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Prevention Of Money Laundering Act (Cap. 373) Prevention Of Money Laundering (Amendment) Regulations, 2006 (L.N.42 Of 2006 )

PREVENTION OF MONEY LAUNDERING ACT (CAP. 373)
Prevention of Money Laundering (Amendment) Regulations,
2006
IN exercise of the powers conferred by article 12 of the Prevention of Money Laundering Act, the Prime Minister and Minister of Finance, has made the following regulations>-
1. The title of these regulations is the Prevention of Money Laundering (Amendment) Regulations, 2006 and they shall be read and construed as one with the Prevention of Money Laundering Regulations,
2003, hereinafter referred to as “the principal regulations”.
2. Immediately after the words “Money Laundering” in the title of the principal regulations, there shall be inserted the words “and Funding of Terrorism”.
3. Immediately after the words “Money Laundering” in regulation
1 of the principal regulations there shall be inserted the words “and
Funding of Terrorism”.
4. Regulation 2 of the principal regulations shall be amended as follows>
(a) in the definition “Case 2 (suspicion)” therein immediately after the words “engaged in money laundering”, wherever these occur, there shall be inserted the words “or the funding of terrorism”<
(b) immediately after the definition “Case 4 (series of transactions)” therein there shall be inserted the following new definition>
“ “casino” shall have the same meaning as is assigned to it by article 2 of the Gaming Act and “casino licensee” in these regulations shall be construed accordingly<”<
(c) immediately after the definition “collective investment scheme” therein there shall be inserted the following new definition>
“ “company” has the same meaning as is assigned to it in the Companies Act<”<
B 777

Citation.

L.N. 199 of 2003

.

Amends the title of the principal regulations.

Amends regulation

1 of the principal regulations.

Amends regulation

2 of the principal regulations.

B 778

Cap. 331.

(d) immediately after the definition “Financial Intelligence Analysis Unit” therein there shall be inserted the following new definition>
“ “funding of terrorism” means the conduct described in articles 328F and 328I both inclusive, of the Criminal Code<”<
(e) immediately after the definition “one-off transactions”
therein there shall be inserted the following new definition>
“ “politically exposed persons” means natural persons who are or have been entrusted with prominent public functions and shall include their immediate family members or persons known to be close associates of such persons, but shall not include middle ranking or more junior officials<”<
(f) the definition “relevant activity” therein shall be amended as follows>
(i) in paragraph (d) thereof the words “or trustees,” immediately following the words “nominee shareholders” shall be deleted<
(ii) immediately after paragraph (d) thereof there shall be inserted the following new paragraphs>
“(e) any person providing trustee or any other fiduciary service, whether authorised or otherwise, in terms of the Trusts and Trustees Act<
(f) casino licensee<”<
(iii) paragraphs (e) and (f) thereof shall be renumbered as paragraphs (g) and (h)< and
(iv) in paragraph (h) thereof as renumbered, for the words “paragraphs (a) to (e) above” there shall be substituted the words “paragraphs (a) to (g) above”<
(g) in the definition “reputable jurisdiction” therein immediately after the words “for the prevention of money laundering”, wherever these occur, there shall be inserted the words “and for combating the funding of terrorism”<
(h) the definition “supervisory authority” shall be amended as follows>
(a) the word “and” at the end of the paragraph (i)
thereof shall be deleted<
(b) In paragraph (j) thereof, the words “the Gaming
Act Regulations, 1998” shall be deleted< and
(c) immediately after paragraph (j) thereof there shall be inserted the following new paragraph>
“(k) the Comptroller of Customs when carrying out duties under any regulations that may be issued from time to time in terms of aticle 7 of the External Transactions Act.”< and
(i) immediately after the definition “supervisory authority”
therein there shall be inserted the following new definition>
“ “terrorism” means any act of terrorism as defined in article 328A of the Criminal Code<”.
5. Regulation 3 of the principal regulations shall be amended as follows>
(a) in the marginal note thereof, immediately after the words “money laundering” there shall be inserted the words “and the funding of terrorism”<
(b) in sub-regulation (1)(a)(i) thereof, for the words “identification procedures” there shall be substituted the words “customer due diligence, including identification procedures,”<
(c) immediately after paragraph (a) of sub-regulation (1)
thereof, there shall be inserted the following new paragraph>
“(b) applies the procedures established under sub- paragraph (a) when entering into or undertaking non face-to- face relationships or transactions<”<
(d) paragraph (b) of sub-regulation (1) thereof shall be renumbered as paragraph (c) and sub-paragraph (ii) of the same paragraph as renumbered shall be substituted by the following>
“(ii) the provisions of the Prevention of Money Laundering Act< of the Sub-Title Of Acts of Terrorism, Funding of Terrorism and Ancillary Offences of Title IVA of
B 779

