By Dr. Frank Anthony Tabone – Associate
Regulation 5 of the Prevention of Money Laundering and Funding of Terrorism (PMLFTR) provides that each subject person shall take necessary measures to be able to identify and assess any risks of money laundering and funding of terrorism which could arise out of their professional activities.
Who are considered as Subject Persons?
The definition of subject person is found in Regulation 2(1) of the PMLFTR. The PMLFTR define subject persons as those persons, legal or natural, ‘exclusively’ when carrying out any activity which is listed under the definition of ‘relevant activity’ and ‘relevant financial business’.
The PMLFTR provides that the term ‘relevant activity’ includes the activity of the following legal and natural persons when acting in the exercise of their professional activities:
- Auditors, External accountants and Tax advisors;
- Real Estate Agents; Notaries and other independent legal professionals when they participate, whether by acting on behalf of and for their client in any financial or real estate transaction or by assisting in the planning or carrying out of transactions for their clients;
- Trust and Company Services providers;
- Nominee Companies holding a warrant under the MFSA Act and acting in relation to dissolved companies registered under the said Act;
- Casino licensees;
- Gaming licensees;
- Any Natural and Legal person trading in goods but only where a transaction involves payment in cash in an amount equal to ten thousand (10,000) euro or more whether the transaction is carried out in a single operation or in several operations which appear to be linked;
- Any natural or legal person trading in works of art or as intermediary;
‘Relevant Financial Business’ is defined in the PMLFTR as:
- Any business of banking carried out by a person or institution as regulated under the provisions of the Banking Act;
- Any activity carried out by a person or institution as regulated under the provision of the Financial Institution Act;
- Any long term insurance business or insurance intermediary activities carried out by an insurance intermediary or by a tied insurance intermediary related to long term insurance business as regulated under the Insurance Distribution Act or the Insurance Business (Captive Insurance Undertaking and Captive Reinsurance Undertakings) Regulations, by a cell company in accordance with the provisions of the Companies Act (Cell Companies Carrying on Business of Insurance) Regulations or by an incorporated cell company and an incorporated cell in accordance with the provisions of the Companies Act (Incorporated Cell Companies Carrying on Business of Insurance) Regulations;
- Investment services carried out by a person or institution as regulated under the provisions of the Investment Service Act; Administration services to collective investment schemes provided by a person or institution as regulated under the Investment Services Act; Collective investment scheme marketing its units or shares, licensed, recognised or notified under the provisions of the Investment Services Act;
- Any activity other than that of a retirement scheme or a retirement fund, carried out in relation to a retirement scheme, by a person or institution as regulated under the Retirement Pensions Act;
- Activities of a regulated market and that of a central securities depository as regulated under the Financial Market Act;
- Safe custody services provided by a person or institution;
- Activities carried out by VFA agents or VFA services carried out by a person or institution as regulated under the Virtual Financial Assets Act;
The PMLFTR further provides that subject persons shall have in place the necessary measures, policies, controls and procedures to address the risks of money laundering and funding of terrorism.
These procedures mainly consist of the following:
- Customer due diligence measures;
- Record keeping procedures;
- Reporting procedures;
- Training and Awareness.
- Risk management measures as provided under regulation 5(5) of the PMLFTR.