Malta’s National Coordinating Committee (“NCC”), which is the governing body responsible for the general oversight of Anti-Money Laundering/Combating the Fund of Terrorism (AML/CFT policy) has recently published Malta’s National Risk Assessment 2023 (“NRA”).
The revised NRA continues to build on what has been achieved so far, to ensure that all stakeholders continue to have a solid understanding of the Money Laundering/Terrorist Financing (“ML/TF”) risks that Malta and its sectors and operators are exposed to, and to ensure that the AML/CFT framework is dynamic and proactive and responds appropriately to any ML/FT risks or gaps.
The 2023 NRA seeks to identify threats and vulnerabilities in ML, TF and for the first time also in proliferation financing (“PF”) and targeted financial sanction (“TFS”) related risks.
The objective of the 2023 NRA was to gain a sufficiently granular appreciation of the actual threats and vulnerabilities faced by various sectors.
The layout of the 2023 NRA is as follows:
(i) Primarily an overview of the previous ML/TF related risk assessments carried out in Malta is presented followed by how the EU SNRA is taken into consideration throughout the whole NRA process;
(ii) The above is followed by a section on the stakeholders and the methodology adopted, as well as a section outlining the contextual factors of Malta;
(iii) Further to the above analysis, another section presents the results of the ‘non-financial products’ focusing on legal persons, legal arrangements, citizenship and residency by investment schemes, and voluntary organizations;
(iv) Following, the 2023 NRA will go through the results of the main threats of laundering foreign and domestic proceeds of crime in Malta, highlighting mainly the financial sector and the designated non-financial businesses and professions (“DNFBPs), [e.g. CSPs);
(v) The financial sector part presents the results by sector and product focusing on the banks, the financial institutions, investment securities, insurance and pensions.
Thereafter, the focus is on presenting the results of the TF risks from the raising, moving and use of funds. Subsequently, the results of the PF and TFS related risk are also presented.
Methodology of the NRA
The Methodology adopted is simplified, Malta specific, version of the World Bank methodology that was used in the 2018 NRA. The methodology also took into consideration the EU SNRA, the 2019 MER for Malta, the Post-Observation Progress Report for Malta, FIAU strategic analysis, and the reports by the EBA, as well as constructive discussions in the different set-up working groups and discussion with the private sector.
After setting up a number of sectoral working groups, to assess the threats and vulnerabilities, a detailed restricted working paper was produced, which fed into the 2023 NRA.
The process used has been improved considerably when compared to the one leading to the 2018 NRA and has led to a more detailed and accurate assessment of what are the main threats, vulnerabilities, and overall risks that Malta faces with respect to ML, TF, PF and TFS.
In view of the revised NRA, Subject Persons are urged to refer to the revisions made in the 2023 NRA and any recommendations provided. It is also important for Subject Persons to update their Business Risk Assessments reflecting the latest changes highlighted in the revised NRA.