Prevention of Money Laundering and Funding of Terrorism

L.N. 26 of 2020

PREVENTION OF MONEY LAUNDERING ACT

(CAP. 373)

Prevention of Money Laundering and Funding of Terrorism

(Amendment) Regulations, 2020

IN exercise of the powers conferred by article 12 of the

Prevention of Money Laundering Act, the Minister for Finance,

acting on the advice of the Financial Intelligence Analysis Unit, has

made the following regulations:-

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

Laundering and Funding of Terrorism (Amendment) Regulations,

2020, and these regulations shall be read and construed as one with S.L. 373.01

the Prevention of Money Laundering and Funding of Terrorism

Regulations, hereinafter referred to as "the principal regulations".

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

regulation 2 of

regulations shall be amended as follows

the principal

regulations.

(a)

the definition "beneficial owner" shall be amended

as follows

(i) in the second proviso to paragraph (a) thereto,

for the words "actions taken to identify the beneficial

owner" there shall be substituted the words "actions taken

and any difficulties encountered to determine who the

beneficial owner is";

(ii) in sub-paragraph (i) of paragraph (b) thereof,

immediately after the words "the settlor" there shall be

added the words "or settlors";

(iii) in sub-paragraph (iii) of paragraph (b)

thereof, immediately after the words "the protector" there

shall be added the words "or protectors";

(b)

the definition "casino" shall be substituted by the

following

" "casino" means any premises where

gaming services are made available to the public

by a gaming licensee and in relation to which a

concession in terms of article 11(3)(a) of the

Gaming Act has been granted, and "casino

licensee" in these regulations shall be construed

accordingly;";

(c)

the definition "electronic

money"

shall

be

substituted by the following

" "electronic money" has the same meaning

as is assigned to the term in the Financial

Institutions Act, and excludes monetary value

that

(a)

is stored on instruments that

can be used to acquire goods or services

only in the premises used by the issuer or

under a commercial agreement with the

issuer either within a limited network of

service providers or for a limited range of

goods or services; or

(b) is used to make payment

transactions executed by means of any

telecommunication, digital or IT device,

where the goods or services purchased are

delivered to and are to be used through

telecommunication, digital or IT device,

provided that the telecommunication,

digital or IT operator does not act only as

an intermediary between the payment

service user and the supplier of the goods

and services;";

(d) in the definition "gaming licensee" for the words "in

terms of the Lotteries and Other Games Act* and, or the

Gaming Authorisation Regulations" there shall be substituted

the words "in terms of the Gaming Authorisation Regulations";

and the marginal note "Cap. 438." shall be deleted;

(e)

in the definition "gaming service" the words ", and

shall also include a game subject to a licensing requirement in

terms of the Lotteries and Other Games Act† and the subsidiary

legislation existing thereunder" and the corresponding marginal

note "Cap. 438." shall be deleted;

(f)

the definition "occasional transaction" shall be

amended as follows

(i) paragraphs (e) to (h) thereof shall be

renumbered as paragraphs (f) to (i);

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

shall be added the following new paragraph

"(e)

a transaction amounting to ten

thousand euro (€10,000) or more, carried out by a

natural or legal person trading in works of art or

acting as intermediary in the sale of works of art, in

a single operation or in several operations which

appear to be linked;";

(iii) paragraph (h) thereof, as renumbered, shall be

substituted by the following

"(h)

the provision of material

aid,

assistance or advice on tax matters;";

(iv) in paragraph (i) thereof, as renumbered, for

the words "a similar structure." there shall be substituted

the words "a similar structure;"; and

(v) immediately after paragraph (i) thereof, as

renumbered, there shall be added the following new

paragraphs

"(j)

the provision, by real estate agents, of

intermediation services in relation to the letting of

immovable property where the monthly rent

amounts to ten thousand euro (€10,000) or more;

and

(k)

the storage, by free ports, of works of

art the value of which is equal to or exceeds ten

thousand euro (€10,000).";

