False invoices, chip-dumping used to launder money through Malta

The Financial Analysis Intelligence Unit will be analysing why financial institutions like money remittance companies have reported less suspicious financial transactions than in previous years.

The anti-money laundering unit, which is run by the police and the Attorney General, is tasked with handling so called STRs (suspicious transactions reports) from banks, legal professionals, gaming companies, casinos, or real estate agencies, when large amounts of money and their source cannot be accounted for.

But in 2015, the FIAU said that the only sector where the number of STRs had decreased – against the general trend of annual increases – was that of financial institutions, down to 11 reports in 2015 from 18 in 2014.

In particular, the FIAU said their level of reporting “remained worryingly low” and that it would investigate why this level of reporting remained low and take measures to rectify it.

In fact, a general increase in STR submissions was noted across practically all categories, a 21% increase over 2014 that mainly came from credit institutions and banks – in total 281 reports.

Of the 136 STRs from credit institutions, 105 were led by the seven core domestic banks, compared to 77 STRs in 2014, predominantly involving foreign, legal and natural persons having no connections to any Maltese natural or legal persons. 

But there was a significant increase in STRs from investment services licensees and remote gaming companies. 

The 281 STRs included reports on 602 persons, of which 70% were either non-Maltese nationals or foreign companies. 

Cases actually forwarded to the police amounted to just 20 reports following a determination of reasonable suspicion of money laundering.

The use of Maltese-registered companies featured prevalently in suspicious transactions that used Maltese bank accounts. Investment services providers were used to potentially disguise the origin of criminal proceeds: two such cases were referred to the police where investment services providers were used by people allegedly involved in organised crime groups to launder funds of illicit origin. 

Suspicions involving domestic bank accounts and Maltese companies used by foreign nationals were linked to international networks laundering the proceeds of fraud, VAT carousel schemes, corruption, misappropriation and organised crime. Once laundered, the proceeds of these crimes were suspected to have been subsequently transferred to foreign bank accounts on the presentation of fabricated invoices and false information.

In one case, the FIAU said a foreign politically exposed person (PEP) had made transfers to a Maltese bank account using invoices “that clearly appeared to be fabricated”. 

One of the predominant ways of using the remote gaming industry to launder money was chip dumping – the intentional loss of chips to another player, especially on a virtual poker table, the FIAU said.

In one case, considerable amounts of cash denominated in high-value notes were exchanged into gaming chips in a casino and then changed back into lower-value notes in what appeared to be an attempt to break down the proceeds of crime into more usable denominations.

In a separate case that raised the possibility of terrorist financing, the FIAU noted that a number of money remittances were made in favour of a Maltese national, who then withdrew the cash using ATMs and cashier facilities, before transferring the funds again to various individuals abroad using money service bureaus.