Compliance with anti-money laundering and combatting of financing of terrorism legislation is not just a cost without benefit, it can allow businesses to protect themselves, and helps avoid damage to Malta’s reputation, reiterated officials from the Financial Intelligence Analysis Unit (FIAU) on Wednesday.

Speaking as part of this week’s episode of The Boardroom on WhosWho.mt, senior officials at the Unit, including Deputy Director Albert Zammit, explained that an increasing number of subject persons in Malta are choosing to exceed mandatory investments in compliance to protect themselves from falling victim to financial crime.

“It pays to be compliant”, Mr Zammit said, “not only because of the legal risks of being non-compliant, but also for businesses to protect themselves [and] their reputation and to ensure they don’t get embroiled in a large scale money laundering operation for example”.

There are, naturally, significant costs associated with compliance, he said. However, the FIAU is trying to make it clear to businesses that these costs are investments rather than simple expenses.

To help reduce these costs, “we need to strike the right balance with compliance”, he said, and everyone needs to adopt risk-based approaches, not just the supervisory bodies, but subject persons and banks, for example.

This is because there are instances where excessive caution has had negative impacts on the local business communities, for example with institutions carrying out excessive due diligence checks on customers.

Risk-based approaches, which involve the creation of individual risk profiles to prioritise the assignment of resources can help minimise this, Mr Zammit said.

Discussing the FIAU’s transition to a risk-based approach, Consuela Marzi, a Senior Manager in the organisation’s Supervision sector, explained that the organisation’s transition to this approach is in line with what is happening abroad, after being the change was initiated by the international Financial Action Task Force.

As Malta’s position as a leading international business hub has been solidified, the FIAU has come to the forefront of attention, standing as one of the nation’s primary lines of defence in the war against money laundering and the financing of terrorism.

With the organisation facing increasing scrutiny in recent years following Malta’s shock failings in a 2019 Moneyval assessment, it has seen itself overhauled, and its operations dramatically expanded.

As part of this ongoing expansion, it says it plans to increase its headcount to 150 by 2022.

Reflecting in a report, titled “Malta Financial Services Oversight”, the authority says that alongside the increase in staff numbers, it will continue to invest in IT tools, resources, and staff training to meet its commitments, and expand the operations that it says “are already bearing fruit”.

“The outcomes of this investment have been clearly reflected in both supervision and enforcement activities”, the FIAU suggests in the report.

In 2020, the FIAU conducted “numerous administrative measures including, among others, 20 administrative penalties from compliance reviews to the tune of €3.8 million across all supervised subject persons”.

The organisation has also recently released its Business Risk Assessment report, which provides an analysis of business risk assessment practices in Malta.


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