(g) the definition "politically exposed persons" shall be

amended as follows

(i) in the first paragraph thereof, immediately

after the words "means natural persons who are or have

been entrusted with prominent public functions" there shall

be added the words "in or outside Malta"; and for the

words "includes the following" there shall be substituted

the word "means";

(ii) in paragraph (h) thereof, for the words "or

any other international body;" there shall be substituted the

words "or any other international body; and" and

(iii) immediately after paragraph (h) thereof, there

shall be added the following new paragraph

"(i)

Anyone entrusted with a prominent

public function listed in an order issued by the

Minister in terms of article 12(5) of the Act from

time to time, or included in any other equivalent

list issued by any other jurisdiction or international

organisation.";

(h) the definition "relevant activity" shall be amended

(i) in paragraph (a) thereof, immediately after

the words "acting as provided for in paragraph (c)" there

shall be added the words "and any other person that

undertakes to provide, directly, or through other persons to

whom he is related, material aid, assistance or advice on

tax matters";

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

the words "real estate agents" there shall be added the

words ", including when acting as intermediaries in

relation to the letting of immovable property where the

monthly rent amounts to ten thousand euro (€10,000) or

more";

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

"gaming licensees; and" there shall be substituted the

words "gaming licensees;"; and

(iv) immediately after paragraph (h) thereof, there

shall be added the following new paragraphs

"(i)

any natural or legal person trading in

works of art or acting as intermediary in the sale of

works of art, including when this is carried out by

art galleries, auctioneers and freeports, where the

value of the transaction or a series of linked

transactions amounts to

ten

thousand

euro

(€10,000) or more; and

(j)

free ports when storing works of art

the value of which amounts to ten thousand euro

(€10,000) or more, or when trading in works of art

or acting as intermediaries in the sale of works of

art as envisaged under paragraph (i);";

(i)

the definition "supervisory authority" shall be

amended as follows

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

Lotteries and Other Games Act* and" and the

corresponding marginal note "Cap. 438." shall be deleted;

and

(ii) paragraph (e) thereof shall be substituted by

the following

"(e) the Accountancy Board acting under

the Accountancy Profession Act;";

(j)

the definition "trust and company service provider"

shall be amended as follows

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

"whether authorised or otherwise" there shall be

substituted the words "whether authorised or required to be

authorised"; and

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

the words "whether registered or notified" there shall be

added the words ", or required to be registered or notified";

(k) in the definition "VFA", for the words "in the Virtual

Financial Assets Act." there shall be substituted the words "in

the Virtual Financial Assets Act;" and

(l)

immediately after the definition "VFA" there shall

be added the following new definition

" "Work of Art" means an original, unique and

tangible object of any kind or material that is created or

executed by hand or a limited edition reproduction thereof,

and which is considered to have an imaginative, expressive

and aesthetic function, value or appeal, irrespective of

artistic quality, and provided that the said criteria are met

includes the following

(a)

paintings, drawings, etchings and

decorative plaques;

(b)

engravings,

lithographs

or

other

prints;

(c)

works of sculpture or statuary;

(d)

tapestries;

(e)

photographs printed and signed by

the photographer, including limited edition prints

made from the exposure; and

(f)

ceramic works.".

Regulation 5 of the principal regulations shall be amended

as follows

(a)

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

a risk assessment under sub-regulation (1)" there shall be

substituted the words "perform risk assessments under this

regulation"; and

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

applicable, the management board" there shall be substituted the

words "where applicable, the management body".

In sub-regulation (5) of regulation 6 of the principal

regulations, for the words "inform the relevant supervisory authority"

there shall be substituted the words "inform the relevant supervisory

authorities"; and immediately after the words "and the European

Supervisory Authorities" there shall be added the words ", and shall

seek to cooperate and coordinate its actions with such relevant

supervisory authorities and the European Supervisory Authorities, as

necessary".

