Malta

1. Does Malta have legislation making it a criminal offence to engage in money laundering and/or terrorist financing?

Yes. The ‘Prevention of Money Laundering Act’ (Chapter 373 of the Laws of Malta) ( ‘PMLA’), is the principal AML (and CTF) legislation in Malta. The ‘Prevention of Money Laundering and Funding of Terrorism Regulations’ (Subsidiary Legislation 373.01) runs in tandem with Chapter 373 and its main scope is to implement Directive (EU) 2015/849 within the Maltese legislation. In addition, the Criminal Code, (Chapter 9 of the Laws of Malta), dedicates a whole sub-title (Articles 328A – 328MA) relating to criminal offences in respect of acts of terrorism, the funding of terrorism and any ancillary acts.

2. To whom does the legislation apply?

The legislation applies to all natural and legal persons.

Maltese law also recognises the notion of corporate criminal liability. Corporate entities may be liable for offences where offences are committed by a person who at the time of the said offence is the director, manager, secretary or other principal officer of a body corporate or is a person having a power of representation of such a body or having an authority to take decisions on behalf of that body or having authority to exercise control within that body, and the said offence was committed for the benefit, in part or in whole, of that body corporate.

Directors, managers and other officers of companies may be guilty of offences unless they can prove that “the offence was committed without [their] knowledge and that [they] exercised all due diligence to prevent the commission of the offence.”

3. What does the legislation prohibit?

PMLA prohibits money laundering and terrorist financing (as defined below)

4. How is money laundering defined? Does underlying criminal activity have to be proven?

Money laundering is defined under Article 2(1) of Chapter 373 of the Laws of Malta as:

1. the conversion or transfer of property knowing or suspecting that such property is derived directly or indirectly from, or the proceeds of, criminal activity or from an act or acts of participation in criminal activity, for the purpose of or purposes of concealing or disguising the origin of the property or of assisting any person or persons involved or concerned in criminal activity;
2. the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect of, in or over, or ownership of property, knowing or suspecting that such property is derived directly or indirectly from criminal activity or from an act or acts of participation in criminal activity;
3. the acquisition, possession or use of property knowing or suspecting that the same was derived or originated directly or indirectly from criminal activity or from an act or acts of participation in criminal activity;
4. retention without reasonable excuse of property knowing or suspecting that the same was derived or originated directly or indirectly from criminal activity or from an act or acts of participation in criminal activity;
5. attempting any of the matters or activities defined in the above foregoing sub-paragraphs (1), (2), (3) and (4) within the meaning of article 41 of the Criminal Code;
6. acting as an accomplice within the meaning of article 42 of the Criminal Code in respect of any of the matters or activities defined in the above foregoing sub-paragraphs (1), (2), (3), (4) and (5);

A money laundering offence can only be committed if there is an underlying criminal offence. The prosecution does not have to prove the underlying criminal offence, but must establish a causal link between that alleged offence and the alleged money laundering offence.

According to Article 328F of Chapter 9 of the Laws of Malta, any person (both legal and natural) who collects, receives, provides or invites other persons to provide money or property for terrorist activities, whether directly or indirectly, will fall under this legislation. In addition, any person who provides money or property who intends it to be used for terrorist activities or any person who has reasonable cause to suspect that such money or property is to be used for such purposes, will also fall under Article 328F and will thus be held liable for committing a terrorism financing offence.

5. What level of intent or knowledge is required to establish a violation?

According to the PMLA, the key element required to establish an offence of money laundering is that a person must have knowledge or suspicion that a particular property or the proceeds thereof are derived directly or indirectly from criminal activity.

The same line of reasoning applies in respect of terrorist financing offences.

6. What are the potential penalties for infringing the legislation?

Article 3 of the PMLA provides that any person convicted of money laundering offences is liable to a fine (multa) not exceeding two million and five hundred thousand euro (€2,500,000) and/or may be imprisoned for up to 18 years.

