The Fourth Anti-Money Laundering Directive will officially be transposed into Maltese law on the 1 January 2018, now that Legal Notice 372 of 2017 has been published in the Government Gazette. The implementation of this Directive intends to improve consistency of anti-money laundering and counter terrorist financing rules across the European Union by putting a greater emphasis on maintaining a risk based approach, especially on customer due diligence requirements.

Under the Third AML Directive, subject persons (any legal or natural person carrying out either relevant financial business or a relevant activity) already have the possibility of applying customer due diligence on a case-by-case basis, however upon the implementation of the new Directive, subject persons shall use the risk-based approach as the main method of applying AML/CFT requirements.

Simplified and enhanced customer due diligence may still be carried out provided that subject persons shall carry out sufficient ongoing monitoring to be able to detect unusual and suspicious transactions. In the case of higher risks to a possible link to proceeds of criminal activity, money laundering or the funding of terrorism, subject persons must carry out enhanced customer due diligence, including all additional safeguards as may be necessary.

Overall, subject persons are given more leeway in deciding on how to meet their AML/CFT obligations and shall possess adequate flexibility to address any potential risks they might be exposed to.

For more information on AML obligations or if you have any questions, please feel free to contact Dr Cherise Abela Grech on cabelagrech@gtgadvocates.com

Disclaimer: This article is not intended to impart legal advice and readers are asked to seek verification of statements made before acting on them.