Regulation 7 of the principal regulations shall be amended

as follows

(a)

in paragraph (a) of sub-regulation (1) thereof,

immediately after the words "obtained from a reliable and

independent source" there shall be added the words ", including,

where available, electronic identification means issued under

electronic identification schemes, or relevant trust services as

set out in Regulation (EU) No 910/2014, or any other secure,

remote or electronic identification process approved by the

Financial Intelligence Analysis Unit under procedures issued in

terms of regulation 17";

(b) in the proviso to paragraph (a) of sub-regulation (1)

thereof, for the words "vested with its administration and

representation;" there shall be substituted the words "vested

with its administration and representation:", and immediately

thereafter there shall be added the following new proviso

"Provided further that where the customer is a body

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

entity incorporated in a Member State or a trust or similar

legal arrangement administered in a Member State, that is

subject to the registration of beneficial owner information,

subject persons shall also obtain proof that such beneficial

ownership information has been duly registered with a

designated beneficial ownership register.";

(c)

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

the words "held by the subject person are kept up-to-date" there

shall be substituted the words "held by the subject person are

reviewed and kept up-to-date";

(d) sub-regulation (4) thereof shall be substituted by the

following

"(4) Subject persons shall not keep anonymous

accounts or anonymous safe-deposit boxes, or accounts or

safe-deposit boxes in fictitious names.";

(e)

sub-regulation (6) thereof shall be substituted by the

following

"(6) Customer due diligence measures

under this regulation shall also be applied, at

appropriate times, to existing customers on a

risk-sensitive basis and also whenever any of the

following circumstances occur

(a)

when the subject person

becomes aware that the relevant

circumstances surrounding a business

relationship have changed; or

(b) when the subject person has a

legal duty to contact the customer for the

purpose of reviewing and updating any

information relating to the beneficial

owners, including when the subject person

has such a duty in terms of the

Cooperation With Other Jurisdiction On

Tax Matters Regulations.";

(f)

in sub-regulation (8) thereof, for the words "risk

assessment" there shall be substituted the words "risk

assessments"; and for the words "regulation 5(1)" there shall be

substituted the words "regulation 5";

(g)

sub-regulation (10) thereof shall be deleted; and

(h) sub-regulations (11) and (12) thereof shall be

renumbered as sub-regulations (10) and (11) respectively.

Immediately after regulation 7 of the principal regulations

there shall be added the following new regulation

" Electronic

(1) The Financial Intelligence

money.

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

issuing electronic money from the carrying out of

customer due diligence measures under

regulation 7(1)(a) to (c) where all the following

criteria are met

(a)

the payment instrument is not

reloadable, or is subject to a maximum

monthly payment transaction limit of one

hundred fifty euro (€150) which can be

used only in Malta;

(b) the maximum amount stored

electronically does not exceed one

hundred fifty euro (€150);

(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 fifty euro

(€50), or in the case of remote payment

transactions where the amount paid exceeds fifty

euro (€50).

(2)

Subject persons issuing electronic

money may still apply simplified customer due

diligence measures where a low risk of money

laundering and funding of terrorism is identified

in accordance with regulation 10, even where the

exemption envisaged under sub-regulation (1)

has not been granted or has been granted subject

to the criteria envisaged in the said sub-

regulation (1).

(3)

Subject persons acquiring payment

transactions shall only accept payments carried

out with anonymous prepaid instruments issued

in other Member States and third countries where

these are issued subject to criteria equivalent to

those envisaged under sub-regulation (1).

(4)

In this regulation

"acquiring of payment transactions"

means a payment service provided by a

payment service provider contracting with

a payee to accept and process payment

transactions which results in a transfer of

funds to the payee;

"payment transaction" has the same

meaning as is assigned to the term under

the Second Schedule to the Financial

Institutions Act;

"remote payment transaction" means

a payment transaction initiated via internet

or through a device that can be used for

distance communication.".

7. In paragraph (b) of sub-regulation (1) of regulation 10 of

the principal regulations, for the words "risk assessment" there shall

be substituted the words "risk assessments"; and for the words

"regulation 5(1)" there shall be substituted the words "regulation 5".

