Amendments to Beneficial Ownership Regulations relating to Trusts, Foundations and Associations

Amendments have been made to the beneficial ownership regulations relating to trusts, foundations and associations together with other amendments to the principal AML/CFT regulations.

The purpose of the majority of these amendments is to transpose Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing as amended by Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 and other amending Directives that might be applicable.

Amendments to Trusts

In exercise of the powers conferred under the Trusts and Trustees Act, Chapter 331 of the Laws of Malta (the “Act”), the Minister responsible for the regulation of financial services acting on the advice of the Malta Financial Services Authority (the Authority) has published the Trusts and Trustees Act (Register of Beneficial Owners) (Amendment) Regulations, 2020 (the “Regulations”) bringing about amendments to the Trusts and Trustees Act (Register of Beneficial Owners) Regulations by means of L.N. 27 of 2020.

The Regulations have effect from the 1^st January, 2020.

The main amendments are highlighted hereunder :-

• The Regulations have been extended to apply to all forms of express trusts. Prior to the amendments, only express trusts that were deemed to have tax consequences in Malta were obliged to submit beneficial ownership information in accordance with Regulations. A trustee who is authorised or registered under the Act must submit the required declaration of beneficial ownership to the Authority within 14 days of being appointed as a trustee of an express trust. Trustees that were appointed prior to the 1^st of January 2020 have six months to submit to the Authority a declaration of beneficial ownership in accordance with the Regulations.

• The Regulations now also apply to any trustee of a trust whose place of establishment or residence is outside the European Union, where such trustee enters into a business relationship (as defined in the Prevention of Money Laundering and Funding of Terrorism Regulations) or acquires real estate in Malta, in its capacity as trustee of a trust.

• The Regulations have also introduced amendments to the rules relating to access of information. Persons with a legitimate interest may be permitted to request beneficial ownership information. The Authority will then review the request and may decide to accept or refuse the said request. Following a decision of refusal, the applicant may appeal the decision by means of judicial review before the Civil Court First Hall with a right of appeal to the Court of Appeal (inferior jurisdiction).

• The information held in the register of beneficial owners of a trust shall be available through such register for at least ten years after the grounds for registering the beneficial ownership information have ceased to exist.

Amendments to Foundations

In exercise of the powers conferred by the Second Schedule of the Civil Code, Chapter 16 of the Laws of Malta (the “Code”), the Minister responsible for Justice has published the Civil Code (Second Schedule) (Register of Beneficial Owners – Foundations) Regulations, 2020 (the” Foundations Regulations”) by means of L.N. 25 of 2020. The Foundations Regulations repeal the Civil Code (Second Schedule) (Register of Beneficial Owners – Foundations) Regulations (S.L. 16.15) which were previously in force.

The main amendments are highlighted hereunder :-

• The Foundations Regulations introduce new definitions on administrators, commercial transactions, directors, private foundations, transparent foundations, together with other amendments.
• The Foundations Regulations have strengthened the rules on the obligations to obtain and keep records of beneficial owners.
• The Foundations Regulations have also introduced rules in relation to foundations established prior to 30^th June 2019 and foundations established after 1^st July 2019 up to the date of the coming into force of the Foundations Regulations.
• The Foundations Regulations have also introduced amendments to the rules relating to access of information. Persons with a legitimate interest may be permitted to request beneficial ownership information. The Registrar for Legal Persons will then review the request and may decide to accept or refuse the said request. Following a decision of refusal, the applicant may appeal the decision by means of judicial review before the Civil Court First Hall with a right of appeal to the Court of Appeal (inferior jurisdiction).

Amendments to Associations

In exercise of the powers conferred by the Second Schedule of the Code, the Minister responsible for Justice has published the Civil Code (Second Schedule) (Register of Beneficial Owners – Associations) Regulations, 2020 (the “Associations Regulations”) by means of L.N. 24 of 2020. The Associations Regulations repeal the Civil Code (Second Schedule) (Register of Beneficial Owners – Associations) Regulations (S.L. 16.16) which were previously in force.

The main amendments are highlighted hereunder :-

• The Associations Regulations introduce new definitions on administrators and directors, together with other amendments.
• The Associations Regulations have amended the rules on the obligations to obtain and keep records of beneficial owners.
• The Associations Regulations have amended the rules applying to associations established prior to 30^th June 2019 and associations established on or after 1^st July 2019 up to the date of the coming into force of the Associations Regulations.
• The Associations Regulations have also introduced amendments to the rules relating to access of information. Persons with a legitimate interest may be permitted to request beneficial ownership information. The Registrar for Legal Persons will then review the request and may decide to accept or refuse the said request. Following a decision of refusal, the applicant may appeal the decision by means of judicial review before the Civil Court First Hall with a right of appeal to the Court of Appeal (inferior jurisdiction).

Amendments to the PMLFTR

Inexerciseofthepowersconferredbythe PreventionofMoneyLaunderingAct,theMinisterforFinance, acting on the advice of the Financial Intelligence Analysis Unit, has made the Prevention of Money Laundering and Funding of Terrorism (Amendment) Regulations, 2020 (the “PMLFTR Regulations”) bringing about changes to the PreventionofMoneyLaunderingandFundingofTerrorism Regulations.

The PMLFTR Regulations have brought about slight amendments to the definition of beneficial owner. New provisions have also been introduced in relation to casinos, gaming licenses and electronic money. The PMLFTR Regulations have also introduced new provisions regulating the Financial Intelligence Analysis Unit.