RESIDUAL BALANCES FUND ACT (COMPLIANCE REVIEW) REGULATIONS (compliancereview)

(COMPLIANCE REVIEW)

SUBSIDIARY LEGISLATION 618.01

RESIDUAL BALANCES FUND ACT

(COMPLIANCE REVIEW) REGULATIONS

7th December, 2023

LEGAL NOTICE 278 of 2023.

(1)

The title of these regulations is the Residual

Balances Fund Act (Compliance Review) Regulations.

(2)

The purpose of these regulations is to determine the

nature, specifications and extent of any compliance review, the basis

for a determination of a failure of the compliance review, as well as

any other conditions forming part thereof.

(1)

In these regulations, unless the context otherwise

requires

"the Act" means the Residual Balances Fund Act;

"beneficial owner" shall have the meaning assigned to it

in accordance with regulation 2(1) of the Prevention of Money

Laundering and Funding of Terrorism Regulations and as

further supplemented in any implementing procedures issued

by the FIAU in accordance with regulation 17 of the Prevention

of Money Laundering and Funding of Terrorism Regulations;

"Member State" means a Member State of the European

Union and includes an EEA State;

"sanctions" means financial sanctions which are binding

on Malta, as established under the National Interest (Enabling

Powers) Act;

(2)

Words and expressions used in these regulations which

are also used in the Act but which are not defined herein, shall have

the same meaning assigned to them in the Act.

Without prejudice to any provisions of the Act, before

releasing any transferred deposit liabilities to transferred depositors,

the Fund shall, following the submission of an application submitted in

accordance with article 19(3) of the Act, conduct a compliance review

in accordance with the provisions of these regulations.

(1)

An application submitted in accordance with

article 19(3) of the Act shall include the following information and

documentation, as applicable

(a)

the application form drawn up by the Fund for the

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purposes of an application to be made in accordance with

article 19(3) of the Act, as may be amended from time to time,

duly completed and signed by the transferred depositor,

together with the supporting documents set out in paragraphs

(b) and (c) below, as applicable, and any other supporting

documents as may be specified therein;

(b)

where the transferred depositor is a body

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

or arrangement

(i)

an explanation and depiction of the

ownership and control structure of the transferred

depositor, together with any documentation necessary to

verify the said structure;

(ii)

a copy of the memorandum and articles of

association or such other constitutive document of the

transferred depositor;

(iii) a copy of the licence or certificate of

registration of the transferred depositor; and

(iv) a copy of the passport, identification and,

or residence card of the beneficial owners of the

transferred depositor and, where necessary, any other

document required to verify the name and surname, date

of birth, nationality, citizenship and residential address of

the beneficial owners of the transferred depositor;

(c)

where the transferred depositor is a natural

person, a copy of the passport, identification and, or residence

card of the transferred depositor and, where necessary, any

other document required to verify the name and surname, date

of birth, nationality, citizenship and residential address of the

transferred depositor; and

(d)

details of the account to which any transferred

deposit liabilities would be transferred should they be released

in accordance with the provisions of the Act and these

regulations

Provided that where the Fund is satisfied that it is not

possible for the transferred depositor to provide any information or

documentation mentioned in this sub-regulation, the Fund may require

any such other information or documentation which is alternative or

equivalent thereto

Provided further that the Fund may determine such

conditions as it may deem necessary for the purpose of ensuring that

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the information and documentation to be submitted in terms of this

sub-regulation is complete, accurate and reliable, and the transferred

depositor shall comply with any such conditions.

(2)

The provisions of sub-regulation (1) shall be without

prejudice to the powers of the Fund to require information, data and, or

documentation under articles 4(3)(a), 5 and 19(5) of the Act.

(1)

As part of the compliance review, the Fund shall

carry out due diligence checks which shall include

(a)

the identification and verification of the identity

of the transferred depositor

Provided that where the transferred depositor is a body

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

arrangement, the Fund shall also verify the legal status of the

transferred depositor

Provided further that where the transferred depositor is a

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

arrangement incorporated and, or administered in any Member State,

that is subject to the registration of beneficial owner information, the

Fund shall also obtain proof that such beneficial ownership

information has been duly registered with a designated beneficial

ownership register;

(b)

the identification, where applicable, of the

beneficial owners, and the verification of the identity of the said

beneficial owners;

(c)

where a person purports to act on behalf of a

transferred depositor, the verification that such person is duly

authorised in writing to act on behalf of the transferred

depositor, as well as the identification of that person and the

verification of the identity of that person; and

(d)

any additional due diligence checks which may be

deemed necessary by the Fund.

(2)

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

transferred deposit liabilities due to a transferred depositor are equal to

or more than ten thousand euro (€10,000) or an equivalent value in any

other currency, the Fund may carry out additional due diligence checks

which may include

(a)

an assessment of the purpose and nature of the

business relationship between the transferring institution and

the transferred depositor, as well as the business and risk profile

of the transferred depositor;

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(b)

an inspection and scrutiny of transactions

undertaken throughout the course of the relationship between

the transferring institution and the transferred depositor to

ensure that the transactions undertaken were consistent with the

transferring institution’s knowledge of the transferred depositor

and of his business and risk profile including, where necessary,

the source of the transferred deposit liabilities due to the

transferred depositor;

(c)

an examination of any form of link of the

transferred depositor with other transferred depositors to detect

any unusual or suspicious transaction patterns;

(d)

a consideration of any adverse information which

links the transferred depositor to financial crime, including

whether the transferred depositor is subject to any sanction;

(e)

the verification of the source of the transferred

deposit liabilities due to the transferred depositor; and

(f)

any additional due diligence checks which may be

deemed necessary by the Fund.

(3)

Without prejudice to sub-regulation (1) and

notwithstanding sub-regulation (2), the Authority may, in consultation

with the FIAU, require the Fund to carry out additional due diligence

checks as part of the compliance review to be carried out in relation to

the transferred deposit liabilities transferred by a particular

transferring institution.

(1)

The compliance review shall not be satisfactorily

completed and consequently, the transferred deposit liabilities shall not

be released if

(a)

the transferred depositor or, where the transferred

depositor is a body corporate, a body of persons, or any other

form of legal entity or arrangement, anyone acting on its behalf

fails to provide, without reasonable justification, the

information and, or documentation requested by the Fund or

required under the Act or these regulations;

(b) the transferred depositor or, where the transferred

depositor is a body corporate, a body of persons, or any other

form of legal entity or arrangement, anyone acting on its behalf

fails to satisfy, without reasonable justification, any such

condition as may be determined by the Fund in accordance with

regulation 4(1);

(c)

the transferred depositor or, where the transferred

depositor is a body corporate, a body of persons, or any other

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form of legal entity or arrangement, anyone acting on its behalf

furnishes the Fund with information which is false, inaccurate

or misleading; and, or

(d)

the transferred depositor is the subject of a

sanction.

(2)

Where the Fund decides that the compliance review has

not been satisfactorily completed on any of the grounds mentioned in

sub-regulation (1), it shall state in the notification to be issued in

accordance with article 19(6) of the Act, the grounds on which such

decision is based.

Where the Fund submits a report to the FIAU as provided

for under article 26 of the Act in connection with a transferred

depositor who, or which has applied to the Fund for the release of the

transferred deposit liabilities due thereto and, or the said transferred

deposit liabilities, the provisions of article 28 of the Prevention of

Money Laundering Act shall apply mutatis mutandis.