Anti-Money Laundering – Companies Act Regulations Updated

by | Aug 20, 2019 | Anti-Counterfeiting, Money Laundering

Money in water - Iuris Malta Law Firm

Amendments to the Companies Act (Register of Beneficial Owners) Regulations

With the coming into force of Legal Notice No. 158 of 2019 as of the 12th July 2019, the Companies Act (Register of Beneficial Owner) Regulations (S.L 386.19)(“the Regulations”) has been amended with the purpose to better implement and transpose into Maltese law the provisions of the Fifth EU Anti-Money Laundering Directive (the 5th AMLD – 2015/849).

Fourth Anti Money Laundering Directive On the 1st January 2018, the Register of Beneficial Owner Regulations had come into force in Malta. They transposed Article 30(1) of the Fourth Anti Money Laundering Directive (4th AMLD). Article 30(1) required companies to obtain and hold “adequate, accurate and current information on their beneficial ownership”. The EU’s Fourth Anti-Money Laundering Directive substantially addressed the issue of ultimate beneficial ownership. Under this Directive, direct or indirect ownership or control of more than 25% of the shares or voting rights in a legal entity is considered to have ultimate beneficial ownership in that entity and senior managing officials are to be treated as beneficial owners in cases where the above criteria of ownership could not be determined.

This requirement of identifying the ultimate beneficial owners affected all Maltese companies, trusts and foundations obliged to obtain and maintain up to date information in respect of their beneficial owners and disclose to the Registry the following information: official full name, date of birth, nationality, country of residence, official identification number, type of the identification document, expiry date of the identification document, country of issue of the identification document and nature and extent of the beneficial interest held by each beneficial owner.

Beneficial Owner Regulations – what has changed?

The amendments to the Regulation are mainly the following.

  1. According to the new sub-regulation (2) of Regulation 5 of the Regulations, beneficial owners are now obliged to communicate directly and inform the relevant company in which they hold a beneficial interest that they are the beneficial owner in terms of the Regulation. This information needs to be provided without delay or the need of the company to send them such a request. That said, it is necessary to underline that it is still the responsibility of the company to obtain the information required from the shareholder or any natural person who is reasonably believed to be a beneficial owner. With these amendments, penalties are now also applicable against beneficial owners who fail to voluntarily provide the information to the company.
  1. The most significant amendment introduced by means of the Amended Regulation refers to regulation 7 which provides that the Register of Beneficial Owners with the Malta Business Registry (MBR) is as of the 1st January 2020 to be made accessible also to “any member of the general public” ; whereas this was previously limited to designated authorities and subject persons, while anyone else needed to prove a legitimate interest to the Registrar to be granted access. With the new amendments, the general public may access the following information: the name, month and year of birth, nationality, country and extent and nature of beneficial interest of the beneficial owner of a company. Furthermore, the right of access of the general public (as well of subject persons) is restricted in the sense that if proven to the Registrar by means of documentary evidence that access to such information would expose the beneficial owner to the risk of fraud, kidnapping, blackmail, violence or intimidation, or where the beneficial owner is a minor or otherwise incapable, such access will not be granted.

          Unlike the other amendments, this particular amendment will come into effect as of the 1st January 2020.

  1. With the new amendments the MBR was bestowed with a new set of powers as per Article 12(1), which entitles the Authority to make enquiries to the company or partnership whether it should have a reasonable cause to believe that the beneficial owner has submitted information which may not be accurate or up-to-date. Among these powers, the MBR has the right to carry out physical on-site investigation at the company’s registered office to inspect its books, in order to establish the current beneficial owner. Furthermore, article 12(2) of the Regulation introduces a new obligation for the national authorities designated for combating money laundering and funding of terrorism and on subject persons which are aware of any discrepancies they find between the information held by them and information kept on the register of beneficial owners. The Registrar shall take any action it deems appropriate in order to resolve such discrepancies and, until that moment, it could even make reference of the said discrepancies by making a specific mention of them on the Register. Every officer of the company is liable to a penalty of not more than €10,000 if the Registry identifies that data are not accurate and/or up-to-date.
  1. The last noteworthy amendment introduced by a newly added article 17 has now clearly identified a period of five (5) years following the stricking off of a company or a partnership from the registry, during which the information on the beneficial owner will remain available on the MBR Register of Beneficial Owners and interconnected registries as further specified in article 13.

For further information on corporate law, do not hesitate to contact Dr Sarah Galea or any other member of IURIS Advocates.