Cap. 233.

Amends regulation

3 of the principal regulations.

B 780

Amends regulation

4 of the principal regulations.

Amends regulation

5 of the principal regulations.

Part II of Book First of the Criminal Code< and of these regulations, and”< and
(e) paragraph (c) of sub-regulation (1) thereof shall be renumbered as paragraph (d) and in the same paragraph as renumbered immediately after the words “engaged in money laundering” there shall be inserted the words “or the funding of terrorism”.
6. Regulation 4 of the principal regulations shall be renumbered as sub-regulation (1) and immediately thereafter as renumbered there shall be added the following new sub-regulations>
“(2) Without prejudice to sub-regulation (1), where the offence is committed by a body or other association of persons, be it corporate or unincorporated, such body or association shall be liable to an administrative penalty of not less than Lm500 (five hundred Maltese liri) and not more than Lm2,000 (two thousand Maltese liri).
(3) Administrative penalties under sub-regulation (2) shall be imposed by the Financial Intelligence Analysis Unit without recourse to a court hearing and may be imposed either as a one time penalty or on a daily cumulative basis until compliance provided that in the latter case the accumulated penalty shall not exceed Lm20,000 (twenty thousand Maltese liri).”.
7. Regulation 5 of the principal regulations shall be amended as follows>
(a) immediately before sub-regulation (1) thereof there shall be inserted the following new sub-regulation>
“(1) Subject persons shall not keep anonymous accounts or accounts in fictitious names such that the true beneficial owner is not known.”<
(b) sub-regulation (1) thereof shall be renumbered as sub- regulation (2) and for the sub-regulation as renumbered there shall be substituted the following>
“(2) Subject to the provisions of regulations 6 and 8, customer due diligence, including identification procedures maintained by a Subject Person, shall be deemed to be in accordance with the provisions of this regulation if in Cases
1 to 4 they require, as soon as it is reasonably practicable
after contact is first made between the Subject Person and the applicant for business concerning any particular business relationship or one-off transaction -
(a) the production by the applicant for business of satisfactory evidence of his identity and the verification of such identity< or
(b) the taking of such measures specified in the procedures as will produce such evidence of identity, and
where that evidence is not obtained, or where the Subject Person knows or suspects that the transaction may be related to money laundering or the funding of terrorism, the procedures shall require that the business in question shall not proceed or shall proceed only in accordance with any direction made by the Financial Intelligence Analysis Unit.
Without prejudice to the above, where to refrain in such manner is impossible or is likely to frustrate efforts of investigating a suspected money laundering or the 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 11.”.
(c) sub-regulations (2) and (3) thereof shall be renumbered as sub-regulations (3) and (4) respectively<
(d) sub-regulation (4) thereof shall be renumbered as sub- regulation (5) and shall be amended by the insertion of the words “customer due diligence, including” immediately before the words “identification procedures” and as well as immediately before the words ‘identification process’< and
(e) sub-regulation (5) thereof shall be substituted by the following>
“(6) Subject Persons shall examine with special attention, and to the extent possible, the background and purpose of any complex or large transactions and any transactions which are particularly likely, by their nature, to be related to money laundering or the funding of terrorism.
B 781
B 782
(7) Subject Persons shall pay special attention to business relationships and transactions with persons, companies and undertakings, including those carrying out relevant financial business or a relevant activity, from a non- reputable jurisdiction, and, where the provisions of sub- regulation (6) apply to such transactions, Subject Persons shall proceed accordingly.
(8) In addition to complying with the other provisions of this regulation, 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 article 25 of the Gaming Act<
(b) identify, by the production of an identification document, in accordance with the provisions of paragraph (i), any person who, whilst in the casino exchanges cash, a cheque or bank draft, whether such is drawn on a local or a foreign credit institution, or who otherwise makes a credit or a debit card payment in exchange for chips or tokens in excess of Lm2,000 (two thousand Maltese liri) for use in the casino<
(c) identify, by the production of an identification document, in accordance with the provisions of paragraph (i), any person who, whilst in the casino exchanges cash, exchanges chips or tokens after playing a game or games, the value of which exceeds Lm2,000 (two thousand Maltese liri)<
(d) ensure that the particulars relating to the identity of a person exchanging chips or tokens the value of which exceeds Lm 2,000 (two thousand Maltese liri) 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 those 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
(e) ensure that the provisions of paragraphs (ii) to (iv) 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 Lm2,000 (two
thousand Maltese liri) but which in aggregate exceed such amount.
(9) Notwithstanding the provisions of sub-regulation (8) and without prejudice to the provisions of regulation 11, the casino licensee shall further record the particulars relating to the identity of a person playing a game or games in the casino where the casino licensee or any casino employee has any knowledge or suspicion that such person is, or may be, engaging in money laundering or the funding of terrorism.”.
8. Immediately following regulation 5 of the principal regulations there shall be inserted the following new regulations>

