The Financial Intelligence Analysis Unit (FIAU) would like to bring to the attention of subject persons that a newly dedicated portal dealing with the Cash Restriction policy has been created on the FIAU website. Therein, subject persons may find a list of Frequently Asked Questions (FAQs) on the Use of Cash (Restriction) Regulations, which came into force last March.

These FAQs highlight the main obligations found in the regulation, give examples and provide answers to the most common questions received, with the aim of making as clear as possible the obligations which emanate from the same. The intended audience for the said publication are traders, buyers and notaries and therefore it is not applicable to all subject persons.

FAQs

The Malta Financial Services Authority (“MFSA” or “the Authority”) has become aware of an entity operating under the name of Legit Crypto Option or Citizen Crypto Mining FX (“the Entity”) which has an internet presence at https://007cryptooption.com/index.html. From information available to the MFSA, the Entity claims to be “authorized and regulated by MFSA as a MiFID firm and holds a Category 3 Investment Services Licence”.

The MFSA wishes to alert the public that the Entity is NOT a Maltese registered Company NOR licensed or otherwise authorised by the MFSA to provide any investment services or other financial services which are required to be licensed or otherwise authorised under Maltese law.

Furthermore, information available to the MFSA suggests that the Entity is likely to be a scheme of dubious nature with a high risk of loss of money. The public should therefore refrain from entering into any transactions or otherwise dealing with the above-mentioned company or individual on any matters falling within the parameters of the Investment Services Act, Chapter 370 of the Laws of Malta.

The MFSA would like to remind consumers of financial services not to enter into any financial services transaction unless they have ascertained that the entity with whom the transaction is being made is authorised to provide such services by the MFSA or another reputable financial services regulator. Investors should also be extra cautious when being approached with offers of financial services via unconventional channels such as telephone calls or social media.

A list of entities licensed by the MFSA can be viewed on the official website of the MFSA.

If you are a victim of a scam or think you might be dealing with an unauthorised entity or any other type of financial scam, first of all stop all transactions with the company and contact the MFSA as soon as a suspicion arises.

On 21 February 2020, the Malta Financial Services Authority (‘the MFSA’ or ‘the Authority’) issued a Public Statement in which it noted that Binance is not authorised by the MFSA to operate in the virtual assets sector in Malta. Following the issuance of various recent warnings by competent authorities of other jurisdictions 1, along with an increase in complaints relating to dealing with unlicensed entities, including Binance, the Authority wishes to reiterate that Binance is not licensed nor authorised by the MFSA to conduct any VFA related activities in or from Malta and therefore falls outside the MFSA’s regulatory oversight.

The MFSA reminds consumers to refer to the Authority’s Guidance Note to the Public Regarding Cryptocurrency Scams, which provides consumers with guidance on how to identify scams, and steps to take to avoid falling victim to them.

Furthermore, consumers of financial services and persons transacting in the crypto sector are reminded to be wary of online adverts and on social media promising high returns on investments in cryptocurrency or cryptocurrency-related products. Consumers should not enter into any transactions unless they have ascertained that the entity with whom the transaction is being made is authorised to provide such services by the MFSA or another reputable financial services regulator. Regulated entities are subject to various requirements which aim to offer higher levels of consumer protection to their clients. A list of VFA Service Providers authorised by the MFSA may be found here.

Any queries related to the above should be addressed to VFA@mfsa.mt.

Interpretative Note on Assessing Jurisdictional Risk and the Consequential Application of AML/CFT Obligations in light of Malta’s Grey Listing by the Financial Action Task Force

On 23 June 2021, the Financial Action Task Force (FATF) placed Malta under increased monitoring as part of a process to ensure that it addresses specific remaining deficiencies in its anti-money laundering and countering the financing of terrorism (AML/CFT) regime – a process which is often informally referred to as having been “grey listed”.

Grey listed jurisdictions are to be considered as non-reputable in line with the definition of a “non-reputable jurisdiction” provided for in Regulation 2(1) of the PMLFTR and as further set out in Section 8.1.1 of the Implementing Procedures – Part I. This also means that a number of obligations are triggered, including the application of Enhanced Due Diligence (EDD) measures (Regulation 11(10)), and restrictions of the application of Simplified Due Diligence (SDD) (Section 8.1.3 of the Implementing Procedures – Part I) and of reliance (Regulation 12(2)(a)).

The Financial Intelligence Analysis Unit (FIAU) is issuing this Interpretative Note to guide subject persons as to how they are to adhere to their AML/CFT obligations in light of Malta’s grey listing by the FATF.

Although subject persons are required to assess the reputability and risk of a jurisdiction to better understand the risks they are exposed to, this obligation is not to be interpreted as being also applicable to Maltese subject persons with respect to Malta itself. Therefore, subject persons are not required to assess the jurisdictional risks arising from entertaining business relationships or conducting occasional transactions with Maltese or resident clients.

