FIAU Recruiting A Team Of Enforcers To Clamp Down On Large Cash Payments In Malta
Cash is very much king in Malta, but the island’s culture is set to be challenged by the enforcement of a new law prohibiting cash payments of €10,000 and over for transactions involving real estate and other high-value items.
With the law passing last March, the Financial Intelligence Analysis Unit (FIAU) has now issued a call for a senior manager to oversee a new Cash Restriction Unit.
This unit will be tasked with receiving reports, carrying out inspections and enforcing the law. If a €10,000 cash transaction is found, both vendor and purchaser will be liable to a fine of not less than 40% of the sum of money they paid, received or transacted in cash.
Therefore if someone is found to have paid or received €20,000 in cash for one of the aforementioned items, both parties will have to pay at least €8,000.
The restriction will also apply to payments broken up into separate transactions which are worth a combined total of over €10,000.
Besides property, a €10,000 cap has also been applied to antiques, jewellery, precious metals, precious stones, pearls, vehicles, seacraft, and works of art.
The FIAU is currently developing a communication plan for its new cash restriction unit and carrying out meetings with the intention of sourcing information from various authorities.
In its annual report for 2020, the national intelligence unit included a strongly-worded quote on cash by the Financial Action Task Force (FATF), the international body which is set to assess the effectiveness of Malta’s money laundering regime in May-June.
“Cash is still widely used in the criminal economy and remains the raw material of most criminal activity,” the FATF warned back in 2015. “Often, even when the proceeds of crime are initially generated in electronic form, criminals choose to withdraw the funds in cash, transport it to another country, and pay it into another account to break the audit trail.”
The FIAU noted that most EU member states have already restricted cash payments to combat money laundering and terrorism financing, but acknowledged that Malta still has a high use of cash for purchases.
“The need for more control was recognised, particularly for high-value goods and this following feedback from various international bodies,” the institution wrote.
“Using cash for large or expensive purchases is one of the oldest routes for laundering funds raised from illicit activities, such as drug trafficking and tax evasion. It is particularly easy to transfer items like jewellery, precious stones or luxury items across borders to be either sold to convert back to cash or gifted, and the illicit money trail is lost.”
“Now that the law is in place, the FIAU is building the necessary team to ensure the regulations are supervised and enforced accordingly.”
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