“Correspondent 5A. (1) In addition and without prejudice to the

B 783

Addition of new regulations 5A, 5B and 5C to the principal regulations.

banking,

branches and subsidiaries.

Customer acceptance policy.

customer due diligence, including identification procedures required by these regulations, in establishing cross-border correspondent banking and other similar relationships, Subject Persons carrying out relevant financial business shall ensure that they fully understand and document the nature of the business activities of their correspondent institution, including the adequacy and effectiveness of their internal controls for the prevention of money laundering and the funding of terrorism.
(2) The procedures for the establishment of correspondent relationships in accordance with sub-regulation (1) shall require the prior approval of senior management for the establishment of such relationships in, or with respondent institutions from, a non-reputable jurisdiction.
(3) Subject Persons shall ensure that the principles of regulation 3(1) are applied to their branches or subsidiaries that are not located in a reputable jurisdiction to the extent that is allowed by the relevant national laws and, where this is not possible, Subject Persons shall immediately inform the Financial Intelligence Analysis Unit and the relevant supervisory authority as applicable.
5B. (1) Subject Persons shall develop and establish effective customer acceptance policies and procedures that are not restrictive in allowing the provision of financial and other services to the public in general but that, as a minimum, include>
B 784

Politically exposed persons.

(a) a description of the type of customer that is likely to pose higher than average risk<
(b) the identification of risk indicators such as the customer background, country of origin, business activities, linked accounts or activities and public or other high profile positions< and
(c) the requirement for an enhanced customer due diligence for higher risk customers.
(2) The Financial Intelligence Analysis Unit may, in consultation with the relevant competent supervisory authority, where applicable, and on a non-discriminatory basis, determine that Subject Persons, or a category of Subject Persons, apply simplified measures in compliance with these regulations where the risk of money laundering or the funding of terrorism appears low and where adequate checks and controls are already otherwise applied.
(3) Any simplified measures as may be determined and applied under sub-regulation (2) shall not be applied in circumstances falling within Case 2 (suspicion).
5C. (1) Customer acceptance policies established under regulation 5B shall be conducive to enabling Subject Persons to determine whether an applicant for business is a politically exposed person.
(2) With regards to politically exposed persons residing in a foreign country, the procedures established under sub-regulation (1) shall require the approval of senior management for establishing such business relationships.
(3) In conducting enhanced ongoing monitoring of business relationships established under sub-regulation (2), Subject Persons shall ensure that the internal procedures include adequate measures to establish the source of wealth and funds that are involved in these business relationships or transactions.”.

Amends regulation

6 of the principal regulations.

