PREVENTION OF MONEY LAUNDERING _g S.L.373.01 1
SUBSIDIARY LEGISLATION 373.01
PREVENTION OF MONEY LAUNDERING 
REGULATIONS
12th August, 2003
 LEGAL NOTICE 199 of 2003.
Title.
Laundering Regulations.
Interpretation.
''applicant for business'' means a legal or natural person, whether
acting as principal or agent, who seeks to form a business
relationship, or carry out a transaction with a person who is acting
in the course of either relevant financial business or relevant
activity;
''business relationship'' means any arrangement between two or
more persons, at least one of which is acting in the course of either
relevant financial business or relevant activity, where -
( a ) the purpose or effect of the arrangement is to facilitate
a frequent or habitual course of dealings between the
persons concerned; and
( b ) the total amount of any payment or payments to be
made by any person to any other in the course of that
arrangement is not known or capable of being
ascertained at the time the arrangement is made;
''Case 1'' (negotiations) means any case where negotiations take
place between the parties with a view to the formation of a business
relationship between them;
''Case 2'' (suspicions) means any case where, in respect of any
transaction, any person handling the transaction knows or suspects
that the applicant for business is, or may be, engaged in money
laundering, or that the transaction is carried out on behalf of
another person who is, or may be, engaged in money laundering;
''Case 3'' (single large transaction) means any case where, in
respect of any transaction, payment is to be made by or to the
applicant for business of the amount of five thousand Maltese liri
(Lm 5,000) or more;
''Case 4'' (series of transactions) means any case where, in
respect of two or more transactions -
( a ) it appears at the outset to a person dealing with any of
the transactions that -
(i) the transactions are carried out by the same
person and are of a similar character, and
(ii) the total amount, in respect of all of the
transactions, which is payable by or to the
applicant for business is five thousand Maltese
2 _g S.L.373.01 PREVENTION OF MONEY LAUNDERING
liri (Lm 5,000) or more; or
( b ) at any later stage it appears to such a person that the
provisions of paragraph ( a )(i) and (ii) are satisfied;
Cap. 370.
''collective investment scheme'', ''participants'' and ''units'' have
the same meanings as are assigned to these terms respectively in
the Investment Services Act;
Cap. 373.
''criminal activity'' has the same meaning as is assigned to the
term in the Prevention of Money Laundering Act;
''established business relationship'' means a business relationship
formed by a person acting in the course of either relevant financial
business or relevant activity where that person has obtained, under
procedures maintained by him in accordance with the provisions of
these regulations, satisfactory evidence of the identity of the person
who, in relation to the formation of that business relationship, was
the applicant for business;
Cap. 373.
''Financial Intelligence Analysis Unit'' has the same meaning as
is assigned to the term in the Prevention of Money Laundering Act;
Cap. 386.
''group of companies'' has the same meaning as is assigned to the
term ''group company'' by the Companies Act so however that, for
the purposes of these regulations, it shall include also any other
body corporate registered or operating in a reputable jurisdiction
and forming part of the group of companies and which is further
licensed or otherwise authorised under the laws of that jurisdiction
to carry out any activity equivalent either to relevant financial
business or to relevant activity;
Cap. 373.
''money laundering'' means the doing of any act which constitutes
an offence under the Prevention of Money Laundering Act, or in
the case of an act committed otherwise than in Malta, would
constitute such an offence if done in Malta;
''one-off transaction'' means any transaction (including the
opening of an account and a safe custody facility) other than a
transaction carried out in the exercise of an established business
relationship formed by a person acting either in the course of
relevant financial business or in the course of relevant activity;
''relevant financial business'' means -
Cap. 371.
( a ) any business of banking or any business of an
electronic money institution, carried on by a person or
institution who is for the time being authorised, or
required to be authorised, under the provisions of the
Banking Act;
Cap. 376.
( b ) any activity carried on by a person or institution who
is for the time being authorised, or required to be
authorised, under the provisions of the Financial
Institutions Act;
Cap. 403.
Cap. 404.
( c ) life assurance business carried on by a person or
institution who is for the time being authorised, or
required to be authorised, under the provisions of the
Insurance Business Act or the Insurance Brokers and
Other Intermediaries Act;
PREVENTION OF MONEY LAUNDERING _g S.L.373.01 3
Cap. 370.
