The Role
In October 2019, during the 2020 Budget speech delivered by the Minister for Finance and Financial Services, the Government announced Malta’s first policy decision to impose restrictions on cash payments for the acquisition of certain high-value goods. This was done primarily to curb cash payments in those sectors of the economy most susceptible to be used for money laundering purposes.
Following the announcement of this policy decision, in 2020 the Financial Intelligence Analysis Unit (FIAU) was entrusted with a further function, that to monitor compliance with any restrictions on payments in cash introduced under the Prevention of Money Laundering Act (PMLA). To this end, amendments to Article 16(1) of the PMLA were introduced by means of Act I of 2020.
On 9th March 2021, the Use of Cash (Restriction) Regulations (S.L. 373.04) (“the Regulations”) were published in the Government Gazette as Legal Notice 81 of 2021 and came into effect on the same day.
Regulatory Context
Through these Regulations, it is now a criminal offence to make or receive payment or carry out a transaction in cash amounting to €10,000 or more (or its equivalent in another currency), whether in a single transaction or in several linked transactions. This restriction applies only in respect of the sale or purchase of any of the following:
- Immovable Property
- Jewellery, Precious metals, Precious stones and Pearls
- Motor-Vehicles
- Sea-Craft
- Works of Art
- Antiques
A fine of not less than 40% of the sum paid, received, or otherwise transacted in cash, in excess of €9,999.99, can be applied to any person who fails to comply with these Regulations. There is scope for a lesser administrative penalty through the conclusion of a settlement agreement upon the consent of the Attorney General. Directors, managers, or any other officers exercising executive functions in a company or other undertaking, or body of persons, can be held liable in solidum with the company, undertaking or body of persons in case of any such breach.
For further guidance on common interpretational issues of these Regulations, interested persons are invited to refer to the frequently asked questions (FAQs) below.
Report Suspected Breach of the Cash Restriction Regulations
The general public can submit information with respect to a suspicious cash transaction via an online form. The person submitting this information can remain anonymous.
All subject persons need to use the goAML platform in order to submit a suspicious transaction in breach of the Cash Restriction Regulations and as such, registration on the goAML platform is mandatory.
FAQs
These questions and answers do not constitute the entire set of obligations, penalties and powers relating to the Use of Cash (Restriction) Regulations but are intended to explain the more commonly asked questions by buyers, traders and other interested parties. These interpretations are not binding on the FIAU and do not constitute legal advice.
• Motor-vehicles
• Sea craft
• Works of art
• Antiques
• Immovable property
• Jewellery, precious metals, precious stones, and pearls
- They are performed by the same parties
- They have a similar or linked purpose
- They are carried out within a six-month period
- Trader ‘A’ is an antique dealer and acquires a lot of Melitensia items. The seller requests payment in cash. Individually the items are priced well below the EUR 9,999.99 but collectively they exceed the said amount. If Trader ‘A’ were to accede to the seller’s request, the two of them would be breaching the Regulations.
Purchasing multiple items in multiple transactions over a period of 6 months, with items having an individual value of less than €9,999.99 each but exceeding said amount in total:
- Trader ‘A’ sells a wristwatch for €3,000 in July and a pair of diamond earrings for €8,000 in November of the same year to an individual. Individually, these jewellery items did not exceed €9,999.99 but taken together they do. While it is possible for payment for the wristwatch to have taken place in cash, this is not possible with respect to the earrings since it would result in a breach of the Regulations. The two transactions meet the conditions to be considered as linked since they are performed by the same individual(s), have a similar or linked purpose (for personal use), and are carried out within a six-month period.
- Trader ‘B’ is a car dealer. In January an individual acquires a car from Trader ‘B’ with the intention to use the same for a new taxi service. In March of the same year, the same individual acquires a further vehicle from Trader ‘B’ for the same purpose. Individually the vehicles did not exceed EUR 9,999.99 but taken together they do. While it is possible for payment for the first vehicle to have taken place in cash, this is not possible with respect to the second one as it would result in a breach of the Regulations. The two transactions meet the conditions to be considered as linked.
Purchasing an individual item having a value of €10,000 or more but paying in instalments:
- Individual ‘A’ purchased a car with a value of €14,000 from individual ‘B’. Two cash payments of €7,000 each, one carried out in June and the other in August, to pay for the same car, would constitute a linked transaction. This is because they are performed by the same individual, have a similar or linked purpose (the same car), and are carried out within a six-month period.
If an individual purchases any of the goods listed under regulation 3(1) (vehicles/seacraft/works of art/antiques/immovable property/jewellery/pearls/precious metals and stones), and within a 6-month period purchases another similar good from the same seller, that purchase is considered as linked. Therefore, if the payment for both items is effected in cash and amounts to €10,000 or more, then such payments would be in breach of the Use of Cash (Restriction) Regulations.