9. Immediately after sub-regulation (3) of regulation 6 of the principal regulations there shall be inserted the following new sub- regulations>
“(4) For the purposes of sub-regulation (1)(b) details of payment shall include the name, address and account number of the applicant for business and, where an account number is not available, then a unique identifying number which allows the transaction to be traced back to the applicant for business shall be used whilst the address may be also substituted by the national identity card number as verified.
(5) The details of payment accompanying a transfer of funds as required under sub-regulation (4) shall be verified against independently sourced documents>
Provided that for payments under Lm500 (five hundred Maltese liri) the paying institution may determine the extent of such verification.
(6) Where information required under sub-regulation (4) is missing or incomplete when receiving inward funds, Subject Persons may either reject the transfer or ask for complete information to be submitted>
Provided that where the transfer is rejected or where circumstances warrant that the funds be made available to the beneficiary and the missing information is not received, Subject Persons shall proceed as provided for in regulation 5(2).
(7) The provisions of sub-regulations (4), (5), and (6) shall not apply where>
(a) the funds are transferred through a transaction carried out by the use of a credit or debit card or any other similar payment instrument where a unique identifying number allowing the transaction to be traced to the payer accompanies the transfer<
(b) both the payer and the payee are acting on their own behalf and are persons authorised to undertake relevant financial business or who are licensed or otherwise authorised under the laws of a reputable jurisdiction to carry out any activity which is equivalent to relevant financial business.”.
10. Regulation 7 of the principal regulations shall be amended as follows>
(a) in sub-regulation (2)(a) thereof, immediately after the words “for the purpose of establishing” there shall be inserted the
B 785

Amends regulation

7 of the principal regulations.

B 786
words “and verifying” and, immediately after the words “in addition to” there shall be inserted the word “the”<
(b) in sub-regulation (2)(b) thereof for the words “regulation
5(1)” there shall be substituted the words “regulation 5(2)”< (c) in sub-regulation (4) thereof>
(i) for sub-paragraph (i) of the proviso thereto there shall be substituted the following>
“(i) where the principal is a body corporate, a body of persons, or any other form of legal entity or arrangement, satisfactory identification shall also be disclosed of all directors, and where such principal does not have directors, of all such other persons vested with its administration and representation, and, other than in the case of a company listed on a recognised stock exchange, a domestic public authority, a state corporation, or any other category of customers where such customers present a low risk of money laundering or the funding of terrorism as may be determined by the Financial Intelligence Analysis Unit in terms of regulation 5B(2), satisfactory identification shall also be disclosed of all persons having a qualifying interest in such principal, including, where applicable, the identity of the beneficial owners or beneficiaries of the qualifying interest<”<
(ii) immediately after sub-paragraph (ii) of the proviso thereto there shall be inserted the following>
“(iii) For the purposes of this regulation a qualifying interest means a shareholding of 25% or more of the equity shares in the principal, or a share of 25% or more of the total contributions made to the principal or of the total assets of the principal, as the case may be.”<
(d) in sub-regulation (5)(a) thereof>
(i) for the words “Where the applicant for business” to “held under a nominee,” both phrases included, there shall be substituted the words “Where the applicant for business is acting on behalf of a body corporate, a body of persons, trust or any other form of legal entity or arrangement in which
there is a qualifying interest as defined in sub-regulation (4)
held under a nominee,”< and
(ii) for the words “beneficiaries of the qualifying shareholding” there shall be substituted the words “beneficiaries of the qualifying interest”< and
(e) in sub-regulation (5)(b) thereof, the words “nominee shareholder,” immediately before the words “trustee or under any other fiduciary arrangement,” shall be deleted.
11. In sub-regulation 8(1) of the principal regulations, immediately before the words “identification procedures” there shall be inserted the words “customer due diligence, including”.
12. Regulation 9 of the principal regulations shall be amended as follows>
(a) immediately after paragraph (b) of sub-regulation (1)
thereof there shall be inserted the following new paragraph>
“(c) in relation to regulations 5(6) and 5(7) a record of the findings of the examination of the background and purpose of such relationships and transactions.”<
(b) in sub-regulation (2)(a) thereof, immediately after the words “relevant financial business” there shall be inserted the words “or relevant activity”<
(c) in sub-regulation (2)(b) thereof, the words “paragraph
(b)” shall be substituted by the words “paragraphs (b) and (c)”<
(d) in sub-regulation (3) thereof, for the words “relevant business”, wherever they occur, there shall be substituted the words “relevant financial business or relevant activity”< and
(e) immediately after sub-regulation (3) thereof there shall be inserted the following new sub-regulations>
“(4) Without prejudice to sub-regulations (1) to (3), both inclusive, a casino licensee shall also maintain records in relation to all identification processes under regulation 5(7) in accordance with the provisions of article 25(2) of the Gaming Act.
B 787

Amends regulation

8 of the principal regulations.

