Money laundering is the illegal process of concealing the origins of money obtained illegally by passing it through a multifaceted sequence of bank transfers or commercial transactions. The overall scheme of this process returns the money to the launderer in an obscure and indirect way (Oxford English Dictionary).

Malta’s commitment to the fight against money laundering and the funding of terrorism is decisively engrained in the country’s interest in conserving its role as a reputable financial services centre and strengthened by the country’s status as a full member of the European Union.

The Maltese Prevention of Money Laundering Act (Chapter 373 of the Laws of Malta) empowers and obliges financial institutions and other professionals, identified as “Subject Persons”, to identify and verify potential clients, establish risk-based controls, carry out periodic reviews throughout the life-time of the relationship and report suspicious activities. Moreover, Malta has also implemented the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR), which are modelled on the European Union’s Third Directive on the prevention of money laundering.

Material Elements of the Offence

The substantial element of the offence must entail any of the following actions, and must be accompanied by the associated intentional element as specified below:

• Converting or transferring property, with the knowledge that such property is derived from criminal activity or partaking in such activity, for the purpose of concealing or disguising the source of the property or assisting a person tangled in criminal activity;
• Concealing or disguising the factual nature, source, location, disposition, movement, right over or the ownership of property with the knowledge that such property is resultant from criminal activity or any participation therein;
• Attaining property with the knowledge that such property is derived from criminal activity or any participation therein;
• Retaining without reasonable excuse property with the knowledge that such property is derived from criminal activity or any participation therein;
• Any attempt at or complicity in any of the above matters or activities.

Subject Persons

Subject persons are those entities, sole practitioners or firms whom the Regulations impose several duties, such as identification and customer due diligence, internal record retention, internal and external reporting and employee instruction and training. These subject persons include auditors, accountants, tax advisers, real estate agents, notaries/lawyers, fiduciary service providers etc.

FIAU

The Financial Intelligence Analysis Unit is a government agency established under the Prevention of Money Laundering Act.  It is the entity responsible for the collection, collation, processing, analysis and dissemination of information with a view to combating money laundering and the funding of terrorism.  The Unit is also responsible for monitoring compliance with the relevant legislative provisions.

Attorney General

The AG may apply to the Criminal Court for such Order if he has sensible cause to suspect that a person is guilty of a money laundering offence.

Penalties

A person found guilty of such an offence is liable, on conviction, to a fine not exceeding €2,330,000, or to imprisonment for a period not exceeding 14 years, or to both such fine and imprisonment. Non- compliance with the responsibilities levied on subject persons in the Regulations entails a fine not exceeding €46,600 or to imprisonment for a period not exceeding 2 years, or to both such fine and imprisonment.

Orders

There are five types of orders which may be issued on account of a money laundering investigation, being:

1. 1.    Investigation Order
2. 2.    Attachment Order
3. 3.    Monitoring Order
4. 4.    Freezing Order
5. 5.    Confiscation Order

A flaw in the system stems from the fact that there isn’t adequate information available for service providers to keep track of which entities/persons have been so hit by any such orders or whether they are still in force. This could be possibly challenging and could lead to situations where services are provided to persons who are or have been suspected of money laundering.