and shall ensure that such statistical data is also

made available to the European Commission.

(4) The departments, agencies, authorities and bodies referred

to in sub-regulation (1) shall make available, upon request, the

relevant statistical data to the Financial Intelligence Analysis Unit to

enable it to fulfil its function under sub-regulation (3).

(1)

The reporting procedures which a subject person is

required to have and implement in terms of regulation 5(5)(a)(i) shall

provide for –

(a)

the appointment by the subject person of one of its

officers of sufficient seniority and command as the reporting

officer, who may be the same officer referred to in regulation

5(5)(c), and to whom officers and employees of the subject

person are to report any information or other matter which may

give rise to a knowledge or suspicion that funds, regardless of

the amount involved, are the proceeds of criminal activity or are

related to funding of terrorism, or that a person may have been,

is or may be connected with money laundering or the funding of

terrorism;

(b)

the consideration of any such report by the

reporting officer or by another designated employee of the

subject person, in the light of all other relevant information, for

the purpose of determining whether or not the information or

other matter contained in the report does give rise to a

knowledge or suspicion that funds, regardless of the amount

involved, are the proceeds of criminal activity or are related to

funding of terrorism, or that a person may have been, is or may

be connected with money laundering or the funding of

terrorism;

(c)

unrestricted access for the reporting officer or

another designated employee to any relevant information held

by the subject person;

(d)

a procedure whereby the reporting officer or

another designated employee submits a report to the Financial

Intelligence Analysis Unit in accordance with sub-regulation (3)

whenever he determines that there is knowledge or suspicion

that funds, regardless of the amount involved, are the proceeds

of criminal activity or are related to funding of terrorism, or that

a person may have been, is or may be connected with money

laundering or the funding of terrorism;

(e)

notifying the Financial Intelligence Analysis Unit

and the relevant supervisory authority, where applicable, of the

details of the appointed reporting officer and any subsequent

changes thereto and the appointment of a designated employee

for the purposes of paragraphs (b) to (d); and

(f)

the approval by the reporting officer of any

employee designated by the subject person for the purposes of

paragraphs (b) to (d) who shall work under his direction.

(2) A supervisory authority shall maintain internal reporting

procedures in accordance with the provisions of sub-regulation (1).

(3) Where a subject person knows, suspects or has reasonable

grounds to suspect that funds, regardless of the amount involved, are

the proceeds of criminal activity or are related to funding of

terrorism, or that a person may have been, is or may be connected

with money laundering or the funding of terrorism, that subject

person shall, as soon as is reasonably practicable, but not later than

five working days from when the knowledge or suspicion first arose,

disclose that information, supported by the relevant identification and

other documentation, to the Financial Intelligence Analysis Unit.

(4) Where a subject person knows or suspects that a

transaction is or may be related to proceeds of criminal activity or the

funding of terrorism, the subject person shall not carry out that

transaction until it has informed the Financial Intelligence Analysis

Unit in accordance with this regulation and, upon informing the

Financial Intelligence Analysis Unit, it shall refrain from executing

that transaction as provided for under article 28 of the Act.

(5) Where it is not possible for a subject person to refrain from

carrying out a transaction prior to informing the Financial

Intelligence Analysis Unit as provided for in sub-regulation (4) or

where refraining from carrying out any such transaction is likely to

frustrate efforts of investigating or pursuing the beneficiaries of the

suspected money laundering or funding of terrorism operations, the

subject person shall accordingly inform the Financial Intelligence

Analysis Unit immediately after the transaction is effected.

(6) Where, following the consideration of an internal report in

accordance with sub-regulation (1)(b), the reporting officer or other

designated employee determines that no reporting to the Financial

Intelligence Analysis Unit is required in terms of this regulation, the

reporting officer shall record the reasons for such determination in

writing and, upon request, shall make it available to the Financial

Intelligence Analysis Unit or a supervisory authority acting on behalf

of the Financial Intelligence Analysis Unit in monitoring compliance

with these regulations.

(7) Where a supervisory authority discovers facts or obtains

any information that is related to funds which are known or suspected

to be related to proceeds of criminal activity or the funding of

terrorism, or to a person who may have been, is or may be connected

with money laundering or the funding of terrorism, that supervisory

authority shall, as soon as is reasonably practicable, but not later than

five working days from when facts are discovered or information

obtained, disclose those facts or that information, supported by the

relevant documentation that may be available, to the Financial

Intelligence Analysis Unit.

