Malta Business Registry ramps up activity in fight against financial crime

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The Malta Business Registry is perhaps one of the longest-standing entities within the Maltese public sector, with a history going back as far as five decades since its original inception as part of the trade department. After years of operating in the background, its role and relevance have grown in significance as Malta steps up its efforts to strengthen the reputation of its jurisdiction and join the global fight against financial crime, including money-laundering.

While the list of changes since the Registry’s demerger from the MFSA three years back is quite a long one, probably the biggest culture shock brought about was the implementation of beneficial ownership requirements from registered companies. We sat down with the newly appointed CEO of the Registry, Geraldine Spiteri Lucas, to discuss these developments.

European Union Member States are obliged to have a central register with information on beneficial owners (BO), by virtue of the 4th Anti Money Laundering Directive. Malta chose the Registry to administer this new register, given that it already had basic information available to it. Still, the task to implement beneficial ownership information was significant. “This was the biggest challenge for us over the past four years”, says Spiteri Lucas.

The Registrar: Dr Geraldine Spiteri Lucas

The new CEO, a lawyer by profession, has grown professionally through the ranks of the Registry, giving her invaluable insight of how companies and their stakeholders operate.  Interestingly, the FATF does not even have a specific requirement that a jurisdiction has a central registry in place, though it does encourage this approach and recognises it as being one of the suggested approaches to ensure that accurate BO information is constantly available to authorities. “The FATF refers to this approach as the multi-pronged approach, that is having BO information available at company level, at registry level and at existing information level”, Spiteri Lucas adds, highlighting proudly that Malta has the first fully-populated BO register in the European Union.

Reaching this stage was no easy task, particularly due to a level of hesitance at the onset of this effort from a number of stakeholders. However, over the past months, there has been an evident increase in the realisation that to shore up Malta’s reputation in the financial industry, the availability of such data was essential.

As time passed, practitioners, service providers and other stakeholders learnt to see the responsibility of ensuring accurate data, not as an additional chore but as the basis of strengthening the local jurisdiction and to enhance the fight against the global scourge of financial crime and money-laundering.

Dissuasive measures leading to change in mentality

While at first such measures appeared too taxing, they were crucial in setting in motion a chain of events that encouraged stakeholders to appreciate the importance of transparency.

Appreciating or understanding the role of beneficial owners however is no easy task. There are two facets to the accuracy of beneficial ownership. At face value, there is factual accuracy, such as whether the person indicated indeed exists or holds shares in the company concerned. But things might not always be as they look on paper. This is where, the Registrar explains, there is a degree of interpretative accuracy. While not holding any substantial shareholding, a person could still be considered as a beneficial owner due to familial relations or other means of exercising control over the company.

In this context, companies and their officers have been called to strengthen their efforts to ensure that they know who actually calls the shots, and if need be, legal advice should be sought to ensure that proper filing with the Registrar is made. They need to further ensure that the appointed directors are not simply individuals used to obscure the real shareholders and/or directors. This activity is then complemented by the FIAU’s ongoing work, which supervises subject persons and ensuring that they are digging deep enough in their client’s corporate structures.

While the FATF’s decision to put Malta on the enhanced monitoring procedure served as an additional nudge for these efforts, the MBR’s efforts had intensified far earlier, particularly since demerging from the MFSA in April 2018 and thus achieving a higher degree of autonomy.

While in the past the Registry accepted documents in good faith, it has now been empowered legally to have active verification measures, while at the same time carrying out an increasing number of on-site inspections on companies to check implementation of BO regulations, and conducting inspections, based on a prior risk assessment, to verify that the information is accurate throughout the lifecycle of a company’s existence.

Supporting this transition, the MBR is also investing in a new portal, based on blockchain which facilitates uploading and accessing of documentation, while investing further in ongoing communication with stakeholders to drum home the message in favour of transparency.

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