With new regulations limiting cash use, FIAU aims to ensure that crime doesn’t pay

Last Updated on Monday, 14 June, 2021 at 2:08 pm by Andre Camilleri

New regulations which place limits on the use of cash have been introduced and serve as an additional means for Malta to ensure that crime doesn’t pay.

The regulations form part of Malta’s growing toolkit used by the FIAU and other authorities to fight money laundering and other crimes. Each entity is guided by international standards and various EU directives, as they seek to block and punish criminals not only through prosecutions, but also by ensuring that they are not able to enjoy the profits of the crimes they have committed through the confiscation of their assets.

The Use of Cash (Restriction) Regulations, the implementation and monitoring of which is within the functions of the FIAU, is one such means to reduce the potential of people enjoying their illicit cash.

The regulations set out a limit of €9,999 on cash purchases which are deemed to be the riskiest in terms of attracting illicit funds. These are immovable property, antiques, jewellery, precious metals, precious stones and pearls, cars, sea-craft and works of art. The regulations were recommended since Malta still has a large cash-based economy, and therefore is at a higher risk of money laundering from the use of cash.

Cash limits exist in other EU states; Greece, for example, limits cash purchases to just €500, while France limits such purchases to €1,000. Most EU countries are sensitive to the use of cash and the risks this presents, which has led to broader discussion in the EU as to whether such restrictions should be mandatory across the EU.

In fact, European Commissioner for Finance Mairead McGuiness said in May that the Commission intended to present new proposals for the fight against money laundering, and an EU-wide €10,000 ban on cash payments is expected to be among them.

The intention of such rules is ultimately to ensure that criminals do not enjoy the proceeds of whatever crime they have committed. This especially bearing in mind the nature of the crimes in question, for instance, drug trafficking, human trafficking, arms dealing, corruption, fraud, extortion, robberies, murders, tax crimes such as tax evasion and VAT fraud, and misappropriation of state funds and assets. A list of crimes well set to erode the foundations of any economy and society.

To enjoy the proceeds of such crimes, criminals need to “clean” their ill-gotten gains and make them seem legitimate. This is what money laundering essentially is. Illicit funds can be laundered through investments in legitimate businesses, investments in property, spending them on high-end, luxury goods, or simply hiding them somewhere.

This is precisely why the role of the FIAU is critical to fight money laundering and funding of terrorism, to act as one of the many gatekeepers working to stem the tide. Apart from the legislative frameworks, the functions of the FIAU are the main foundations for this effort.

The FIAU’s Intelligence Analysis function, for instance, works on receiving, collecting, analysing and providing intelligence about reasonable suspicion of money laundering and proceeds of crime to the Police – intelligence which is then used to trigger or contribute to ongoing criminal investigations and subsequent prosecutions.

The FIAU also provides intelligence to the Commissioner for Revenue, other competent authorities and foreign FIUs. This is all done to assist in the identification of proceeds of crime, the prevention of money laundering, and ultimately making sure that criminals are punished and their criminal proceeds are confiscated.

Specialised analytical software, access to various databases, such as the Beneficial Owners Register and the Centralised Bank Account Register, co-operation and exchange of information with other authorities and foreign FIUs, and the powers granted to the FIAU by law to demand information are the primary tools used by the FIAU to collect and analyse intelligence which is then used for investigations.

The FIAU’s Supervision, Enforcement and Guidance & Outreach functions are then aimed at those financial and non-financial businesses and professions, otherwise known as subject persons, which have anti-money laundering obligations. The FIAU is tasked to ensure that they are aware of and compliant with their legal obligations to ensure that they do their part in preventing money laundering and consequently making it difficult for criminals to enjoy their ill-gotten assets.

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