Malta’s AML/CFT regulations updated with changes to FIAU fine structure

A change to Malta’s money laundering regulations has updated the Financial Intelligence and Analysis Unit’s fine structure, following several legal challenges to administrative fines imposed by the entity.

A new legal notice has introduced several amendments to the Prevention of Money Laundering and Funding of Terrorism Regulations, with the new fine structure now capped at €5 million in cases of serious, repeated or systemic breaches of the law.

This can be increased to a fine of no more than 10 per cent of turnover if the €5 million limit is deemed not to be effective and dissuasive in view of the serious, systemic and repeated nature of the contraventions committed.

Previously, the regulations stipulated that the administrative penalty is capped at €5 million or not more than 10 per cent of a business’s total annual turnover.

Crucially, however, this “total annual turnover” applied only to relevant financial business.

This lead to several appeals being filed against the fines imposed by the FIAU, including in the Constitutional Court, where it is being accused of being judge, jury and executioner, as well as for discrimination and disproportionality.

In December, a €3.7 million fined imposed on Satabank was reduced to €851,000 after ruling that the fines had to be capped at 10 per cent of the bank’s turnover.

However, the FIAU disagreed with this interpretation and attempted to clarify the law further.

The new law, released to the Government Gazette, seemingly clarifies that any percentage-based fine should be applied on a wide basis, including not only a particular company’s annual turnover, but, where the company forms part of or is subsidiary to a group that prepares consolidated annual financial statements, the annual turnover relevant to calculating the fine should be the total annual turnover of the consolidated business.