( d ) investment business carried on by a person or
institution licensed, or required to be licensed, under
the provisions of the Investment Services Act;
Cap. 370.
( e ) a collective investment scheme licensed, or required to
be licensed, under the provisions of the Investment
Services Act;
Cap. 370.
( f ) any activity carried on by a person pursuant to a valid
stockbroker’s licence issued under the provisions of
the Investment Services Act;
Cap. 345.
( g ) any activity carried on by a person pursuant to a valid
licence of a Recognised Investment Exchange issued
under the provisions of the Financial Markets Act;
( h ) any activity which is associated with a business falling
within paragraphs ( a ) to ( g );
''relevant activity'' means the activity of the following legal or
natural persons when acting in the exercise of their profession:
( a ) auditors, external accountants and tax advisors;
( b ) real estate agents;
( c ) notaries and other independent legal professionals in
relation to assisting in the planning or execution of
transactions for their clients concerning the:
(i) buying and selling of real property or business
entities;
Cap. 370.
(ii) managing of client money, securities or other
assets, unless the activity is undertaken under a
licence issued under the provisions of the
Investment Services Act;
(iii) opening or management of bank, savings or
securities accounts;
(iv) organisation of contributions necessary for the
creation, operation or management of
companies;
(v) creation, operation or management of trusts,
companies or similar structures;
or by acting on behalf of and for their client in any
financial or real estate transaction:
Provided that where a natural person undertakes
any of the above professional activities as an employee
of a legal person, the obligations under these
regulations shall apply to that legal person;
Cap. 330.
( d ) nominee companies and licensed nominees acting as
nominee shareholders or trustees, authorised under the
Malta Financial Services Authority Act;
( e ) dealers in precious stones or metals, or works of art or
similar goods and auctioneers whenever payment is
made in cash in an amount equal to five thousand
Maltese liri (Lm 5,000) or more;
( f ) any activity which is associated with an activity falling
4 _g S.L.373.01 PREVENTION OF MONEY LAUNDERING
within paragraphs ( a ) to ( e );
''reputable jurisdiction'' means any country having appropriate
legislative measures for the prevention of money laundering, taking
into account that countryís membership of, or any declaration or
accreditation by, any international organisation recognised as
laying down internationally accepted standards for the prevention
of money laundering;
''subject person'' means any legal or natural person carrying out
either relevant financial business or relevant activity;
''supervisory authority'' means -
( a ) the Central Bank of Malta;
( b ) the Malta Financial Services Authority;
Cap. 371.
Cap. 376.
Cap. 370.
Cap. 403.
Cap. 404.
( c ) the competent authority nominated under the Banking
Act, the Financial Institutions Act, the Investment
Services Act, the Insurance Business Act, or the
Insurance Brokers and Other Intermediaries Act;
Cap. 168.
Cap. 386.
( d ) the Registrar of Companies acting under article 193 of
the Commercial Partnerships Ordinance and under
articles 403 to 423 of the Companies Act;
Cap. 403.
( e ) an inspector appointed under article 30 of the
Insurance Business Act;
Cap. 371.
( f ) a person appointed under article 20 or article 22 of the
Banking Act;
Cap. 376.
( g ) a person appointed under article 14 or article 15 of the
Financial Institutions Act;
Cap. 370.
( h ) a person appointed under article 13 or article 14 of the
Investment Services Act;
Cap. 438.
Cap. 400.
S.L. 400.01
( i ) the Lotteries and Gaming Authority acting under the
Lotteries and Other Games Act and the Gaming Act,
the Gaming Act Regulations, and any regulations
issued thereunder; and
Cap. 438. ( j ) an inspector appointed under article 17 of the Lotteries
and Other Games Act.
Systems and 
training to prevent 
money laundering.
3. (1) No subject person shall form a business relationship or
carry out any one-off transaction with an applicant for business
unless that subject person:
( a ) maintains the following procedures established in
relation to that business:
(i) identification procedures in accordance with the
provisions of these regulations;
(ii) record-keeping procedures in accordance with
the provisions of these regulations; and
(iii) internal reporting procedures in accordance with
the provisions of regulation 10;
( b ) takes appropriate measures from time to time for the
purposes of making employees aware of:
PREVENTION OF MONEY LAUNDERING _g S.L.373.01 5
(i) the procedures under the provision of paragraph
( a ), and any other relevant policies that are
maintained by him; and
Cap. 373.
