Malta transposes EU’s Fourth Anti-Money Laundering Directive

Malta has, at long last, transposed the European Union’s Fourth Anti-Money Laundering Directive into national legislation, by way of five separate legal notices published this week.

The new regulations, which provide for a Register of Beneficial Owners amongst several other rules, will come into force on 1 January.

In order to transpose the legislation, changes were made this week to the Civil Code, the Companies Act, the Trusts and Trustees Act, and the Prevention of Money Laundering Act, in all comprising some 100 pages of new legislation.

Amongst the new rules for Maltese and Malta-based companies are:

• A requirement for companies to disclose their beneficial, or true, owners in a publicly available register.

• Data on the beneficial owners of trusts to be available to tax and law enforcement authorities, as well as sectors with an obligation to follow anti-money laundering rules, such as lawyers.

• A requirement for member states to verify beneficial ownership information submitted to their registers.

• Extending anti-money laundering and counter-terrorism regulations to apply to virtual currencies, provision of tax services and those dealing in works of art.

The information on the beneficial owners of a company will be made accessible to: national authorities responsible for combating money laundering and terrorist financing; national authorities investigating or prosecuting money laundering; the Financial Intelligence Analysis Unit; national tax authorities and; any other national authorities under the Prevention of Money Laundering and Funding of Terrorism Regulations.

Others who will have access to the Register will include those who require access for carrying out customer due diligence; any person or organisation that, upon a written request, can satisfactorily demonstrate and justify a legitimate interest shall, in accordance with data protection requirements, be granted access to the name, the month and year of birth, the nationality, the country of residence and the extent and nature of the beneficial interest of the beneficial owners of a company; those with a legitimate interest to have access to the register; those persons or organisations requesting access that will contribute to the prevention, detection and combating of money laundering or the associated predicate offences or the financing of terrorism.

Access to the information on the beneficial owners of a company held by the registrar in the register of beneficial owners will be subject to on-line registration and will be subject to the payment of a €5 fee for every access to the information on the beneficial owners of each company.

A deal struck yesterday at EU level had reportedly seen strong opposition from Malta, particularly as concerns the EU’s bid to increase transparency on trusts and companies, for fear of a negative impact on its economy.

The MEP in charge of the issue, Dutch Green Judith Sargentini, is quoted as saying that Malta, the UK, Cyprus, Luxembourg and Ireland were among those opposing the changes. The final deal struck yesterday allows the authorities and “persons who can demonstrate a legitimate interest” to access data on the beneficial owners of trusts.

Trusts are legitimate financial vehicles that manage assets but they have sometimes been accused of hiding illegal activities because of their lack of transparency.

European Union states and MEPs agreed on stricter rules to prevent money laundering and terrorism financing on exchange platforms for bitcoin and other virtual currencies, the EU said in a statement.

The agreement is part of a broader set of measures to tackle financial crimes and tax evasion. EU legislators also backed stricter controls on pre-paid cards, and raised transparency requirements for the owners of trusts and companies.

The EU decision comes as bitcoin’s prices have risen more than 1,700 per cent since the start of the year, triggering worries that the market is a bubble that could burst in spectacular fashion.

The agreed measures will end anonymous transactions on virtual currency platforms and with prepaid payment cards, which investigators said could have been used to fund attacks by militants.

Bitcoin exchange platforms and “wallet” providers that hold the cyber currency for clients will be required to identify their users, under the new rules which now must be formally adopted by EU states and European legislators and then turned into national laws within 18 months.

The Prevention of Money Laundering Act will now provide for the setting up of a National Coordinating Committee composed of: the Permanent Secretary of the Ministry for Finance, the Permanent Secretary of the Ministry for Home Affairs and National Security, the Permanent Secretary of the Ministry For Justice, Culture and Local Government, the Governor of the Central Bank of Malta, the Commissioner for Revenue, the Chairman of the Malta Financial Services Authority, the Chairperson of the Malta Gaming Authority, the Commissioner of Police, the Attorney General, the Chairman of the FIAU and the Chairperson of the Asset Recovery Bureau. The Chairperson of the committee shall be the Permanent Secretary of the Ministry for Finance.

The committee will be coordinating the development of a national strategy to combat money laundering and the funding of terrorism. The act continues to enhance the Financial Intelligence Analysis Unit’s role in the fight against money laundering and the funding of terrorism, especially when it comes to cooperating and exchanging information with international counterparts and local authorities. Furthermore, it strengthens the FIAU’s abilities to supervise and sanction breaches of AML/CFT preventative measures.

Bitcoin exchange platforms and “wallet” providers that hold the cyber currency for clients will be required to identify their users.