The Malta Business Registry’s efforts to sustain Malta’s fight against crime have been significantly enhanced in 2021, with a noticeable ramping up of dissuasive activity, intent in fostering a veritable clean-up in the way Maltese companies are set-up and run.
Data for 2021 provided by the Business Registry shows that in 2021, the MBR rejected some 835 company applications, the majority of which, 470, were ones in which proposed directors and shareholders are involved in other Maltese companies. The right to reject applications purely on the basis of the presence of key individuals whose house was not in order is a relatively new development in Maltese legislation. This includes, for example, directors with incomplete beneficial ownership information in other companies they sit on.
The number of rejected applications amounts to more than one-fifth of all requests for new company formation.
“This is a reflection of the culture shift that we are seeking to instil, one that promotes quality before quantity,” said Geraldine Spiteri Lucas, recently appointed CEO and Registrar.
This effort was complemented with a record 13,717 Know-Your-Customer checks conducted in relation to new companies.
This is a reflection of the culture shift that we are seeking to instil, one that promotes quality before quantity
Spiteri Lucas highlighted that this dissuasive effect is yielding the desired results and she remarked how the quality of the type of company setting up shore here is also improving due to the stronger efforts being implemented by practitioners themselves. The Registrar had words of praise for Malta’s practitioners saying that: “They are on board and doing their best to ensure that the Registrar has correct BO information.”
She noted how company service providers and other professionals who help companies run themselves are encouraging their clients to provide the MBR with as much information as possible.
Geraldine Spiteri Lucas, CEO and Registrar, Malta Business Registry“We have seen a shift from a situation where everything that was requested by the MBR was being questioned, whereas now, companies are providing us with additional documentation in a voluntary manner.”
As Malta increases its effort to implement the action plan agreed with the FATF to secure de-listing from the enhanced monitoring procedure, the MBR’s increased activity also continued with regards to the ongoing operations of companies In 2021. The MBR, which has continued to invest in its human resource complement, carried out in-depth reviews, which are known as Know-Your-Customer screening, on some 45,409 directors, shareholders and beneficial owners, a significant increase on the 27,291 carried out the year before.
Spiteri Lucas insisted that these efforts confirm that the absolute majority of Malta-registered entities operate with full respect of applicable legislations and regulations, but acknowledged that the Registry’s increased efforts were netting more results. Indeed, the MBR carried out 1,529 onsite inspections in 2021, almost double the year before, focusing this activity on determining that the submitted beneficial ownership information – that is, who is really behind a company, who owns it and controls it – is accurate and up-to-date.
Recent legislative changes have introduced significantly higher administrative penalties for failing to provide information – or providing false information – on beneficial ownership, with the heftiest fines potentially reaching €100,000.
These inspections are also an essential part of the armoury utilised in fighting financial crime. From the information collated through these various efforts, the MBR was able to pass on some 88 suspicious transaction reports to the Financial Intelligence Analysis Unit. Although this is a relatively limited figure considering the tens of thousands entities on the Maltese register, it is still a visible increase on the number of STRs issued a year earlier – 29.
Given the sheer number of companies registered in Malta, the MBR has also established specific criteria by which it decides which entities to target.
“As MBR we have carried out a risk assessment specifically on beneficial ownership information, roping in various other competent authorities, such as the FIAU and the Malta Police Force. This has allowed us to concentrate our resources and efforts on the companies presenting the highest risk,” Spiteri Lucas concluded.