Laundering Act, and of these regulations; and
( c ) provides employees from time to time with training in
the recognition and handling of transactions carried
out by, or on behalf of, any person who is, or appears
to be, engaged in money laundering.
(2) Any subject person who contravenes the provisions of this
regulation shall be guilty of an offence and shall, on conviction, be
liable to a fine ( multa ) not exceeding twenty thousand Maltese liri
(Lm 20,000) or to imprisonment for a term not exceeding two
years, or to both such fine and imprisonment.
(3) In determining whether a subject person has complied with
any of the requirements of subregulation (1), a court shall consider:
( a ) any relevant guidance or procedures issued, approved
or adopted by the Financial Intelligence Analysis Unit
with the concurrence of a supervisory authority, which
applies to that subject person; and
( b ) in a case where no guidance or procedures falling
within the provisions of paragraph ( a ) apply, any other
relevant guidance issued by a body which regulates, or
is representative of, any trade, profession, business or
employment carried on by that subject person.
(4) In proceedings against any subject person for an offence
against this regulation, it shall be a defence for that person to show
that he took all reasonable steps and exercised all due diligence to
avoid the commission of the offence.
(5) In this regulation, the term ''employees'' means employees
whose duties include the handling of either relevant financial
business or relevant activity.
Offences by bodies 
corporate and 
unincorporated 
associations.
4. Where an offence against the provisions of regulation 3 is
committed by a body or other association of persons, be it
corporate or unincorporate, every person who at the time of the
commission of the offence was a director, manager, secretary or
other similar officer of such body or association, or was purporting
to act in any such capacity, shall be guilty of that offence unless he
proves that the offence was committed without his knowledge and
that he exercised all due diligence to prevent the commission of the
offence.
Identification 
procedures; 
business 
relationships and 
transactions.
5. (1) Subject to the provisions of regulations 6 and 8,
identification procedures maintained by a subject person shall be
deemed to be in accordance with the provisions of this regulation if
in Cases 1 to 4 they require, as soon as it is reasonably practicable
after contact is first made between that subject person and an
applicant for business concerning any particular business
relationship or one-off transaction -
( a ) the production by the applicant for business of
6 _g S.L.373.01 PREVENTION OF MONEY LAUNDERING
satisfactory evidence of his identity; or
( b ) the taking of such measures specified in the
procedures as will produce such evidence of identity
and where that evidence is not obtained, the
procedures shall require that the business in question
shall not proceed or shall proceed only in accordance
with any direction made by the Financial Intelligence
Analysis Unit.
Without prejudice to the above, where to refrain in such
manner is impossible or is likely to frustrate efforts of investigating
a suspected money laundering operation that business shall proceed
on condition that a report is immediately lodged with the Financial
Intelligence Analysis Unit in accordance with regulation 11.
(2) For the purposes of these regulations, evidence of identity
shall be deemed to be satisfactory if -
( a ) it is reasonably capable of establishing that the
applicant is the person he claims to be; and
( b ) the person who obtains the evidence is satisfied, in
accordance with the established internal procedures
and policies of the business concerned, that it does
establish that fact.
(3) In determining for the purposes of these regulations what is
reasonably practicable in relation to any particular business
relationship or one-off transaction, all the circumstances shall be
taken into account including, in particular:
( a ) the nature of the business relationship or transaction
concerned such that a subject person is able to
establish the business profile of the applicant for
business;
( b ) whether it is possible to obtain the evidence before
commitments are entered into between the parties or
before money is exchanged; and
( c ) in relation to Case 3 (single large transaction) or Case
4 (series of transactions), the earliest stage at which
there are reasonable grounds for presuming that the
total amount payable by an applicant for business is
five thousand Maltese liri (Lm 5,000) or more.
(4) Where, following the identification procedures under these
regulations, in an established business relationship doubts have
arisen or changes have occurred in the circumstances surrounding
that established business relationship, then the identification
process shall be repeated in accordance with these regulations.
