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The release of the 2023 National Risk Assessment (NRA) by the National Coordinating Committee (NCC) and the Financial Intelligence Analysis Unit (FIAU) marks a pivotal moment for Malta's financial landscape. Offering a meticulous analysis of the country's vulnerabilities and threats to money laundering(ML), terrorist financing(TF), and other financial crimes, the NRA presents both a roadmap for progress and a stark reminder of areas demanding sustained vigilance.
While the NRA paints a cautiously optimistic picture, with an encouraging decrease in overall money laundering risk compared to 2018, it also unveils persisting challenges that require proactive adaptation from businesses and authorities alike as explored in the subsequent sections:
The persistent misuse of cash, particularly by high-volume CCBs handling over €10,000 in cash transactions, warrants heightened attention. The NRA reports a 23% increase in suspicious transaction reports (STRs) linked to cash between 2020 and 2021, highlighting the critical need for robust CDD and KYC practices. Implementing risk-based transaction monitoring systems potentially equipped with AI-powered anomaly detection, coupled with scenario-based rule sets aligned with the PMLFTR and implementing procedures, can empower CCBs to identify and report suspicious activity efficiently. Grant Thornton Malta's extensive experience in transaction monitoring and data analysis empowers us to assist clients in mitigating the inherent risks associated with transactions.
Companies lacking genuine economic activity pose a significant threat. The NRA emphasizes the importance of identifying beneficial ownership, leveraging data analytics tools to assess company profiles, compare against public registers, and verify business activities across diverse channels. As an example, a 2022 study by Transparency International found that companies offering a high degree of anonymity are involved in 70% of all major corruption cases globally, underlining the urgency of addressing this vulnerability in Malta. Utilizing tools like corporate ownership databases and analysis software, Grant Thornton Malta can assist clients in unveiling complex ownership structures and mitigating associated risks.
The NRA highlights evolving areas of concern, including the gaming industry, tax advisors, high-value goods, and citizenship/residency by investment schemes due to the dynamic nature of such services. These sectors face evolving risk profiles necessitating tailored controls and enhanced due diligence procedures. For instance, the report identifies a 42% increase in STRs linked to the gaming industry between 2020 and 2021, reflecting the potential for misuse within this sector. Grant Thornton Malta, with its specialized industry expertise and understanding of regulatory nuances, can guide these sectors in developing effective compliance strategies tailored to their specific vulnerabilities, leveraging industry-specific data and risk assessments.
The FIAU has strongly encouraged all organizations to strengthen and effectively implement the risk-based approach, particularly concerning the anti-money laundering and counter-financing of terrorism (AML and CFT) business risk assessment (BRA). The FIAU has observed that many BRAs tend to apply identical mitigation measures for both AML and CFT, often neglecting the inclusion of Proliferation Financing (PF) in their assessments. While certain measures can overlap, it is crucial to differentiate the distinct risks posed by money laundering, financing of terrorism as well as proliferation financing. Grant Thornton can assist your organization in crafting, updating, and refining your BRA to comply with industry-specific regulations and tailor it to the diverse services you offer, ensuring a comprehensive and differentiated approach to mitigating these evolving threats.
The 2023 NRA presents a call to action for all stakeholders within Malta's financial ecosystem. Businesses must adapt their compliance strategies, embrace technology, and actively engage in knowledge sharing initiatives. Authorities must continue to refine regulations and foster collaboration with the private sector. By working together, we can leverage the insights from the NRA to create a safer and more transparent financial environment for all.
Grant Thornton Malta goes beyond simply assisting clients in navigating the evolving risk landscape. We advocate for a proactive approach that fosters collaboration and knowledge sharing within the financial ecosystem. Here's how we contribute to building a more secure financial future:
Industry-specific workshops and engagement: We actively participate in and host industry-specific workshops accredited by the Malta Institute of Accountants (MIA), facilitating dialogue and knowledge exchange between stakeholders. This collaborative approach fosters collective understanding of sector-specific risks and promotes the development of shared best practices.
Contact Grant Thornton Malta today to discuss how our expertise can empower your organization
to navigate the evolving risk landscape, adopt a proactive compliant approach, and contribute to building a more secure financial future for Malta.