(8) Where, following a submission of a disclosure as in sub-

regulation (3), or for any other reason as is allowed by law, the

Financial Intelligence Analysis Unit demands information from the

disclosing or any other subject person, that subject person shall

comply as soon as is reasonably practicable but not later than five

working days from when the demand is first made

Provided that the Financial Intelligence Analysis Unit may,

where it deems so necessary, demand that the information be

submitted within a shorter period of time;

Provided further that a subject person may make

representations justifying why the requested information cannot be

submitted within the said time and the Financial Intelligence Analysis

Unit may, at its discretion and after having considered such

representations, extend such time as is reasonably necessary to obtain

the information, whereupon the subject person shall submit the

information requested within the time as extended.

(9) Subject persons carrying out a relevant activity under

paragraph (a) or paragraph (c) of the definition ''relevant activity''

shall not be bound by the provisions of sub-regulations (3), (4) and

(8) in relation to information that is received or obtained in the course

of ascertaining the legal position of their client or performing their

responsibility of defending or representing that client in, or

concerning, judicial proceedings, including advice on instituting or

avoiding proceedings, whether such information is received or

obtained before, during or after such proceedings.

(10) Any bona fide communication or disclosure made by a

supervisory authority or by a subject person or by an employee or

director of such a supervisory authority or subject person in

accordance with these regulations shall not be treated as a breach of

the duty of professional secrecy or any other restriction (whether

imposed by statute or otherwise) upon the disclosure of information

and shall not involve that supervisory authority or subject person or

the directors or employees of such supervisory authority or subject

person in any liability of any kind, even in circumstances where they

were not precisely aware of the underlying criminal activity and

regardless of whether illegal activity actually occurred.

(11) Any investigating, prosecuting, judicial or administrative

authority and subject person shall protect and keep confidential the

identity of persons and employees who report suspicions of money

laundering or the funding of terrorism, or suspicions that funds are

the proceeds of criminal activity either internally or to the Financial

Intelligence Analysis Unit.

(12) The Financial Intelligence Analysis Unit shall, wherever

practicable and as may be allowed by the provisions of the Act,

provide subject persons and, where applicable, supervisory

authorities with timely feedback on the effectiveness of suspicious

transaction reports and of any other information it receives under this

regulation.

(1)

A subject person, a supervisory authority, any Prohibition of

official or employee of a subject person or a supervisory authority, or disclosure.

any person from whom the Financial Intelligence Analysis Unit has

demanded information pursuant to these regulations or article 30 of

the Act, or any other person who has transmitted information to the

Financial Intelligence Analysis Unit, 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, 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 one hundred and fifteen thousand euro

(€115,000) or to imprisonment for a term not exceeding two years or

to both such fine and imprisonment.

(2) Disclosures made in the following circumstances shall not

constitute an offence under sub-regulation (1)

(a)

disclosures to the supervisory authority relevant to

that subject person or to law enforcement agencies in

accordance with applicable law;

(b)

disclosures between a subject person who

undertakes relevant financial business and another person

undertaking activities equivalent to relevant financial business,

whether situated in a Member State or a third country, which

form part of the same group and apply group-wide policies and

procedures as provided for under regulation 6;

(c)

disclosures between a subject person who

undertakes activities under paragraph (a) or paragraph (c) of the

definition "relevant activity" and another person undertaking

activities equivalent to those under the said paragraphs in a

Member State or a third country imposing requirements similar

to those laid down in these regulations, who perform their

professional activities, whether as employees or not, within the

same legal person or within a larger structure to which they

belong and which shares common ownership, management or

compliance control;

(d)

disclosures between a subject person who

undertakes relevant financial business or the activities under

paragraph (a) or paragraph (c) of the definition "relevant

activity" and another person from the same professional

category situated in a Member State or a third country imposing

requirements similar to those laid down in these regulations and

in cases related to the same customer and the same transaction,

provided such persons are subject to obligations as regards

professional secrecy and personal data protection;

(e)

disclosures by a subject person in the course of

proceedings instituted against the subject person for, or as a

consequence of, the failure or delay in carrying out a transaction

in 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 in terms of article 28 of

the Act

Provided that disclosures under this paragraph shall

not constitute an offence under sub-regulation (1) only where

such disclosures are made after the lapse of the period of time

referred to in the proviso to article 28(1) of the Act, and where

applicable, after the lapse of any period of time during which

the execution of the transaction is opposed by the Financial

Intelligence Analysis Unit in terms of article 28 of the Act;

(f)

disclosures by a subject person to a supervisory

authority or professional body exercising supervision or

regulatory oversight over that subject person, 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 a transaction, that the subject person

refrained from carrying out a transaction as required in terms of

article 28 of the Act

Provided that disclosures under this paragraph shall

not constitute an offence of sub-regulation (1) only in the case

where such disclosures are made after the lapse of the period of

time referred to in the proviso to article 28(1) of the Act, and

where applicable, after the lapse of any period of time during

which the execution of the transaction is opposed by the

Financial Intelligence Analysis Unit in terms of article 28 of the

Act.

