The National Coordinating Committee ("NCC"), in close collaboration with the relevant government authorities involved in the fight against financial crime and representatives from private sector bodies, has issued an updated edition of Malta's National Risk Assessment 2023 ("NRA"). The NRA represents the latest phase in Malta's ongoing process to identify and assess vulnerabilities and threats related to Money Laundering ("ML"), Terrorist Financing ("TF"), and, for the first time, risks associated with Proliferation Financing ("PF") and Targeted Financial Sanctions ("TFS").
The NRA aims to achieve a shared understanding among supervisory authorities and law enforcement bodies on the risks of ML, TF, PF, and TFS, while also ensuring a robust comprehension of risks in the private sector to enhance a risk-based approach aligned with NRA's priorities and recommendations.
Summary of the main risks
Money Laundering
In comparison to the 2018 NRA, a decline in the ML residual risk has been identified across most sectors, and this should be attributed mostly to the improvement of mitigating measures applied. Financial institutions, company service providers, tax advisors, dealers in immovable property & high-value goods and legal persons displayed the highest residual risk of Medium-High.
Terrorist Financing:
The TF residual risk for Malta is rated as 'Medium', based on the analysis of the threats and vulnerabilities of various sectors and financial instruments. This residual risk rating is mainly driven by the:
- movement of funds for TF via financial institutions (remitters);
- involvement of Maltese legal persons with beneficial owners in high-risk jurisdictions possibly linked to TF (with no business relationship with the financial sector in Malta);
- threat of the movement of funds for TF via cash cross-border movements; and
- threat of raising/movement of funds for TF via disbursements of Voluntary Organisations.
Proliferation Financing and Targeted Financial Sanctions:
The PF and TFS residual risk for Malta is rated as 'Medium', primarily driven by the risk of money transfer services used to conduct cash transfers related to the procurement of goods, the risk of cross-border smuggling of cash to support proliferation activities and the use of trade finance products and services in procurement of proliferation-sensitive goods.
Looking ahead
Subject persons are required to consider the threats, vulnerabilities, risks and mitigating measures identified in the 2023 NRA as part of the annual revision of the Business Risk Assessment.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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