Where a corporate is liable for money laundering offences on the basis of actions of an individual, it is liable to pay a fine (multa) of not less than twenty thousand euro (€20,000) and not more than two million and five hundred thousand euro (€2,500,000).

Article 5 of PMLA allows for the Court to make a range of interim orders in cases restricting the ability of persons charged with money laundering to deal with or dispose of monies and other property held by them. The Court also has powers to order the forfeiture of property following conviction for money laundering (or terrorist financing) offences.

A person convicted of terrorism financing offences referred to above may be imprisoned for a term of not less than four years but not exceeding twenty years and/or be ordered to pay a fine (multa) not exceeding two million and five hundred thousand euro (€2,500,000) unless the fact constitutes a more serious offence under any other provision of this Code or of any other law.

7. Does the legislation have extra-territorial reach?

Article 9 of the PMLA refers to instances involving proceeds found outside Malta and the powers of investigation granted to local authorities in connection with offences cognizable by courts outside Malta. Apart from that, Article 10 of the same Act goes into the situations where the AG receives an extraterritorial request for the temporary seizure of all or any of the moneys or property, movable or immovable, of a person charged or accused in proceedings before extraterritorial courts.

8. Are there additional anti-money laundering or counter terrorist financing regulations or obligations, such as registration or reporting obligations, for businesses or individuals that operate in particular sectors or undertake particular activities?

The law imposes an array of obligations relating to the prevention of money laundering to a category of individuals referred to as ‘subject persons’. S.L 373.01 defines subject persons as those persons, legal or natural, carrying out ‘relevant activity’ or ‘relevant financial business’. These persons are considered subject persons exclusively when carrying out those activities including; auditors, real estate agents, 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, casino or gaming licensees etc.

Subject persons have a number of obligations, including but not limited to:

• the identification and verification of a customer and the ultimate beneficial owner
• record keeping
• reporting of any suspicious transactions that might have arisen
• the training of a subject person’s staff for them to remain up to date on the current obligations and regulations

As stated in the third obligation above, subject persons are obliged to report any knowledge or any suspicion of ML/FT which they might have to the FIAU in relation to any funds or property that are being used as or are the proceeds of a criminal activity. This requires the implementation of both internal and external procedures.

Regulation 15 of S.L. 373.01 requires a subject person to appoint one of its officers as the Money Laundering Reporting Officer ( ‘MLRO’), whose functions are to:

• receive reports from the subject person’s employees of knowledge or suspicion of ML/TF, or that a person may have been, is or may be connected with ML/TF;
• consider these reports to determine whether knowledge or suspicion of ML/TF subsists or whether a person may have been, is or may be connected with ML/TF;
• report knowledge or suspicion of ML/FT or of a person’s connection with ML/TF to the FIAU; and
• respond promptly to any request for information made by the FIAU.

A subject person must refrain from carrying out or executing a particular transaction until the FIAU is notified if the subject person has knowledge or suspicion that a particular transaction is or may be related to the proceeds of a criminal activity or the funding of terrorism (unless it is not possible for them to do so, in which case they must inform the FIAU immediately after the transaction has been effected).

9. What are the potential penalties for failing to comply with these obligations?

According to Regulation 16 of S.L. 373.01, a subject person or any person who is employed under the subject person who discloses any information to the person concerned or to a third party commits an offence and is liable on conviction to a fine (multa) not exceeding one hundred and fifteen thousand euro (€115,000) and/or to imprisonment for a term not exceeding two years.

In addition to Regulation 16, Regulation 21 of S.L 373.01 sets out a list of penalties for any person who fails to comply with the obligations mentioned in the law and in the FIAU implementing procedures. According to Regulation 21(1) “[a]ny 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.”

According to Sub-regulation (3) the FIAU can also impose administrative penalties without having to resort to a Court hearing. Such administrative penalties can either involve a one-time fixed penalty or alternatively they can be daily cumulative penalties or a mixture of both. The administrative penalties must be effective, proportionate and dissuasive.

10. Who are the relevant enforcement authorities in Malta and what are their contact details?