Anti-Money Laundering and Counter-Terrorist Financing

In lawman’s terms, money laundering is the act of making dirty money (ie. money obtained from criminal activity) appear to have originated from a legitimate source, thus transforming it into ‘clean money’. The amounts of money involved in such cases are usually of such a high amount as to raise suspicion. Counter-Financing of Terrorism (CFT) involves investigating, analyzing, deterring, and preventing sources of funding for terrorist activities usually carried out by terrorist organisations. Such funds usually move across one jurisdiction to another, making them hard to trace. By tracking down the source of the funds that support terrorist activities, law enforcement may be able to prevent some of those activities from occurring.

In Malta, the Anti-Money Laundering (AML) regime consists mainly of the Prevention of Money Laundering Act (Chapter 373 of the Laws of Malta) criminalises and regulates money laundering, also establishing the Financial Intelligence Analysis Unit (FIAU). The Prevention of Money Laundering Act was amended in order to transpose the provisions of EU Directive 2015/849 (dealing with the prevention of the use of the financial system for the purposes of money laundering or terrorist financing) and in order to elaborate on, and strengthen, the national AML/CFT regime. On the 19thJune 2018 the 5th anti-money laundering Directive (Directive (EU) 2018/843), which amended the 4th anti-money laundering Directive, was published in the Official Journal of the European Union. The Member States had to transpose this Directive by 10 January 2020.

Moreover, the Prevention of Money Laundering Act and the Prevention of Money Laundering and Funding of Terrorism Regulations made thereunder are supplemented by the Implementing Procedures issued by the FIAU. The Implementing Procedures provide an interpretation of the regulations and their purpose is to guide and assist subject persons in understanding and fulfilling their obligations under the regulations, thus ensuring effective implementation thereof. The said Implementing Procedures are binding on subject persons and failure to comply is subject to an administrative penalty. Lastly, in relation to money laundering, it is also pertinent to mention the Dangerous Drugs Ordinance (Chapter 101 of the Laws of Malta) and the Medical and Kindred Professions Ordinance (Chapter 31 of the Laws of Malta) which contain, inter alia, provisions which apply as a lex specialis to laundering of money obtained from drug trafficking.

Contrary and inversely to money laundering, in the case of counter-financing of terrorism, it is not the source of the funds on which focus is made, but the destination and purpose of the said funds. According to Sub-title IV A of the Criminal Code (Chapter 9 of the Laws of Malta) entitled 'Of Acts of Terrorism, Funding of Terrorism and Ancillary Offences', funding of terrorism is defined in Article 328F. as ‘… directly or indirectly, collecting, receiving, providing or inviting another person to provide, money or other property or otherwise provides finance intending it to be used, or which he has reasonable cause to suspect that it may be used, in full or in part, for the purposes of terrorist activities or knowing that it will contribute towards the activities …’

Lexvirtualis™ offers the following services:

• Compliance with Maltese and EU legislation

• Compliance with FIAU Guidelines

• Formulation of proper AML-CFT programme, policy and procedures manuals, documentation

• Support, advice and assistance with regulatory returns, regulatory requests and regulatory inspections