(3) The fact that a subject person who undertakes activities

under paragraph (a) or paragraph (c) of the definition "relevant

activity" is seeking to dissuade a client from engaging in an illegal

activity shall not constitute an offence under sub-regulation (1).

The Financial Intelligence Analysis Unit, with the Implementing

concurrence of the relevant supervisory authority, may issue procedures.

procedures and guidance as may be required for the carrying into

effect of the provisions of these regulations, and which shall be

binding on subject persons.

Where the Financial Intelligence Analysis Unit knows or Power to

has reasonable grounds to suspect that, in connection with a business terminate

business

relationship established by a subject person, money laundering or relationship.

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 functions under the Act, the

Financial Intelligence Analysis Unit may require subject persons to

submit periodical reports on the measures and procedures they

maintain and apply pursuant to regulation 5 and any other information

or documents as the Financial Intelligence Analysis Unit may

consider necessary.

Where a subject person is required to provide information

to the Financial Intelligence Analysis Unit under the Act, these

regulations and any procedures or guidance 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 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) A subject person who contravenes any provision of these

regulations or of any procedures or guidance issued in terms of

regulation 17 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 in accordance with policies and procedures

established by the Board of Governors referred to in the Act, which

may be imposed either as a one-time fixed penalty or as a daily

cumulative penalty, or both.

(4) Notwithstanding the provisions of sub-regulations (1) and

(2), the Financial Intelligence Analysis Unit may

(a)

with respect to minor contraventions and where the

circumstances so warrant, impose an administrative penalty

below the minimum established by these regulations but not less

than two hundred and fifty euro (€250) or issue a reprimand in

writing instead of an administrative penalty; and

(b)

with respect to serious, repeated or systematic

contraventions of these regulations or of any procedures or

guidance issued in terms of regulation 17, impose

administrative sanctions as follows

(i) in the case of a subject person carrying out a

relevant activity, an administrative penalty of not more

than one million euro (€1,000,000) or, where the benefit

derived from that contravention can be quantified, not

more than twice the amount of the benefit so derived; or

(ii) in the case of a subject person carrying out a

relevant financial business, an administrative penalty of

not more than five million euro (€5,000,000) or not more

than ten per centum (10%) of the total annual turnover

according to the latest available approved annual financial

statements

Provided that, where the subject person is a parent

undertaking or a subsidiary of a parent undertaking which is

required to prepare consolidated accounts, the relevant total

annual turnover shall be the total annual turnover resulting from

the latest available consolidated accounts approved by the

ultimate parent undertaking.

(5) 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 the maximum set out under sub-

regulations (1), (2) and (4)(b) as may be applicable.

(6) Where the Financial Intelligence Analysis Unit imposes an

administrative penalty on a subject person, it shall inform in a timely

manner the relevant supervisory authority or any other authority,

body or committee responsible for the authorisation, licensing,

registration or regulation of, or the granting of a warrant to, the

subject person concerned, and shall provide all relevant information

on the contravention which it retains necessary.

(7) Where a contravention in terms of sub-regulations (1), (2)

and (4) is committed by a subject person who is a body or other

association of persons, be it corporate or unincorporate, the Financial

Intelligence Analysis Unit may impose the applicable administrative

penalty on any person who at the time of the contravention was a

director or other similar officer responsible for the management of

such body or association of persons, or was purporting to act in any

such capacity, unless that person proves that the contravention was

committed without his knowledge and that he exercised all due

diligence to prevent the commission of the contravention.

Provided that the Financial Intelligence Analysis Unit may

also, in addition to the said administrative penalty, recommend to any

relevant supervisory authority or any other authority or body

responsible for the authorisation, licensing, registration or regulation

of the subject person concerned, that the person or persons aforesaid

be precluded from exercising managerial functions within any subject

person, as may be deemed appropriate.

(8) The provisions of this regulation shall be without prejudice

to the powers of a supervisory authority or any other authority, body

or committee responsible for the authorisation, licensing, registration,

regulation, or the granting of a warrant to a subject person, to take any

action or regulatory measure available to it under applicable law as it

may deem appropriate in the circumstances of the case.

The Prevention of Money Laundering and Funding of

Terrorism Regulations are hereby revoked, and the revocation thereof

shall not in any way

(a)

affect the previous operation of the regulations so

revoked by these regulations or anything done or suffered under

those regulations;

(b)

affect the institution, continuation or enforcement

of any inquiry, investigation or legal proceedings under the

regulations so revoked or the imposition of any penalty or

punishment under the provisions of those regulations.

€3.42