Prevention of Money Laundering
As a European Union member state, Malta has implemented all EU Directives regulating the prevention of money laundering. Furthermore, Malta is part of MONEYVAL (the Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures formerly PC-R-EV), established in September 1997 by the Committee of Ministers of the Council of Europe to conduct self- and mutual- assessment exercises of the anti-money laundering measures implemented in Council of Europe countries.
Malta is not listed in any international blacklisted countries which are likely to be used for money laundering activities. Malta actively participates in initiatives adopted at international levels such as by the EU Committee on the Prevention of Money Laundering and Terrorist Financing, the MONEYVAL Committee of the Council of Europe, the Financial Action Task Force against money laundering and the OECD.
The principal sources of Maltese law on money laundering as a criminal activity and the prevention thereof are two statutory instruments, namely the Prevention of Money Laundering Act (Cap. 373 of the Laws of Malta), augmenting other provisions found in the Criminal Code (Cap. 9 of the Laws of Malta), and the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR S.L. 373.01). Furthermore, subject persons- which according to legislation means “any person required to maintain internal reporting procedures and to report transactions suspected to involve money laundering or funding of terrorism,” are also required to comply with the detailed Sectoral Implementing Procedures on the Prevention of Money Laundering and Funding of Terrorism published by the Financial Intelligence Analysis Unit (FIAU) in conjunction with the Malta Gaming Authority (MGA).
Since 1989, Land-Based Casinos based in Malta started introducing specific anti-money laundering (AML) procedures. This process continued with Malta implementing the provisions of Directive 2005/60/EC of the European Parliament and of the Council of Europe as of 26 October 2005 by means of the Prevention of Money Laundering and Funding of Terrorism Regulations (S.L. 373.01).
Under the provisions of Directive (EU) 2015/849 of the European Parliament and of the Council, on 20 May 2015, Malta introduced the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR), 2017 (L.N. 372 of 2017) on the 1 January 2018. Subsequent to, all Business to Consumer (B2C) Gaming Operators, licensed to provide a service involving the wagering of a stake with monetary value in games of chance, including games of chance with an element of skill, via electronic means of distance communication upon request from the recipient of said services, with the opportunity to win prizes of money or money’s worth, have become ‘Subject Persons’.
With the current obligations, Gaming Operators are required to apply a Risk-Based Approach (RBA) with their on-going business which is a core foundation of the 4th Anti-Money Laundering Directive and thus requires ‘Subject Persons’ to conduct and document a Money Laundering (ML), Terrorist Financing (TF) Business Risk Assessment. Gaming Operators are also bound to appoint a Money Laundering Reporting Officer (MLRO) of sufficient seniority whose main responsibility is to consider any internal reports of unusual or suspicious transactions and, where necessary, follow up the same by filing a STR with the FIAU. Furthermore, the Directive provides that licensees are to apply CDD measures ‘upon the collection of winnings, the wagering of stakes, or both, when carrying out transactions amounting to EUR 2000 or more, whether the transaction is carried out in a single operation or in several operations which appear to be linked’.
For an accurate interpretation of obligations on the Gaming Sector under the PMLFTR-2017, we advise a full study of the Implementing Procedures – Part II for the Gaming Sector, published by the Financial Intelligence Analysis Unit (FIAU) in conjunction with the Malta Gaming Authority (MGA).
By virtue of the Prevention of Money Laundering Regulations, the Malta Gaming Authority (MGA) is also the supervisory authority bound to monitor the operation of all its licensees and report to the FIAU any suspected money laundering or terrorist funding activity. It is the duty of the MGA to issue or renew a licence applied for under the Gaming Regulations after it is reasonably satisfied that all persons involved in the applicant company are fit and proper persons and after it has ascertained that the applicant has followed policies. The MGA will take affirmative steps to prevent money laundering and other suspicious transactions.
From that point onwards, the applicant is obliged to provide the MGA with the necessary due diligence documents in respect of its key officials, directors, shareholders and other key personnel deemed to be pertinent to business operations by the same applicant. The due diligence exercise ensures the suitability of all persons involved in the conduct of gaming operations in and from Malta.
The licensing procedure will meticulously ascertain that the applicant has followed policies and will take affirmative steps, which include the following:
- The Human Resources Roles & Responsibilities document should include the role and responsibilities of the Money Laundering Reporting Officer (MLRO)
- The Human Resources Roles & Responsibilities document should include the role and responsibilities of the Key Official
- Fraud Management Procedures
- Documented Anti-Money Laundering – Risk Based Assessment
- Documented Customer Acceptance Policy
- Documented Customer Due Diligence (CDD) Procedures
- Documented Enhanced Due Diligence (EDD) Procedures
- Pay-out Management Procedures
- Reference is also made to latest obligations under the new PMLFTR – 2017 (L.N. 372 of 2017)