(5) Subject persons shall examine with special attention any
complex or large transactions and any transactions which are
particularly likely, by their very nature, to be related to money
laundering.
Identification 
procedures: 
payment by post, 
etc.
6. (1) Where an applicant for business would, apart from this
subregulation, be required under identification procedures in
accordance with the provisions of regulation 5, to produce evidence
PREVENTION OF MONEY LAUNDERING _g S.L.373.01 7
of his identity, but -
( a ) the circumstances are such that a payment is to be
made by the applicant for business; and
( b ) it is reasonable in all the circumstances -
(i) for the payment to be sent by post or by any
electronic means which is effective to transfer
funds; or
(ii) for the details of the payment to be sent by post,
to be given on the telephone or to be given by
any other electronic means;
Cap. 371.
subject to the provisions of subregulation (3), the fact that the
payment is debited from an account held in the applicant’s name at
a credit institution within the meaning of article 2(1) of the
Banking Act, shall be capable of constituting the required evidence
of identity.
(2) For the purposes of subregulation (1)( b ), it shall be
immaterial whether the payment or its details are sent or given to a
subject person or to some other person acting on his behalf.
(3) The provisions of subregulation (1) shall not have effect to
the extent that:
( a ) Case 2 (suspicion) applies to the circumstances of the
payment; or
Cap. 371.
( b ) the payment is made by any person in the course of
opening an account with a credit institution within the
meaning of article 2(1) of the Banking Act.
Identification 
procedures: 
transactions on 
behalf of another.
7. (1) Subject to the exemptions provided in regulation 8, the
provisions of this regulation apply in relation to a subject person
where an applicant for business is or appears to be acting otherwise
than as principal.
(2) In all identification procedures maintained by a subject
person it shall be deemed to be in accordance with this regulation
if, in a case to which the provisions of subregulation (1) apply:
( a ) they require reasonable measures to be taken for the
purpose of establishing the identity of any person on
whose behalf the applicant for business is acting in
addition to identification of the applicant for business;
and
( b ) they require that, where such measures cannot be
taken, the business relationship or one-off transaction
shall only proceed as provided for under regulation
5(1).
(3) In determining, for the purposes of subregulation (2), what
constitutes reasonable measures in any particular case, regard shall
be had to best practice which, for the time being, is followed in the
relevant field of business and is applicable to the circumstances of
the case.
(4) For the purposes of subregulation (2), it shall be reasonable
for a subject person to obtain from the applicant for business a
8 _g S.L.373.01 PREVENTION OF MONEY LAUNDERING
written declaration, accompanied by the relevant supporting
documentary evidence, in which he discloses satisfactory
identification of his principal:
Provided that -
(i) where the principal is a body corporate,
satisfactory identification shall also be disclosed
of all directors and of all qualifying
shareholders. For the purpose of this regulation
a qualifying shareholding means a shareholding
of 10% or more of the equity shares of the
principal;
(ii) the applicant for business is duly authorised in
writing by the principal.
(5) ( a ) Where the applicant for business is acting on behalf of
a body corporate, the shareholding of which includes a
qualifying shareholding as defined in subregulation (4)
held under a nominee, trustee or other fiduciary
arrangement, a subject person shall not undertake any
business with or provide any service to such applicant
for business unless that applicant for business
discloses the identity of the beneficial owners or
beneficiaries of the qualifying shareholding and
produces the relevant authenticated identification
documentation. Such disclosure procedures shall also
apply where there are changes in beneficial ownership
or beneficiaries.
( b ) Where the applicant for business is acting as a nominee
shareholder, trustee or under any other fiduciary
arrangement, a subject person shall not undertake any
business with or provide any service to such applicant
for business unless that applicant for business
discloses the identity of the beneficial owners of the
shares held by him or of the trust beneficiaries or of his
principal, as the case may be, and produces the
relevant authenticated identification documentation.
Such disclosure procedures shall also apply where
there are changes in beneficial ownership,
beneficiaries or principal.
(6) An applicant for business who makes a false declaration for
the purposes of this regulation shall be guilty of an offence and
shall be liable, on conviction, to a fine ( multa ) not exceeding
twenty thousand Maltese liri (Lm 20,000) or to imprisonment for a
term not exceeding two years or to both such fine and
imprisonment.
