Investment firms hit with €1.3m in penalties for failing anti-money laundering checks

Investment services firms were hit with €1.3 million in penalties following a supervisory examination by the Financial Intelligence Analysis Unit last year, shouldering the bulk of fines dished out by the agency.

Gaming operators were the second hardest hit sector with the FIAU imposing €791,917 in fines for anti-money laundering control breaches

The figures come from the FIAU annual report for 2020 that was tabled in parliament this afternoon by Finance Minister Clyde Caruana.

In 2020, the FIAU imposed a total of €4.6 million in administrative penalties as it stepped up enforcement and beefed up its resources.

There were nine prosecutions by the police last year, following reports passed on by the FIAU that indicated suspicions of money laundering and tax evasion. In 2018, no prosecutions resulted.

Remote gaming with most suspicious transactions

The report shows that remote gaming companies accounted for almost half of the suspicious transaction reports received by the FIAU last year.

The gaming industry flagged 2,485 suspicious transactions, accounting for 48% of all reports received by the FIAU.

Credit institutions came second with 1,975 STRs, or 38% of all reports filed with the FIAU.

Figures show that the agency received a total of 5,207 STRs last year, a significant 85% increase over 2019.

Of note are 61 STRs flagged by Virtual Financial Asset Agents, which were only regulated at law in 2018.

STRs are investigated by the FIAU and any suspicion of money laundering or other financial crimes is passed on for further investigation to the police.

Intelligence reports

From more than 3,800 cases closed in 2020, the FIAU disseminated more than 4,500 intelligence reports to foreign counterparts, the Tax Commissioner and the police. The Inland Revenue Department recouped €10 million in taxes from reports forwarded to it by the FIAU.

A third of the suspicions flagged last year were related to transaction activity, which could not be explained or was inconsistent with the customer’s known profile. The two major predicate offences resulting from the STRs were tax crimes and fraud.

The FIAU received 250 requests for cooperation from foreign jurisdictions, while the agency sent 741 requests for cooperation.

The majority of requests for cooperation received by the FIAU came from Germany (23%), Italy (16%) and the UK (4%). The majority of requests for assistance sent by the Maltese FIAU were to Italy (8%), the UK (7%), Germany, the US and Switzerland, each totalling 5%.

The report shows that the FIAU sent 4,101 spontaneous intelligence reports to foreign jurisdictions and received 102. Germany emerged as the country which sent and received most such reports.

The FIAU has seen its headcount increase substantially amid other reforms that the agency had to undergo after receiving rebuke three years ago as Malta’s anti-money laundering regime came under international scrutiny.

The agency today employs 102 people and these are expected to increase to 158 by the end of the year. It will be moving into its new offices at Trident Park in Mrieħel later this year.

The agency has spearheaded the introduction of a new electronic system that allows banks to upload on a regular basis all IBAN accounts, including their beneficial owners to the system. This allows the FIAU to automatically trace all Malta-based accounts of an individual or a company without the need to wait for a response from each and every bank.