AS A RESULT OF THE RECENT AMENDMENTS TO THE PREVENTION OF MONEY LAUNDERING ACT (PMLA), AND TO THE PREVENTION OF MONEY LAUNDERING AND FUNDING OF TERRORISM REGULATIONS (PMLFTR), THE CURRENT EU ANTI MONEY LAUNDERING DIRECTIVE HAS NOW BEEN FULLY TRANSPOSED INTO OUR LEGISLATIVE FRAMEWORK.

There are a number of changes made and this article will mainly focus on just a few which may be more of interest to the accountancy profession. The definition of occasional transaction is now also including the ‘two new entries’.

These are:
(i) the provision, by real estate agents, of intermediation services in relation to the letting of immovable property where the monthly rent amounts to ten thousand euro (€10,000) or more and

(ii) the storage, by free ports, of works of art the value of which is equal to or exceeds ten thousand euro (€10,000).

However, the main interest for the accountant is the change in the description of occasional transaction regarding tax. Under the old regime occasional transactions included ‘the provision of tax advice’. In terms of the new regulations, this has now been changed to ‘the provision of material aid, assistance or advice on tax matters.’ My assessment is that there is a need of a wide debate in order to define what is ‘material aid’ and what constitute ‘assistance or advice on tax matters.’

Another change in the regulations, is that when on boarding a Malta registered company as a client, the Subject Person is now obliged that the due diligence documentation should also include proof that the beneficial owners are included in the beneficial owners register. This should not create any issues as details from the MBR are easily available at a fee of five Euro.
The biggest challenge is however that the new regulations are also extending this requirement to those jurisdictions where the beneficial owners register is publicly available. In other words, this means that if the client being onboarded is a company registered in say Hungary, then there is the obligation to get proof that the beneficial ownership information has been duly registered with the Hungarian authority. This may create quite a challenge as there may be language issues.

The same applies if the client is a trust or a similar legal arrangement. Again, for a trust incorporated in Malta, the process is quite smooth as such information would be available to the MLRO upon request, provided that such request is supported by acceptable evidence why such information is being asked. Once again for foreign trusts, it may not be that simple. On the other hand, the regulations are only asking for ‘proof’. Does this mean that a declaration by the foreign trustees, confirming the names of the beneficiaries and also accompanied by a declaration that they have submitted the names of the beneficiaries to be included in the register of the trust beneficiaries, be considered as being sufficient proof?

Regulation 11 of the PMLFTR is now also listing additional obligations when there is a business relationship or an occasional transaction dealing with a non reputable jurisdiction. Subject Persons should seriously take note of this amendment (paragraph 10 of the regulation), as the new requirements are very onerous.

One of the amendments of the PMLA is that the name and shame regime has been increased to Euro 50,000. This means that whereas before the FIAU was obliged by law to name any subject person who has been fined (administrative penalty) over Euro 10,000, this threshold has now increased to Euro 50,000. The FIAU will publish all fines but will only name those over Euro 50,000. In 2019 there was only one administrative penalty published for Euro 40,000. Does this mean that now we will expect more?

Victor is a co-founder and director of Inscope Limited, an AML-CFT software development company.