Expanded list of Maltese PEPs extends scrutiny to much larger pool of connections

The conduct of the personal financial affairs of many Maltese individuals is set to become much more complicated, at least on paper, after the publication of a new list of Maltese PEPs adds a new layer of connections.

Family members and close relatives of PEPs have now also been placed under enhanced scrutiny, a spokesman for the Financial Intelligence Analyses Unit, told The Shift.

In reply to questions about why the list was published now and whether this had anything to do with the greylisting, the FIAU said that this has become a new legal requirement.

“The list of designated PEPs recently published by the Ministry is the first of its kind. The requirement for each EU member state to issue a list of functions which within each individual state are to be considered as ‘prominent public functions’ was introduced by the 5th Anti-Money Laundering Directive,” the FIAU explained.

“This list complements the general definition of prominent public functions which already existed in the Prevention of Money Laundering and Funding of Terrorism Regulations, and which has always been transposed directly from the EU’s Anti-Money Laundering Directives.”

The new list, adapted to the local situation, includes senior politicians such as the Prime Minister and his Ministers, political party leaders and administrators.

It also classifies as PEPs all chairmen and directors of public entities, including those in non-executive roles, the Commissioner of Police, the Head of the Armed Forces, Permanent Secretaries, and many others.

All those in the list will fall under the radar of supervisory authorities and regulators, such as the FIAU, MFSA and the Central Bank, each time they are involved in any substantial financial transaction. The added measures are intended to strengthen surveillance for possible corruption and any funds deriving from crime.

FIAU said that the additional scrutiny will be applied not only to spouses and legal partners, but also to their children and their spouses or legal partners and the PEPs parents.

Government ministers are already considered PEPs and subject to strict controls on all financial transactions, even the most simple, such as opening a bank account, however the new regulations mean his/her spouse, children, their spouses and parents will also have to submit to the same rigorous process of enhanced due diligence.

Most functioning democracies already have this system in place: Malta is now being required to fall in line with them to start the long and complicated road off the FAT’s greylist.

The comprehensive list of PEPs has been published in the Government Gazette: https://www.gov.mt/en/Government/DOI/Government%20Gazette/Government%20Notices/Pages/2021/04/GovNotices0604.aspx– see Number 437.

It includes people in the highest levels of government, such as the President of Malta, government members, permanent secretaries, and chiefs of staff of ministers and parliamentary secretaries, as well as those in executive positions in political parties, the whole of the judiciary, top civil servants, all ambassadors, the governor of the central bank and many others.

All CEOs of government entities and members of their boards of directors are now being considered PEPs and subject to the enhanced scrutiny that entails.