FIAU & MBR sign agreement to share information on beneficial ownership

The MoU “specifies a mutual commitment between both entities for cooperation and the exchange of information. This will further strengthen the mechanisms by which both entities detect and take measures promptly concerning any possible issues of non-compliance preventing Maltese legal entities from being used for criminal purposes, including money laundering and funding of terrorism”.

The MoU will enable cooperation and sharing of information, particularly for investigations and supervisory coverage. The sharing of information will permit both state entities to compare data and ensure that information submitted by subject persons in respect of beneficial ownership is true and correct. This is in line with Recommendation 24 of the Financial Action Task Force (FATF), which sets out the requirement to strengthen the international standard on beneficial ownership of legal persons to facilitate greater transparency on the ultimate ownership and control of legal persons, providing competent authorities timely access to adequate, accurate and up-to-date beneficial ownership information, and to take more effective action to mitigate the risks of misuse.

The collaboration follows recent legislative amendments in Malta concerning the regulation on register of beneficial owners of trusts and companies, accompanying a hefty increase in pecuniary fines for late or inaccurate beneficial ownership submissions. The collaboration further addresses one of the shortcomings cited by the FATF in its decision to grey-list Malta, that of ensuring ownership information for companies based in Malta is accurate, and that measures are taken by Authorities when information is found to be inaccurate.

From a subject person’s point of view, this is regarded as a positive way forward which should not only start addressing the FATF’s main findings but should also facilitate the availability of information between regulatory authorities, hence leading to more efficient communication with subject persons. A beneficial owner is legally defined as a natural person who ultimately owns or controls, either directly or indirectly, 25% plus one or more of the shares, voting rights or ownership interest of the body corporate. The term ‘beneficial owner’ also caters for instances where a natural person exercises control via other means, or, in the absence of a natural person meeting these criteria, a senior managing official formally appointed within the corporate body to take strategic decisions on the business operations and/or who exercises executive control over the day-to-day business of that entity.

Holding accurate beneficial ownership information is a key component in the fight against money laundering and funding of terrorism. Subject persons should therefore ensure they remain in line with applicable legislation and guidelines issued by the Supervisory Authorities concerning the evaluation and verification of beneficial ownership. Sector-specific policies and procedures are mandatory controls that subject persons should have in place, particularly to assist the relevant employees having access to, or directly verifying, beneficial ownership of corporate customers.

BDO is here to help!

Our AML Compliance Advisory Department can assist subject persons by understanding the business environment in which the organization operates and the risks that may have an impact on its operations. Assistance may be provided mainly through independent reviews and, if required, followed with the updating of the organization’s AML/CFT policies and procedures and AML/CFT-related training.

Contact BDO Malta today to find out more