Malta has adopted Directive (EU)
2018/843 – Fifth Anti-Money Laundering Directive (“the Fifth AML Directive”) by
transposing it into local legislation throughamendments tothe Prevention of
Money Laundering Act (Chap. 373 of the Laws of Malta), the Prevention of Money
Laundering and Funding of Terrorism Regulations (Subsidiary Legislation, S.L.
373.01) and the Criminal Code, Chapter 9 of the Laws of Malta.
The Fifth AML Directivefurther
enhances the EU regulatory regime originally established in 1990 with the First
AML Directive. The money laundering directives provide for the application of
customer due diligence when entering into a business relationship (i.e.
identify and verify the identity of clients, monitor transactions and report
suspicious transactions). This legislation has been constantly revised in order
to mitigate risks relating to money laundering and terrorist financing. The
Fifth AML Directive continues to build on its successors in that it increases
access rights to the beneficial ownerships registers introduced under the
Fourth AML Directive (Directive 2015/849), it enhances the powers of EU
Financial Intelligence Units and improves cooperation and information sharing
between anti-money laundering supervisors and broadens the criteria for assessment
of high-risk third countries.
The provisions of the AML
Directives are aimed at entities or persons carrying on a relevant activity or
involved in relevant financial business (“Subject Persons”). Said subject
persons are considered the “gate-keepers” in the fight against money laundering
and terrorist financing and are required to implement client onboarding
procedures, risk assess their clients / financial transactions and report any
suspicion of money laundering or terrorist financing.
EMD is your one-stop shop for
Legal and Compliance related services. If your firm is a subject person you
will need a robust legal and compliance function to help you keep abreast with
the constantly evolving regulatory, AML/KYC requirements. A subject person is required to appoint a
Money Laundering Reporting Officer (“MLRO”) and Compliance Officer and needs to
have policies and procedures in place in respect of client onboarding and risk
assessment. The subject person must register with FIAU and must submit an annual
Risk Evaluation Questionnaire through the FIAU’s online portal.
EMD Advocates can provide a suite
of services to assist with setting up and/or updating of the Legal and
Compliance function within the firm including the drafting and review of the
relevant policies, procedures and requirements. We can also assist on an
ongoing basis to review and update any policies and procedures in line with any
legal or regulatory updates. We can assist the Legal and Compliance function
within your firm including the following:-
• Drafting and review of Compliance, AML/KYC
policies and procedures in line with the PMLFTR and Implementing Procedures;
• Assistance with devising and implementing a Customer
Risk Assessment process;
• Assistance with devising and implementing a
Business Risk Assessment and periodic reviews thereof;
• Drafting and reviewing of contracts;
• Conducting legal research and advising on the
applicable requirements;
• Assistancewithfilling the relevant reports
required by FIAU, MFSA, IRD or any other competent authority.
• Assisting in compiling client profiles and
compliance audits when needed
• Assisting the MLRO and Compliance Officer in all
matters.
In addition, through our related entity, EMD Advisory
Services Limited, we can also provide corporate compliance services filing of
Annual Returns and BO Forms, tax and VAT compliance as well as assistance with
book-keeping and financial statements.
Acquisition
Malta Company : If you are looking to acquire a Malta company you will
need a financial, legal and tax advisor. At EMD we can provide all those
services under the same roof. An acquisition can take place through the
purchase of all or the majority of the shares in the Maltese entity,
alternatively an acquisition can take place by merger.
The method of acquisition chosen
will also determine the legal consequences and effects of the acquisition. In
the case of an acquisition of shares, the purchaser acquires beneficial
ownership of the target company. Through the acquisition the beneficial
ownership of the target entity changes, however, the target entity is otherwise
unaffected. Therefore, existing contracts continue to apply in view of the fact
that there is no change in legal entity. That said, the target company may have
some contracts in place which render a change in beneficial ownership a
“prohibited assignment” and would therefore trigger termination of the
contract. Thus, a review of the relevant contractual arrangements in place
prior to the acquisition is advisable so as to ensure that any business
significant contracts will continue in force even after the acquisition.
Another method of acquisition is
through a merger, whereby an entity acquires another. In this scenario, there
is a legal change and transfer of entity since the target company is
effectively absorbed and becomes part of the acquiring entity. Therefore, all
contracts entered into by the target company are automatically transferred to
the acquiring company and it is important to assess the effects of such a
transfer from a legal and tax perspective. In certain cases, such as
employment, the employee’s rights are protected under specific rules governing
transfer of business. Furthermore, in the case of immovable property owned by
the target company, a simple declaratory deed must be filed in the Public
Registry to record the change of ownership.
An alternative to a merger by
acquisition, is a merger through the formation of a new company. In this
scenario, therefore, both entities cease to exist and are replaced by a new
third entity. Therefore, title to the assets and contracts of both companies
are automatically transferred to the new company.
Whichever method is chosen, it is
always advisable to conduct a due diligence of the target company to assess its
legal and financial standing while at the same time also addressing certain
specific aspects such as the transferability of certain contracts as well as
the legal and tax implications of the transfer.
EMD Advocates, the legal arm of
the firm can provide legal advise on the structuring of the transaction
(acquisition of shares, merger by acquisition or formation of a new company)
and advising on the implications in relation to title to property, employee
rights, transfer of licenses, competition law restrictions and transfer of
contracts. EMD Advocates can also conduct a due diligence exercise on the
target. This exercise can be performed in conjunction with the Advisory arm of
the firm to cover not only the legal issues but also issues relating to tax,
VAT and corporate compliance. The due
diligence report would highlight any concerns or issues using a traffic light
system for flagging matters.
EMD Advisory can provide advice
and assistance from a financial and tax perspective in relation to the
structuring of the acquisition transaction. EMD can further assist with the
compilation of the Independent Expert’s report concerning the price of
acquisition.
Finally, EMD Trust, our licensed
trust, fiduciary and CSP provider can assist with the implementation of the acquisition
including the drafting of the relevant paperwork and filings with the MBR/other
authorities involved.
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