Regulation 11 of the principal regulations shall be

amended as follows

(a)

sub-regulation (1) thereof shall be amended as

(i) paragraph (b) thereof shall be substituted by

the following

"(b)

where, on the basis of the risk

assessments carried out in accordance with

regulation 5, 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; and";

(ii)

paragraph (c) thereof shall be deleted;

(iii) paragraph (d) thereof shall be renumbered as

paragraph (c); and

(iv) in paragraph (c) thereof, as renumbered, for

the words "sub-regulations (3) to (9)" there shall be

substituted the words "sub-regulations (3) to (10)";

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

referred to in paragraphs (a) to (c)" there shall be substituted the

words "cases referred to in paragraphs (a) and (b)"; and the

proviso thereto shall be deleted;

(c)

sub-regulation (9) thereof shall be substituted by the

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

possible, examine the purpose and background of all

transactions that

(a)

are complex;

(b)

are unusually large;

(c)

are conducted in an unusual pattern; or

(d) have no apparent economic or lawful

purpose

Provided that in such cases subject persons shall

increase the degree and nature of monitoring of the

business relationship, to determine whether those

transactions or activities are suspicious in terms of

regulation 15(3)."; and

(d) immediately after sub-regulation (9) thereof, as

substituted, there shall be added the following new sub-

regulations

"(10) Where occasional transactions or business

relationships or transactions involve non-reputable

jurisdictions, subject persons shall

(a) obtain additional information on the

identity of the customer and, where applicable, the

beneficial owners;

(b) obtain additional information on the

intended nature of business relationships;

(c) obtain additional information on the

source of wealth and source of funds of the

customer, and, where applicable, the beneficial

owners;

(d) obtain information on the purpose of

prospective or executed transactions;

(e) obtain the approval of senior

management

when

establishing

business

relationships, carrying out occasional transactions

or continuing business relationships;

(f) conduct enhanced monitoring of

business relationships by increasing the frequency

of monitoring, and identifying and, where

appropriate, examining patterns of transactions that

require further scrutiny; and

(g) where applicable, require that the first

payment be carried out through a bank account in

the customer’s name held with a bank subject to

customer due diligence obligations that are

consistent with those laid down under these

regulations.

(11) Where occasional transactions or business

relationships or transactions involve non-reputable

jurisdictions in respect of which there is an international

call for counter-measures, subject persons shall inform in

writing the Financial Intelligence Analysis Unit, and shall

apply one or more of the following enhanced customer due

diligence measures

(a) carry out additional customer due

diligence measures;

(b) introduce

enhanced

reporting

mechanisms

or

systematic

reporting

of

transactions;

(c) limit occasional transactions or business

relationships involving such non-reputable

jurisdictions

Provided that in the cases referred to in this sub-

regulation the Financial Intelligence Analysis Unit or the

relevant supervisory authority shall apply any one or more

of the following counter-measures

(a) refuse the establishment in Malta of

branches, representative offices or subsidiaries of

persons or entities undertaking activities equivalent

to relevant financial business or relevant activity

which are situated in such non-reputable

jurisdictions, or otherwise take into account the

fact that that person or entity is situated in a non-

reputable jurisdiction that has deficiencies in its

anti-money laundering and counter funding of

terrorism regime;

(b) prohibit

subject

persons

from

establishing branches or representative offices in

such a non-reputable jurisdiction or otherwise take

into account the fact that the branch or

representative office would be situated in a non-

reputable jurisdiction that has deficiencies in its

anti-money laundering and counter funding of

terrorism regime;

(c)

carry

out

increased

compliance

monitoring or require increased external audit

requirements on branches and subsidiaries of

persons and entities referred to in paragraph (a),

established in Malta;

(d) require external audit requirements on

subject persons forming part of a group in respect

of their branches or subsidiaries in such non-

reputable jurisdictions; and

(e) require subject persons carrying out

relevant financial business to review, amend or

terminate correspondent relationships with

respondent institutions established in such non-

reputable jurisdiction.

(12) The provisions of the proviso to sub-

regulation (11) shall not prejudice the ability of the

Financial Intelligence Analysis Unit, or a supervisory

authority, acting pursuant to its powers at law, to apply, in

the case referred to in this sub-regulation, measures other

than those envisaged in that proviso, or to apply measures

so envisaged in other situations as deemed appropriate.

