By Dr Geraldine Spiteri Lucas - Chief Executive Officer and Registrar, Malta Business Registry
Last year Malta made a high-level political commitment to work with the FATF and MONEYVAL to strengthen the effectiveness of its AML/CFT regime. One of these commitments was to implement its FATF action plan for ‘Immediate Outcome 5’ by:
‘Continuing to demonstrate that beneficial ownership information is accurate and that, where appropriate, effective, proportionate, and dissuasive sanctions, commensurate with the ML/TF risks, are applied to legal persons if information provided is found to be inaccurate;’
In order for Malta to address this action point appropriately and be able to identify false beneficial owners registered with the Registrar of Companies, Malta carried out a risk assessment on commercial partnerships with specific focus on the concealment of Beneficial Ownership (BO) information. This assessment was mainly carried out with the contribution of the Malta Business Registry (MBR) data together with data provided by the Financial Intelligence Analysis Unit (FIAU), the Malta Financial Services Authority (MFSA), the Office of the Commissioner for Revenue , and the Office of the Attorney General.
This risk assessment was consolidated by the National Coordinating Committee on Combating Money Laundering and the Funding of Terrorism. This interim risk assessment also presents relevant information and indicators on the misuse of Maltese companies for ML/FT purposes which are derived from an analysis of intelligence carried out by the FIAU. This sectorial risk assessment, along with its analysis, are intended to feed into the update of the National Risk Assessment.
It is to be noted that the MBR’s understanding of ML/TF risks are formed based on the analysis of all relevant qualitative and quantitative information. While the MBR takes into account the National Risk Assessment when assessing and understanding ML/TF risks, it still maintains an independent view rather than unduly relying on the said assessment. The MBR also protects privacy interests; however, privacy is not treated as an undue impediment for sharing when it comes to to combatting ML, TF, and other illicit financial activities. The residual risk was examined as a function of the inherent threat and vulnerability, combined with the assessment of the effectiveness of mitigating measures that are in place.
The assessment examines the threats faced by commercial partnerships. Some of the threats identified were false BOs, tax evasion due to incorrect BO, ML/FT due to incorrect BO, unlicensed financial services mediums, and abandoned commercial partnerships. Some of the weaknesses identified in the vulnerabilities risk assessment pertained to:
- the lack of appointment of a Maltese resident director;
- the residence of the persons owning the company, where the senior managing official was disclosed with the Registrar;
- complex structures, where bank accounts are held;
- whether or not an auditor is appointed;
- and the size of the commercial partnerships and the relevant turnover and share capital.
The controls were also analysed. Some of these are in place due to the fact that Malta adopts a multi-pronged approach to verify BOs – from the registration requirements and relevant reporting with the Registrar to the supervision of companies. This is complemented by desktop reviews carried out by MBR’s Compliance Unit and the screening of all involvements, checks on possible eligibility of sanctions and certifying true copies of supporting documents, among other aspects.
As an entity we remain committed to strengthening the strong foundation laid down over the past months.