Skip to main content

Malta’s FATF Grey Listing: FIAU’s Interpretative Note on Assessing Jurisdictional Risk on Guiding Maltese Subject Persons

By July 12, 2021August 3rd, 2023No Comments

On 23 June 2021, the Financial Action Task Force (FATF) classified Malta as a “jurisdiction under increased monitoring,” as part of a process to ensure that it addresses specific deficiencies in its anti-money laundering and countering the financing of terrorism (AML/CFT) governance regime, a process referred to as “grey listing.”  FATF’s classification is also in accordance with Malta’s level of commitment and progress made in addressing such deficiencies.  As a result, a number of obligations are triggered, including the application of Enhanced Due Diligence (EDD) measures, and restrictions of the application of Simplified Due Diligence (SDD) and of reliance in line with the Financial Intelligence Analysis Unit’s Implementing Procedures – Part I.  The FIAU issued an Interpretative Note to guide Maltese subject persons in complying with their AML/CFT obligations in light of these latest developments.

Subject persons are required to assess the reputability and risk of a jurisdiction to better understand the risks they are being exposed to through their respective business relationships and occasional transactions.  However, the FIAU specified that this obligation is not to be interpreted as being also applicable to Maltese subject persons with respect to Malta itself.  Concretely, Maltese subject persons are not required to assess the jurisdictional risks arising from business relationships or occasional transactions with fellow Maltese or resident clients while subject persons are also not expected to consider Malta as a “non-reputable or high-risk jurisdiction” solely because of its placement under increased monitoring.

Furthermore, Malta’s placement under increased monitoring by the FATF need not be considered as a trigger to revise or update subject persons’ Business Risk Assessments or Customer Risk Assessments and should not on its own lead to an intensification of AML/CFT measures with respect to Maltese or Maltese resident customers.  This covers bodies corporate and legal arrangements established in Malta or having Maltese beneficial owners.  Therefore, Maltese subject persons may continue to place reliance on other Maltese subject persons, continue to apply SDD on Maltese or resident customers when Customer Risk Assessments determine that customers pose a low risk of ML/FT.