Therefore, subject persons are not expected, solely because of Malta’s placement under increased monitoring by the FATF, to consider Malta as non-reputable or as a high-risk jurisdiction. This development need not be considered as a trigger to revise or update the Business Risk Assessment or Customer Risk Assessments. Neither should this development, on its own, result in an intensification of AML/CFT measures, including the application of EDD, with respect to Maltese or Maltese resident customers, including bodies corporate and legal arrangements established in Malta or having Maltese beneficial owners. Subject persons may therefore continue to place reliance on other Maltese subject persons, and may equally continue to apply SDD on Maltese or resident customers in situations which are deemed to pose a low risk of ML/FT.

Link to PDF

The FIAU would like to bring to your attention the latest FATF ‘High-Risk Jurisdictions subject to a Call for Action‘ (previously known as ‘Public Statement’) and ‘Jurisdictions under Increased Monitoring’ (previously known as ‘Improving global AML/CFT compliance: on-going process’) documents issued by the FATF on 25 June 2021. A copy of these documents has been uploaded on the FIAU’s website under ‘Country Statements’.

The FATF classifies the jurisdictions included in these documents into different categories, in accordance with the deficiencies present in such jurisdictions and the level of commitment and progress made in addressing such deficiencies.

The categories are the following:

1. Jurisdictions with strategic deficiencies in their regime to counter money laundering, terrorist financing, and financing of proliferation that have failed to meaningfully address their AML/CFT deficiencies and are subject to a call for counter-measures (listed under ‘High-Risk Jurisdictions subject to a Call for Action’). This process is informally referred to as black listing;
2. Jurisdictions that have developed an action plan with the FATF and have made a high-level political commitment to address their AML/CFT deficiencies (listed in the ‘Jurisdictions under Increased Monitoring’). This process is informally referred to as “grey listing”. This document also lists jurisdictions that are no longer subject to the FATF on-going global AML/CFT compliance process, where applicable.

Subject persons are required to implement the measures set out under Regulation 11 of the Prevention of Money Laundering and Funding of Terrorism Regulation S.L. 373.01 (“PMLFTR”) and under Chapter 8 of the FIAU Implementing Procedures Part I, which is legally binding upon all subject persons in terms of Regulation 17 of the PMLFTR.

‘High-Risk Jurisdictions subject to a Call for Action’

Since February 2020, in light of the COVID-19 pandemic, the FATF has paused the review process for countries in the list of High-Risk Jurisdictions subject to a Call for Action, given that they are already subject to the FATF’s call for countermeasures. Therefore, subject persons should refer to the list of ‘High-Risk Jurisdictions subject to a Call for Action’ adopted in February 2020. While the statement may not necessarily reflect the most recent status in Iran and the Democratic People’s Republic of Korea’s AML/CFT regime, the FATF’s call for action on these high-risk jurisdictions remains in effect. Subject persons should refer to Regulation 11(11) of the PMLFTR and apply the enhanced due diligence measures therein.

‘Jurisdictions under Increased Monitoring’

In October 2020, the FATF decided to recommence work, paused due to the COVID-19 pandemic, and to identify new countries with strategic AML/CFT deficiencies and prioritise the review of listed countries with expired or expiring deadlines of action plan items. The following countries had their progress reviewed by the FATF since February 2021: Albania, Barbados, Botswana, Cambodia, Cayman Islands, Ghana, Jamaica, Mauritius, Morocco, Myanmar, Nicaragua, Pakistan, Panama, Uganda, and Zimbabwe. For these countries, updated statements are provided on the FATF website. Burkina Faso and Senegal were given the opportunity and chose to defer reporting due to the pandemic; thus, the statements issued in February 2021 for these jurisdictions are included below, but they may not necessarily reflect the most recent status of the jurisdiction’s AML/CFT regime.
Following review, the FATF now also identifies Haiti, Malta, Philippines, and South Sudan.
The FATF welcomes the progress made by these countries in combating money laundering and terrorist financing, despite the challenges posed by COVID-19.With regards to the enhanced due diligence measures to be applied to the above-mentioned jurisdictions, subject persons should refer to Regulation 11(10) of the Prevention of Money Laundering and Funding of Terrorism Regulations.
Interpretative Note on Assessing Jurisdictional Risk and the Consequential Application of AML/CFT Obligations in light of Malta’s Grey Listing by the Financial Action Task Force
The FIAU has issued an interpretative note to guide subject persons as to how they are to adhere to their AML/CFT obligations in light of Malta being placed under increased monitoring by the FATF. The interpretative note may be downloaded from the ‘Publications & Consultation’ section of the FIAU’s website.

In the event that any further information is required, you may contact the FIAU on queries@fiaumalta.org