The Malta Financial Intelligence Analysis Unit (FIAU) has released its Annual Report for 2023, showcasing significant advancements in its efforts to combat money laundering and terrorist financing. The report highlights the strides made in enhancing resource distribution, improving reporting quality, and enforcing compliance measures.

Increased Reporting and Resource Optimization

In line with its strategy, the FIAU’s Intelligence Analysis Section focused on expanding its workforce and optimizing resource allocation. This approach has been critical in managing the growing workload effectively, both at the national and international levels. The year 2023 saw a 5% increase in suspicious transaction reports (STRs) compared to 2022, reflecting the impact of the FIAU’s guidance and outreach efforts with the private sector.

The FIAU received or generated 9,157 reports in 2023, involving over 16,000 natural persons and more than 5,000 legal entities. This substantial number of reports indicates an improvement in the quality and complexity of the information submitted. Notably, electronic money financial institutions, casino licensees, company service providers, and auditors exhibited significant increases in reporting, with the latter two sectors showing 35% and 28% increases, respectively.

Predominant Predicate Offences and Enhanced Reporting Quality

The primary suspected predicate offences identified in 2023 included fraud, tax evasion, circumvention of targeted financial sanctions, and drug trafficking. The reduction in requests for information to credit and financial institutions underscores the effectiveness of the Central Bank Account Register (CBAR) system. Despite the rise in suspicious reports, there was a downward trend in the number of information requests sent to these institutions, highlighting the system’s robustness.

The continued rise in suspicious reports has necessitated a sustainable risk-based approach. The FIAU has refined its prioritization metrics, enhancing efficiency in handling incoming intelligence and optimizing resource use without compromising quality.

Sector-Specific Reporting Trends

The FIAU’s report provides detailed insights into the reporting trends across various sectors. Remote gaming companies, virtual financial assets (VFAs), credit institutions, and financial institutions dealing with electronic money and payment services all contributed significantly to the total number of reports. Land-based casino licensees, company service providers, auditors, and accounting professionals also maintained substantial reporting levels, reflecting the comprehensive nature of the FIAU’s oversight.

Enforcement and Compliance Measures

In 2023, the FIAU issued 28 administrative measures for anti-money laundering (AML) and counter-financing of terrorism (CFT) breaches identified during supervisory initiatives. The most serious failures were related to customer profiling, transaction monitoring, and scrutiny. The Enforcement Section also took action against entities failing to comply with CBAR reporting requirements, emphasizing the importance of timely and accurate data submission.

To support compliance, the FIAU published guidance notes and FAQs, conducted training sessions, and plans to release an Enforcement Factsheet in early 2024. The Enforcement Section’s efforts included over 40 follow-up meetings with subject persons (SPs) to ensure the implementation of remedial actions. The Compliance Monitoring Committee (CMC) held 35 meetings to discuss various cases, including compliance deficiencies, annual REQ submissions, and remediation efforts.

Strengthening the Culture of Compliance

The FIAU’s proactive engagement with SPs has fostered a culture of compliance, crucial for effective AML/CFT measures. The increase in the Enforcement Section’s staff complement and the introduction of robust control measures reflect the FIAU’s commitment to timely, effective, and proportionate enforcement actions. The CMC’s deliberations on compliance deficiencies, beneficial ownership issues, and other concerns further underscore the comprehensive nature of the FIAU’s oversight.

The FIAU’s 2023 Annual Report highlights significant progress in enhancing the quality and efficiency of AML/CFT efforts in Malta. The strategic focus on resource optimization, improved reporting quality, and stringent enforcement measures has strengthened the FIAU’s ability to combat financial crimes effectively. The ongoing collaboration with the private sector and the continuous refinement of processes demonstrate the FIAU’s commitment to maintaining a high standard of financial intelligence and regulatory compliance.

Read the full report here.