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The FIAU has issued a notice informing subject persons of a series of amendments to the PMLFTRs. These changes came into force on the 22 May 2020 with the issue of the Legal Notice 214 of 2020.
The amendments were effected following a consultation document issued by the FIAU on the 1st of April 2020 which allowed subject persons to submit their feedback till the 17 April 2020. The changes were implemented with the intent to address the technical compliance shortcomings within the PMLFTRs which were highlighted by the MONEYVAL 5th Round of Mutual Evaluation, bring more clarity to some of the provisions, as well as to enhance the legislative framework in place.
Revisions were made to regulations 8,11, 12, 15 and 21 of the PMLFTRs. Regulations 15 and 21 had significant changes. The FIAU is urging subject persons to familiarize with the law as amended.
The amendments to Regulation 15(3) and Regulation 15(7) affect a revision in the timeframe for the submission of suspicious transaction reports (STRs) including both subject persons and supervisory authorities. The previous 5 working-day submission period is no longer applicable. Both subject persons as well as authorities are now obliged to make “prompt” submissions of STRs to the FIAU.
The FIAU has informed all interested parties that in the coming weeks, the relative changes to Chapter 5 of the Implementing Procedures (Part I) will be published. These will help shed light on the interpretation of the requirement to submit STRs in a prompt manner and best practice.
Furthermore, additional amendments to Regulation 15(3) and Regulation 15(7) clarify that the obligation to submit an STR is also applicable in the instance where there is an attempt to carry out a transaction or activity. As long as the subject person knows, suspects, or has reasonable grounds to suspect that the action is related to proceeds of crime or funding of terrorism.
The amendment of Regulation 21(3), now expressly states that any administrative penalty imposed by the FIAU has to be effective, proportionate and dissuasive.
Through the amendments made to Regulation 21(7), the FIAU is now empowered to impose administrative sanctions on individuals who have a senior managerial role within a subject person and who are found to be responsible (meaning caused or contributed) for AML/CFT breaches committed by that subject person. The cause or contribution can take place either through an act or omission of the individual, which has to be intentional or through negligence (including through the lack of proper oversight of subordinates).
The FIAU has extended the circle of individuals subject to penalties in said cases. The FIAU will be able to impose administrative penalties of not less than €1,000 but not more than €250,000 on individuals who hold directorship or similar positions/functions (which subjectivity was already present in the previous version of the PMLFTRs), individuals holding senior executive management functions, the Money Laundering Reporting Officer, and the officer responsible for AML/CFT compliance within a subject person. The FIAU will also have the power to recommend to any relevant supervisory authority, that the said individual/s be suspended or precluded from exercising any of the said functions within that, or any other subject person even in instances where administrative penalties are not imposed.
Amendments to Regulation 8 (5) specify that in a situation where a transaction cannot be carried forward due to the inability to comply with regulation 7(1) (a) (b) and (c) (referencing to the identification and verification of a customer, identification and verification of UBOs and intended nature of business) if refraining from the transaction “would likely tip-off” the customer, that business shall proceed on condition that a disclosure is lodged immediately to the FIAU.
Amendments to Regulation 11(3) (a) and (d) refer to correspondent relationships with institutions from countries which are not Member States. Subject persons are obliged to ensure that they have sufficient information about the respondent institution. This includes the nature of the respondent’s business, the reputation of the institution, the quality of the supervision the respondent is subject to (which were already an obligation previously) now with added requirement to obtain information whether the respondent institution has been subject to any money laundering or financing of terrorism investigation or regulatory action. Subject persons also need to clearly understand and document the respective responsibilities of each institution for the prevention of money laundering or funding of terrorism.
Furthermore, amendments to Regulation 11(6) (b) refer to the long-term insurance business. In an instance where the beneficiaries, or beneficial owners of the beneficiaries are Politically Exposed Persons giving indication of high risk of money laundering or funding of terrorism, the subject must consider whether to lodge a disclosure with the FIAU.
Amendments to Regulation 12 (2) (b) expand on reliance obligations. The regulation specifies that subject persons seeking reliance are obliged not to rely on third-parties from non-reputable jurisdictions. This has been extended to include jurisdictions which are regarded by the subject person as representing a high risk of money laundering or funding of terrorism.
Speak to our FCC subject matter experts to ensure you remain compliant at all times.