Jurgen Dalli

Junior Legal Associate, PKF Malta


FIAU Notice: Publication of Revised Version of the Implementing Procedures (Applicable to all Subject Persons) - Part I

Tuesday 03rd November 2020

A money Laundering Reporting Officer ought to be appointed by a subject person in order to assess transactions. The latter officer ought to have a degree of seniority and command in order to be appointed. Hence, such MLRO ought to occupy a position such as an executive director who does not engage in internal audit functions.

Nonetheless, the MLRO need not be located locally, and can be assigned to someone residing elsewhere as long as the subject person believes such person is capable of conducting his or her duty as MLRO. Such MLRO must be provided with all the relevant information and data in order to allow the latter to properly conduct his or her duty. These have not been tampered with and retain the same structure as before the issued changes.

Nonetheless, FIAU reviews all appointments of such MLRO. Moreover, the FIAU ought to be notified of any new appointment or removal of such MLRO in order to assess whether such elected person has the required skillset to properly conduct his or her duties and obligations.

The updated version introduced by FIAU allow for an appointment of an assistant due to the possibility of an overwhelming volume of work thereby allowing the MLRO to have an active assistant. Such designating employee has the prerogative to request an STR unlike other employees merely assisting the MLRO. Hence, such designated employee must firstly be approved by the MLRO. All these functions have been introduced by virtue of the new changes since there was no such possibilities prior to said amendments.

The FIAU now also requires that reporting should be conducted when there is knowledge or suspicion of a transaction being connected to ML/FT due to the subject person becoming aware of any information or matter that in his or her opinion gives rise to transactions connected to ML/TF. Moreover, the FIAU now also requires that such reporting is also conducted by those who are merely engaged in providing services and not only to subject persons. This was undoubtedly introduced in order to allow the possibility of tackling potential ML/TF transactions from all aspects and allowing any person to report any occurrence of such illicit transactions.

This report ought to be made by the next working day and also must ensure that the MLRO is aware of such knowledge or suspicion. All other employees ought to familiarize themselves with the procedures required to be conducted in the case where there is the absence of the MLRO conversely to the previous version, thereby incorporating anti-ML/TF initiatives with all employees rather than solely the MLRO. Moreover, such reports can be either made electronically or in writing but preferably should be made in the form of a template in order to ensure continuity and consistency in how reports are being submitted thereby avoiding having a different style of reporting for each and every report submitted.

It is important that such report encapsulates all the details showing the concerns of the employee. It is possible that prior to filing of a report, the concern is raised to one’s superior which ought to take priority before raising such concern to the MLRO. This took the place of the team which used to assess such reports prior to the changes introduced. The report no longer requires the inclusion of the information which gave rise to the knowledge or suspicion but information or matter that gave rise to the employee’s concern.

Software solutions could be used by subject persons and where there is further evidence of ML/FT then the MLRO ought to be made aware by the next working day. The new changes allow the employees who detect such suspicious transactions to further scrutinize the case at hand before immediately informing the MLRO of the occurrence, once again reinforcing the importance of having all employees taking an active stance against possible ML/TF cases. It is then the duty of the MLRO to decide if an STR ought to be filed or whether further information is required for such action. In case of the latter, the MLRO may even obtain information from the customer or person subject to such a report.

The collection ought to be made without unreasonable delay. The FIAU has taken the time to elaborate on as to what an unreasonable delay constitutes, unlike the previous version which omitted from taking this initiative. This initiative was mainly adopted in order to limit any ambiguity as to what an undue delay might comprise of, thereby eliminating the possibility of having subject persons resorting to delays to justify their omissions. According to amended guidelines, an unreasonable delay is one where the MLROs are not to conduct investigative work, priority ought to be given to those cases involving substantial funds, MLROs should have the backing of both human and technical resources, a request for intel must be made promptly and the failure to provide information is to raise suspicion.

An STR report may be conducted by other employees apart from the MLRO and the designated employee as long as the other employees are being supervised. Also, the MLRO may seek the assistance of other employees, however, in this case, attention should be given to the sensitivity and confidentiality of the information being disclosed. In the case where not sufficient suspicion is gathered and hence no report is conducted, the MLRO must keep an electronic or manual copy of such an account.

These possibilities where all introduced by virtue of the new changes as prior to this there was no mention of the possibility of having the designated employees or other employees being able to determine where an internal report gives rise to knowledge or suspicion of ML/TF. Moreover, the MLRO is no longer prohibited from seeking assistance from external advisors. One can always notice the importance FIAU is giving to give subject persons and their employees to tackle ML and TF from all angles and utilise all tools at their disposal to uncover those transactions which have an illicit background. These changes have expanded on the importance of internal reporting procedures in order to have a clear and unambiguous set of instructions which elaborate and explain how proper internal reporting ought to be conducted.

Where an external report is being conducted, it is now possible that the suspicion need not arise at that time but could arise later. Any disclosures should be made to the FIAU promptly, meaning that a suspicious transaction report should be submitted on the same day when knowledge or suspicion of ML/FT is considered to subsist by the MLRO. This notwithstanding, the FIAU recognises that in certain more complex cases the compilation and submission of the STR within the same day when the knowledge or suspicion of ML/FT would prove challenging in view of the extensive volume and/or complexity of documentation that may need to be provided. In such instances the MLRO shall ensure that the STR is submitted within the shortest time possible.

All information giving rise to suspicion ought to be given to the FIAU as required by due diligence. STRs are to be submitted to the FIAU in electronic format as may be indicated by the FIAU from time to time using such templates as may be provided. In exceptional cases, when subject persons do not have access to IT systems to submit STRs online, manual submissions are also accepted. In completing this report MLROs should seek to provide as much detail as possible together with the relevant identification and other supporting documentation. It is important to keep in mind that subject persons must file STRs only with the FIAU and with no other supervisory authority. This creates a stronger appreciation to the work being conducted by the FIAU as having such sensitive data and information being shared with other entities might hinder the work of the FIAU. All these measures have been recently adopted by the FIAU as these where not included in the guidelines on the reporting of an STR prior to the recent changes.

Subject persons are required to report also attempted transactions that are deemed suspicious but which never materialise, as by way of example the subject person would have desisted from servicing or on-boarding the customer in question. The recent changes have removed the need to file a report where suspicion does not exist but may arise later.

Subject persons that are payment service providers have additional reporting obligations in terms of Regulation (EU) 2015/847. This Regulation obliges payment service providers that are acting either as a payee’s payment service provider or as an intermediary payment service provider to notify the FIAU about payment service providers that repeatedly fail to include information required in terms of this Regulation with the transfer of funds. Reports ought to be made to compliance@fiumalta.org. External disclosures should ideally be submitted to the FIAU in writing and marked as strictly confidential. Submissions may be sent either via e-mail on whistleblowing@fiumalta.org or in writing, addressed to the FIAU’s Whistleblowing Reports Unit.


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