(13) When taking any measures as set out in the

proviso to sub-regulation (11), the Financial Intelligence

Analysis Unit and the relevant supervisory authorities shall

take into account, as appropriate, relevant evaluations,

assessments or reports drawn up by international

organisations, which lay down or monitor adherence with

international standards for the prevention of money

laundering and for combating the funding of terrorism, in

relation to the risks posed by individual third countries,

and shall duly notify the European Commission of any

measures taken.".

Sub-regulation (6) of regulation 13 of the principal Amends

regulation 13 of

regulations shall be substituted by the following

the principal

regulations.

"(6) The processing of personal data for the purposes of

the Act and these regulations shall be deemed to be a matter of

public interest under Regulation (EU) 2016/679, and the term

"personal data" shall have the same meaning as is assigned to it

under Regulation (EU) 2016/679.".

Regulation 14 of the principal regulations shall be Substitutes

regulation 14 of

substituted by the following

the principal

regulations.

"14. (1) The Financial Intelligence Analysis Unit shall

maintain comprehensive statistical data relative to its functions

under the Act, to assist in the review of the effectiveness of the

national system to combat money laundering or the funding of

terrorism and the carrying out of national risk assessments.

(2) Comprehensive statistical data maintained under

sub-regulation (1) shall include

(a) data measuring the size and importance of the

different sectors which are subject to anti-money

laundering and counter-funding of terrorism obligations

under these regulations, including the number of entities

and persons conducting a relevant activity or a relevant

financial business and the economic importance of each

sector;

(b) the kind of activity conducted by the entities

and persons referred to in paragraph (a);

(c) the number of suspicious transaction reports

made to the Financial Intelligence Analysis Unit, the types

of underlying criminal activities, where this information is

known, and the follow up given to these reports;

(d) where available, data identifying the number

and percentage of suspicious transaction reports resulting

in further investigation, together with an annual report to

subject persons detailing the usefulness and follow-up of

the reports presented;

(e) statistics relevant to the exchange of

information between the Financial Intelligence Analysis

Unit and foreign counterparts, including data regarding the

number of requests for information made, received,

refused and answered in full or in part, broken down per

foreign counterpart;

(f) data on human resources available to the

Financial Intelligence Analysis Unit to carry out its

functions under article 16(1)(a), (b) and (c) of the Act;

(g) the number of on-site and off-site

examinations carried out on subject persons with the aim

of monitoring their compliance with the provisions of the

Act and any regulations made thereunder, the number of

compliance failures or contraventions identified following

such examinations, and the number and values of

administrative measures or penalties imposed.

(3) The Financial Intelligence Analysis Unit shall

publish consolidated reviews of the statistical data gathered in

accordance with this regulation on an annual basis and shall

ensure that such statistical data is also made available to the

National Co-ordinating Committee on Combating Money

Laundering and Funding of Terrorism established by the

National Co-ordinating Committee on Combating Money

Laundering and Funding of Terrorism Regulations in terms of

article 12A of the Act and the European Commission on an

annual basis and upon request.".

Sub-regulation (2) of regulation 16 of the principal Amends

regulation 16 of

regulations shall be amended as follows

the principal

regulations.

(a) paragraph (b) thereof shall be substituted by the

following

"(b) disclosures between subject persons who

undertake relevant financial business, other than a business

referred to in paragraphs (l), (m) and (n) under the

definition "relevant financial business" or between those

subject persons and other persons undertaking equivalent

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;";

(b) paragraph (c) thereof shall be substituted by the

following

"(c) disclosures between subject persons who

undertake activities under paragraph (a) or paragraph (c) of

the definition "relevant activity" or between those subject

persons and other persons 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 share common ownership, management

or compliance control;"; and

(c)

in paragraph (d) thereof, immediately after the

words "who undertakes relevant financial business" there shall

be added the words ", other than a business referred to in

paragraphs (l), (m) and (n) under the definition "relevant

financial business" ".

In the proviso to paragraph (c) of sub-regulation (4) of

regulation 21 of the principal regulations, for the words "conferred to

it under article 30C" there shall be substituted the words "conferred to

it under article 30D".

€1.44