Amends regulation

9 of the principal regulations.

B 788

Amends regulation

10 of the principal regulations.

Amends regulation

11 of the principal regulations

(5) Subject Persons shall ensure that all customer identification, due diligence records and transaction records and information are made available on a timely basis to the Financial Intelligence Analysis Unit and, as may be allowed by law, to other relevant competent authorities, for the purposes of the prevention of money laundering and the funding of terrorism.”.
13. Regulation 10 of the principal regulations shall be amended as follows>
(a) in sub-regulation (1) thereof> .
(i) for the words “a reporting officer employed” there shall be substituted the words “a reporting officer designated”< and
(ii) immediately after the words “in money laundering” wherever they occur, there shall be inserted the words “or the funding of terrorism”< and
(b) for sub-regulation (2) thereof, there shall be substituted the following>
“(2) It shall be lawful for the reporting officer or other designated employee of the Subject Person to disclose information obtained in the course of internal reporting procedures under these regulations to the reporting officer or other designated employee of another Subject Person or Persons>-
(a) forming part of the same group of companies of the former Subject Person< or
(b) where the Subject Persons are acting in terms of a principal and broker or principal and agent relationship.”.
14. Regulation 11 of the principal regulations shall be amended as follows>
(a) in the marginal note thereto, immediately after the words “money laundering” there shall be inserted the words “or the funding of terrorism”<
(b) in sub-regulation (1) thereof, immediately after the words “money laundering” there shall be inserted the words “or the funding of terrorism” and for the words “reasonably practicable,” there shall be substituted the words “reasonably practicable, but not later than three (3) working days from when the suspicion first arose,”< and
(c) immediately after sub-regulation (2) thereof there shall be added the following new sub-regulations>
“(3) Where, following a submission of a disclosure as in sub-regulation (1), or for any other reason as is allowed by law, the Financial Intelligence Analysis Unit demands additional information, a Subject Person shall comply as soon as is reasonably practicable but not later than five (5) working days from when the demand is first made unless that Subject Person makes representations justifying why the requested information cannot be submitted within the said time and the Financial Intelligence Analysis Unit, at its discretion and after having considered such representations, extends such time as is reasonably necessary to obtain the information, whereupon the Subject Person shall submit the information requested within the time as extended.
(4) A Subject Person who contravenes the provisions of this regulation, or who fails to disclose information as required by sub-regulation (1) or who fails to submit information demanded under sub-regulation (3), shall be liable to an administrative penalty of not less than Lm100 (one hundred Maltese liri) and not more than Lm1,000 (one thousand Maltese liri).
(5) Administrative penalties under sub-regulation (4) shall be imposed by the Financial Intelligence Analysis Unit without recourse to a court hearing and may be imposed either as a one time penalty or on a daily cumulative basis until compliance provided that in the latter case the accumulated penalty shall not exceed Lm 5,000 (five thousand Maltese liri).”.
15. In regulation 12 of the principal regulations for the words “money laundering activities” there shall be substituted the words “money laundering and, or funding of terrorism activities”.
B 789

Amends regulation

12 of the principal regulations.

B 790

Amends regulation

15 of the principal regulations.

16. Regulation 15 of the principal regulations shall be amended as follows>
(a) immediately before the words “the identity of the person” there shall be inserted the words “the due diligence including”< and
(b) in the proviso thereof, immediately before the words “the identification process” there shall be inserted the words “the customer due diligence including”.

Ippubblikat mid-Dipartiment ta’ l-Informazzjoni (doi.gov.mt) — Valletta — Published by the Department of Information (doi.gov.mt) — Valletta

Mitbug[ fl-Istamperija tal-Gvern — Printed at the Government Printing Press

Prezz 60ç – Price 60c