Identification 
procedures, 
exemptions.
8. (1) Subject to the provisions of subregulation (2),
identification procedures under the provisions of these regulations
shall not require any steps to be taken to obtain evidence of any
person’s identity -
( a ) where there are reasonable grounds for believing that
the applicant for business is a person who is authorised
PREVENTION OF MONEY LAUNDERING _g S.L.373.01 9
to undertake relevant financial business or is a person
who is licensed or otherwise authorised under the laws
of a reputable jurisdiction to carry out any activity
which is equivalent to relevant financial business;
( b ) where any transaction is carried out with a third party
pursuant to an introduction effected by a person in
respect of whom there are reasonable grounds for
believing that that person is authorised to undertake
relevant financial business or is a person who is
licensed or otherwise authorised under the laws of a
reputable jurisdiction to carry out any activity which is
equivalent to relevant financial business, and who
provides the name of the third party and gives an
assurance that he has obtained evidence as to the
identity of the third party:
Provided that the subject person shall ensure that
supporting identification documentation is available or
may be made available if required by the relevant
authorities;
( c ) in relation to life insurance business in respect of
which a premium is payable in one instalment of an
amount not exceeding one thousand Maltese liri (Lm
1,000);
( d ) in relation to life insurance business in respect of
which a periodic premium is payable and where the
total payable in respect of any calendar year does not
exceed five hundred Maltese liri (Lm 500); and
( e ) in relation to insurance policies in respect of pension
schemes taken out by virtue of a contract of
employment or the insured’s occupation:
Provided that such policies contain no surrender
clause and may not be used as collateral for a loan.
(2) Nothing in this regulation contained shall apply in
circumstances falling within Case 2 (suspicion).
Record-keeping 
procedures.
9. (1) Record-keeping procedures maintained by a subject
person shall be deemed to be in accordance with the provisions of
this regulation if they make provision for the keeping, for the
prescribed period, of the following records:
( a ) in relation to any business relationship that is formed
or a one-off transaction that is carried out, a record
indicating the nature of the evidence of a person’s
identity obtained under procedures maintained in
accordance with these regulations, comprising a copy
of the evidence of identity and providing sufficient
information to enable the details as to a person’s
identity contained in the relevant evidence to be re-
obtained;
( b ) a record containing details relating to all transactions
carried out by that person in the course of an
established business relationship.
10 _g S.L.373.01 PREVENTION OF MONEY LAUNDERING
(2) For the purposes of subregulation (1), the prescribed period
shall be the period of at least five years commencing with -
( a ) in relation to such records as are described in
paragraph ( a ), the date on which the relevant financial
business was completed; and
( b ) in relation to such records as are described in
paragraph ( b ), the date on which all dealings taking
place in the course of the transaction in question were
completed:
Provided that, in relation to records relating to a one-off
transaction or a series of one-off transactions, the aforesaid period
of at least five years shall commence with the date on which the
one-off transaction or the last of a series of one-off transactions
took place.
(3) For the purposes of subregulation (2)( a ) the date on which
relevant business is completed shall, as the case may be, be deemed
to be the date of -
( a ) in circumstances falling within Case 1 (negotiations),
the ending of the business relationship in respect of
whose formation the record under this regulation was
compiled,
( b ) in circumstances falling within Case 2 (suspicion) or
Case 3 (single large transaction), the carrying out of
the one-off transaction or the last of a series of one-off
transactions in respect of which the record under this
regulation was compiled, and
( c ) in circumstances falling within Case 4 (series of
transactions), the carrying out of the last one-off
transaction in a series of one-off transactions in
respect of which the record under this regulation was
compiled,
and where the formalities necessary to end a business relationship
have not been observed, but a period of five years has elapsed since
the date on which the last transaction was carried out in the course
of that relationship, then the date of that transaction shall be treated
as the date on which the relevant business was completed.
Internal reporting 
procedures.
