About a year and a half ago, on 1st January 2018, Malta took a step in the right direction and strengthened its anti-money laundering regime by transposing Directive EU 2015/849 of the European Parliament and of the Council into Maltese law. This resulted in S.L. 386.19 which made it obligatory for every company to maintain an updated register of its beneficial owners, with the objective being to increase transparency in business in relation to ownership. Just recently, in July 2019, the Maltese legislators have sought to improve upon the current law through the introduction of Legal Notice 158 of 2019.
The first amendment made is with respect to Article 5 which lists the data that companies are obliged to maintain regarding the beneficial owners of the commercial partnerships, including but not limited to: the name, date of birth, nationality, and the nature and extent of beneficial interest of their share. While the extent of the data required to be collected by the companies has not been modified, the newly introduced legal notice imposes an obligation upon “any natural person who has reasonable cause to believe to be a beneficial owner of a company” to provide the required information without delay. Therefore a natural person being a beneficial owner is also obliged to report on his beneficial interest in a company.
Another change which has been introduced is that as from 1st January 2020, the register of beneficial owners is to be made accessible to any member of the general public; the public’s access shall however be limited to the following: the name, the month and year of birth, the nationality, the country of residence and the extent and nature of the beneficial interest of the beneficial owners of a company. This has effectively done away with the previous requisite of having to prove legitimate interest in order to obtain such information.
A new proviso was also added to the exception of when one is not allowed access to information on the beneficial owners of a company. This proviso clarifies that this exception, which is applicable in cases where the beneficial owner would be exposed to a disproportionate risk, risk of fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation, or where the beneficial owner is a minor or otherwise legally incapable, shall not be applicable to credit institutions and financial institutions, or to “subject persons” as defined in terms of the PMLFTR (Prevention of Money Laundering and Funding of Terrorism Regulations).
Moreover, two entirely new regulations have been introduced to S.L. 386.19. The first one limits the time period during which information on beneficial owners is to be held by the Registrar up to 5 years after the name of the company has been struck off from the Register. The second one then vests the Registrar with the discretion of making enquiries with a commercial partnership when he has reasonable cause to believe that the beneficial ownership information submitted to him in respect of the commercial partnership may not be accurate or up-to date. He may do so by carrying out physical on-site investigation at the premises in order to establish the current beneficial ownership.
Competent authorities like the FIAU, and the PMLFTR subject persons shall also be obliged to report any discrepancies they find between the beneficial information available to them and the beneficial ownership information held in the register of beneficial owners kept by the Registrar. The Registrar must take any appropriate action in order to resolve such discrepancies and until the discrepancies are resolved, the Registrar may make specific mention in the register of beneficial owners of the discrepancies. Significantly, where the Registrar has to update the beneficial ownership information in the register, every officer of the company in question shall be liable to a penalty, whose maximum lies at €10,000.
All in all, these new regulations seek to plug the grey areas that used to exist under S.L. 386.19. While they seek to promote transparency by allowing everyone to have access to information on beneficial owners, they also seek to punish those who attempt to mislead the Authorities by providing incorrect information on the identity of these beneficial owners. They represent another step forward for Malta in strengthening its anti-money laundering system in order to reach the standards as requested by the European Union.