MALTA: UBO compliance more than ‘mere box-ticking exercise’, says MFSA.

As published on newsbook.com.mt, Wednesday 9 March, 2022.

The due diligence of ultimate beneficial ownership of Malta registered companies should be more than a mere “box-ticking exercise”, a Malta Financial Services Authority (MFSA) official said.

Speaking at a webinar, the MFSA’s deputy head of Conduct Supervision Petra Camilleri said that while it is important to ensure compliance with legal requirements, it is fundamental to look beyond the percentages and definitions of what qualified someone as an ultimate beneficial owner (UBO).

After being included on the global money-laundering watchdog’s greylist last year, Malta committed to effectively fight tax crimes by using intelligence to catch tax cheats and better policing of ultimate beneficial ownership rules.

In the action plan agreed with the FATF, Maltese authorities agreed to ensure that ownership information for companies based in Malta is accurate. They also agreed to crack down decisively when information about company ownership is found to be inaccurate.

Moreover, gatekeepers, including those in the private sector, that do not comply with their obligations to obtain accurate and up-to-date beneficial ownership must be sanctioned.

Last week, the FATF said it made the initial determination that Malta has substantially completed its action plan and warrants an on-site visit to verify that the implementation of Malta’s anti-money laundering and counter terrorist financing (AML/CFT) reforms has begun and is being sustained, and that the necessary political commitment remains in place to sustain implementation and improvement in the future.

The webinar organised by consultancy firm Sigma Risk, also included the participation of Carmela Umbro from the Malta Financial Intelligence Analysis Unit (FIAU), Geraldine Spiteri Lucas from the Malta Business Registry (MBR), Stefan-John Barry from the Malta Association of Compliance Officers, Silvio Chetcuti from the Bank of Valletta, and Pekka Dare from the International Compliance Association.

The MBR maintains the UBO register for companies, foundations and associations, while the MFSA is responsible for the UBO register for trusts.

The registers were one of the deliverables resulting from legislation transposing EU directives aimed at fighting money-laundering and the funding of terrorism, and are contemplated in the FATF standards.

One of the ongoing developments of EU legislation is the creation of an EU platform where all the registers of the EU Member States will be interconnected – with Malta being one of the first jurisdictions to reach an advanced stage of this development.

In a statement, the MFS said that while the ultimate beneficial owner had to be identified, the onboarding subject person – such as a corporate service provider or bank – also needed to verify the facts, and to instil in its onboarding officers the need to ask ‘why’, as well as to follow any red flags even when a person purporting to be the beneficial owner, according to the strict definition of a UBO, seemed straightforward and innocuous.

Addressing the webinar, Stefan-John Barry from the Malta Association of Compliance Officers said that control of an entity was much more important than shareholding. “It is all about understanding who you are dealing with,” he said.

Barry also suggested that the register should log the history of the company’s ownership as this might make it easier to spot red flags.

The MBR’s representative Geraldine Spiteri Lucas said that more functionalities were being added to the register, allowing more targeted searches.