10. (1) Internal reporting procedures maintained by a subject
person, shall be deemed to be in accordance with the provisions of
this regulation if they provide for -
( a ) a reporting officer employed by the subject person to
whom a report is to be made of any information or
other matter which gives rise to a knowledge or
suspicion that another person is engaged in money
laundering;
( b ) consideration of such report by the reporting officer or
by another designated employee of the subject person,
in the light of all other relevant information, for the
purpose of determining whether or not the information
or other matter contained in the report does give rise to
a knowledge or suspicion that another person is
PREVENTION OF MONEY LAUNDERING _g S.L.373.01 11
engaged in money laundering;
( c ) reasonable access for the reporting officer or other
designated employee to any information held by the
subject person which may be of assistance for the
purposes of considering the report; and
( d ) a procedure whereby any knowledge or suspicion that
another person is engaged in money laundering
determined by the reporting officer or other designated
employee is reported in accordance with regulation 11.
(2) It shall be lawful for the reporting officer or other
designated employee of the subject person to disclose information
obtained in the course of internal reporting procedures under these
regulations to the reporting officer or other designated employee of
another subject person or persons forming part of the same group of
companies of the former subject person.
(3) A supervisory authority shall maintain internal reporting
procedures in accordance with the provisions of subregulation (1).
The failure of a supervisory authority to maintain such procedures
in accordance with the provisions of this regulation shall not
constitute an offence but may be the subject of disciplinary
proceedings against the officials or employees concerned.
(4) Any official or employee of a subject person or a
supervisory authority who discloses to the person concerned or to a
third party not being the reporting officer or other designated
employee as referred to in subregulation (2) that an investigation is
being carried out pursuant to the provisions of this regulation, or
that information has been transmitted to the Financial Intelligence
Analysis Unit pursuant to this regulation or regulation 11, shall be
guilty of an offence and liable on conviction to a fine ( multa ) not
exceeding twenty thousand Maltese liri (Lm 20,000) or to
imprisonment for a term not exceeding two years or to both such
fine and imprisonment.
Reporting of 
evidence of money 
laundering.
11. (1) Where a supervisory authority, either in the course of
its supervisory work or in any other way, or a subject person -
( a ) obtains any information, and
( b ) is of the opinion that the information indicates that any
person has or may have been engaged in money
laundering,
that supervisory authority or subject person shall, as soon as is
reasonably practicable, disclose that information, supported by the
relevant identification documentation, to the Financial Intelligence
Analysis Unit.
(2) Subject persons carrying out a relevant activity under
paragraph ( a ) or paragraph ( c ) of the definition of ''relevant
activity'' shall not be bound by the provisions of subregulation (1)
if such information is received or obtained in the course of
ascertaining the legal position for their client or performing their
responsibility of defending or representing that client in, or
concerning judicial proceedings, including advice on instituting or
avoiding proceedings, whether such information is received or
12 _g S.L.373.01 PREVENTION OF MONEY LAUNDERING
obtained before, during or after such proceedings.
Use of disclosed 
information.
12. Any information disclosed under these regulations shall be
used only in connection with investigations of money laundering
activities.
Exoneration from 
the duty of 
professional 
secrecy.
13. Any bona fide communication or disclosure made by a
supervisory authority or by a Subject Person or by an employee or
director of such a supervisory authority or subject person in
accordance with these regulations shall not be treated as a breach of
the duty of professional secrecy or any other restriction (whether
imposed by statute or otherwise) upon the disclosure of information
and shall not involve that supervisory authority or subject person or
the directors or employees of such supervisory authority or subject
person in any liability of any kind.
Power to issue 
procedures.
14. The Financial Intelligence Analysis Unit, with the
concurrence of the relevant supervisory authority, may issue
procedures as may be required for the carrying into effect of the
provisions of these regulations. Such procedures shall be binding
on persons carrying out relevant financial business or relevant
activity. 
Transitory 
provisions.
15. Nothing in these regulations contained shall require a
person who is carrying out a relevant activity to maintain
procedures in accordance with these regulations which require
evidence to be obtained, in respect of any business relationship
formed by him before the date on which these regulations come
into force, as to the identity of the person with whom that
relationship has been formed, and any such relationship shall be
treated as if it were an established business relationship:
Provided that where a doubt has arisen or changes have
occurred in the circumstances surrounding the established business
relationship the identification process shall be carried out in
accordance with these regulations.
