The Malta Financial Services Authority continued to strengthen its anti money laundering procedures with the publication of Guidance on Politically Exposed Persons (PEPs). This is another step in the MFSA’s efforts to enhance AML supervision and tackle international challenges posed by money laundering in line with international best practice and commitments with international counterparts and supervisory bodies.
The Malta Financial Services Authority (MFSA) expects all persons and entities licensed or otherwise authorised by it who qualify as subject persons under the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR), to comply with their anti-money laundering and combating financing of terrorism (AML/CFT) obligations under the PMLFTR, including the requirement to apply a risk based approach to identifying PEPs and to apply appropriate Enhanced Due Diligence (EDD) measures when dealing with PEPs.
In view of the higher risk attributed to PEPs, the PMLFTR require subject persons to apply EDD measures when they are offering services to PEPs. Family members of PEPs and persons known to be close associates of PEPs shall be subject to the same EDD measures which are applicable to PEPs in view of their similar risk profile.
Subject persons are required to carry out customer due diligence (CDD) measures which are proportionate to the risks posed by the customer. This applies also to PEPs and family members and
persons known to be close associates of PEPs. Not all PEPs pose the same level of risk and the EDD measures to be applied should be proportionate to the risk attributed to a particular PEP.
Finally, the guidance notes outline and provide information on the application of the Enhanced Due Diligence measures to be taken by subject persons in the case of PEPs, family members and close associates. These consist of obtaining senior management approval prior to providing a service to a PEP, family member or close associate; taking adequate measures to establish the source of wealth and funds involved; and conducting enhanced ongoing monitoring.
