Issue link: https://maltatoday.uberflip.com/i/869387
8 MATTHEW VELLA MALTESE banks such as HSBC Malta are starting extensive due diligence exercises for politically- exposed persons, as a letter sent to Nationalist Party leader Simon Busuttil by chief executive officer Andrew Beane shows. In the July letter, shared with the PN parliamentary group and seen by this newspaper, Beane tells Bu- suttil that a VIP team at the bank will be responsible centrally for the management of PEP due diligence obligations. Hundreds of people across the Maltese islands are likely to be af- fected under tighter rules to fight money laundering, as the defini- tion of a politically exposed person will now include not just people with political functions, but also their spouses and close associates and relatives. Under the new EU rules, the 4th Anti-Money Laundering Directive will see at least 300 domestic PEPs in Malta – possibly more – as well as family members and business associates, under closer scrutiny by banks and financial services providers. The obligations of customer due diligence for banks are legally binding, and all PEP customers must complete them in order to retain their accounts with the banks. "HSBC recognises these require- ments can feel intrusive to cus- tomers, in particular that we are required to obtain a range of confi- dential information, such as an in- dividual's source of wealth," Beane said in his letter to the PN leader. "We take significant steps to dis- charge our duties with discretion and with great care to client con- fidentiality." All in the family For PEP relatives, the new AMLD rules will mean that open- ing a bank account will now be subject to enhanced due diligence measures. Not only politicians, or party executives and directors of gov- ernment entities will be subject to enhanced due diligence, but also their family members, such as spouses and partners, children, the PEP's parents, as well as 'close associates' who have business rela- tions or joint ownership of compa- nies. This will mean that institutions such as banks or insurance com- panies will have to obtain senior management approval to even es- tablish a business relationship with such persons. Thousands in Malta could be af- fected by the enhanced due dili- gence rule, if banks adopt a strict approach with people whose job in government was granted to them on a 'person of trust' basis – even though such placements include low-grade employees on security or cleaning duties. Under such procedures, entities such as banks will have to make sure they can establish the source of wealth and funds that PEPs and their associates have, and then apply ongoing monitoring of the business relationship. Entities will also have to take reasonable measures to determine whether the beneficiaries of a life insurance or investment policy are PEPs, and inform senior manage- ment before the pay-out of any policy proceeds, and carry out enhanced scrutiny of the relation- ship. Even after a PEP is no longer entrusted with a public function, banks will still have to continue ap- plying their enhanced due diligence for the next 12 months at minimum, until that person can be considered to be no longer a 'PEP risk'. Banks start due diligence for MPs under new money laundering rules maltatoday, SUNDAY, 3 SEPTEMBER 2017 News Operational Programme I – European Structural and Investment Funds 2014-2020 "Fostering a competitive and sustainable economy to meet our challenges" Advert part-financed by the European Regional Development Fund Co-financing rate: 80% European Union; 20% National Funds Notice on Call for Project Proposal submissions under Call VI Extension of Call VI Deadline In view of the Announcement of Call VI under the Cohesion Fund issued by the Managing Authority for Cohesion Policy 2014-2020 in Malta on 25 th June 2017, the Managing Authority is extending the deadline for the submission of projects under Priority Axis 11 - 'Investing in Ten-T Infrastructure'. The deadline shall now be Friday 17 th November 2017 at noon to allow adequate time for the preparation of project proposals. Further information and specific queries on the notice in caption may be obtained from www.eufunds.gov.mt or from PPCD's E-mail Helpdesk: info.ppcd@gov.mt. MATTHEW VELLA THE agency responsible for the sale of Maltese citizenship is refus- ing to give MaltaToday a break- down of all the accredited agencies that had successfully sold the Indi- vidual Investor Programme. Identity Malta turned down Mal- taToday's freedom of information request for a list of all the firms whose applications for citizenship were either accepted or turned down. Malta's IIP has 154 agents pro- moting and selling citizenship to the global elite for €650,000 a pass- port. Applicants must also com- mit to acquire a property worth €350,000 or rent an apartment for five years for at least €16,000 per annum, and invest €150,000 in government stocks. No data however is publicly avail- able about which of these agencies were successful at promoting their clients, who must pass through a due diligence exercise before be- ing finally accepted as citizens by Identity Malta. MaltaToday has filed a complaint with both the IIP regulator, as well as the Information and Data Pro- tection Commissioner, to review the FOI request. In its refusal, Identity Malta insisted that the information re- quested was confidential com- mercial information "in view of the reasonably predictable, sub- stantially adverse effects on the financial and property interests of the Government and… inso- far as the information requested could reasonably be expected to have a substantial adverse effect on the proper and efficient con- duct of the operations of a public authority and the public interest that is served by non-disclosure outweighs the public interest in disclosure." The regulator for the IIP, an in- dependent officer who reviews annual data on the sale of citizen- ships, already publishes informa- tion on how many successful ap- plications take place, as well as the geographical distribution of the applications. In 2016, a MaltaToday story on the residential properties of suc- cessful IIP citizens not being worth €350,000, led to the creation of a compliance unit at Identity Malta to investigate potential abuses. In an investigation carried out by the regulator of the IIP, it turned out that in the 13 cases selected by MaltaToday, 11 had leased their premises and in six of these cases the lease value was "nearly equal to the threshold" save for a €200 dif- ference. The regulator said this statistic implied the figure had been round- ed upwards so that the rental would be in line with the IIP rules, or that the applicants had specifi- cally selected a property that did not significantly exceed the mini- mum €16,000 threshold. Identity Malta started to request accredited agents to provide a qualified architect's declaration to confirm the values of the proper- ties being leased and purchased; and has set up a Compliance Unit tasked with monitoring and inves- tigating potential abuses. Identity Malta refusing to publish agency stats on passport sales