The FIAU has slapped a record €1.2 million fine on a small Maltese investment firm that closed down earlier this year.
MPM Capital Investments Ltd was handed the penalty after a series of irregularities including the failure to properly oversee transactions by politically exposed persons and others involving high-risk jurisdictions.
The Financial Intelligence Analysis Unit announced the latest and largest ever fine just 24 hours after a gaming company was handed a fine of €733,160 fine – at the time also a record.
Earlier this week, the Malta Financial Services Authority revoked MPM Capital company licence and banned its directors from holding similar positions for 10 years over unlicensed operations.
They had allegedly provided the regulator with “false, inaccurate and misleading information”.
The company was also accused of failing to act and cooperate with the MFSA in an open and honest manner and failing to inform the MFSA of material information concerning the company immediately upon becoming aware of the matter.
In its announcement, the FIAU said that an on-site compliance review carried out last year had uncovered a wide range of irregularities.
The company had failed to assess the risk of conducting business with multiple jurisdictions including Fiji, Belize, the Marshall Islands and Libya, among others.
The FIAU also concluded that the company did not have an adequate level of understanding of the risks it was exposed to.
It also said that in 23 of 25 files reviewed by officials, no consideration was given by the company on the money laundering risks emanating from several foreign jurisdictions.
Similar problems were found in how the company was assessing its clients, with no customer risk assessment having been conducted for some of those on the operator’s books. In other instances, risk assessments were only carried out years after first on boarding the clients.
In some files, the company had failed to verify the residence of clients, or the identity of agents claiming to be acting on their clients’ behalf, however, these were deemed to be relatively low-level breaches.
Far more serious were findings that the company held no information as to whether its customers are politically exposed (PEP) or otherwise in four of the files reviewed. And in 19 of the files reviewed, the company did not establish whether its customers were politically exposed at the time they were on-boarded.
Although a note was found on file dated 2016 stating that a PEP search had been carried out, no evidence of any PEP searches were found.
The FIAU also found that in two of the files reviewed in which a politically exposed person was involved, the enhanced due diligence measures required were either not applied or were inadequately applied.
Giving examples of its findings, the FIAU said it had uncovered instances where clients’ declared salaries, apparently mid-level white collar level, did not seem to tally with large transactions at times exceeding €1 million.
Company to contest findings and fine
In a statement, MPM Capital Investments said it is denying any wrongdoing. It said it is collaborated fully with authorities and will be contesting the findings and the fine through all legal avenues.
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