Companies licensed or authorised by the Malta Financial Services Authority to provide services were identified as having potentially been used to disguise the origin of criminal proceeds. Photo: Jason Borg

The Financial Intelligence Analysis Unit forwarded to the police a number of suspect cases of companies incorporated in Malta by foreigners and the use of credit institutions licensed under the Banking Act as vehicles to launder the proceeds of criminal funds generated abroad.

The unit’s annual report for 2013, laid on the table of the House by Finance Minister Edward Scicluna yesterday, noted that the main trend observed during the last year was the use of a Malta-registered company having at least one non-resident foreign beneficial owner.

The use of Maltese bank accounts and international wire transfers featured in the vast majority of the cases reviewed by the unit. In some cases, the subjects availed themselves of the services of Maltese professionals and service providers. In such cases, the entities were suspected of having been used unknowingly and unwittingly to launder criminal funds.

The use of companies licensed to operate in the remote gaming sector also featured in a number of cases referred to the police for investigation.

Similarly, companies licensed or authorised by the Malta Financial Services Authority to provide services were identified as having potentially been used to disguise the origin of criminal proceeds.

Widespread fraudulent schemes operated by foreign nationals

The FIAU analysis in these cases was initiated either upon the receipt of intelligence from a foreign agency, which would have identified the link to Malta during the course of an analysis or investigation it was carrying out, or upon the receipt of a suspicious transaction report from an entity that would have identified a suspicion of money laundering.

In one case, a Maltese bank received claims from foreign remitting banks to return the funds remitted as fraudulent activity had been identified.

The analysis of the Maltese companies’ bank accounts revealed the transactions being carried out were inconsistent with the declared intended activities.

Intelligence obtained from the FIAU’s counterparts in another case provided substantial indications that the Maltese companies and bank accounts had been used to defraud hundreds of individuals in foreign countries and to subsequently launder the illicit proceeds.

Both cases involved widespread fraudulent schemes operated by foreign nationals residing outside Malta, which involved several victims, all remitting relatively small sums of money from different countries to bank accounts in Malta held in the name of Maltese companies that were beneficially owned by the foreign nationals.

In another case, the victim was a foreign company that was allegedly defrauded by foreign nationals through dealings carried out through a Maltese company.

Another typology identified in 2013 was the use of Maltese bank accounts by Maltese nationals to carry out licensable activities without the required authorisation from the competent authorities.

Cases involved the suspicion of the laundering of profits of illegal gambling through cash deposits in a bank account followed by substantial wire transfers to online gaming companies registered outside the island.

The FIAU also referred cases to the police involving the deposit of large numbers of cheques in bank accounts over a protracted period of time that were incompatible with the type of business or occupation of the person making the deposits.

It noted three other cases involving the use of substantial sums of cash for the purchase of luxury items by individuals having a history of proceeds-generating convictions, the use of potentially forged withdrawal vouchers to substantiate cash deposits, multiple deposits on the same day at different banks and unreasonable explanations on the source of the funds upon deposits being made.

Several cases involved forged documentation and false invoices being produced by companies to provide documentary evidence in support of wire transfers.

Fictitious back-to-back agreements entered into merely to support very large transfers between companies in different jurisdictions also featured prominently.

The FIAU also examined the attempt to transfer funds of a foreign politically-exposed person by a non-EU bank through a correspondent banking relationship held with a Maltese bank.

The suspicious transaction, which was supported by an invoice that did not appear to be genuine, was very similar to several other cases identified in previous years where high-profile people in African countries attempted to carry out suspicious transfers through banks in their country that, in turn, used corresponding banking relationships with banks in Malta.

A number of cases involved the use of remote gaming accounts held with remote gaming companies licensed in Malta to launder the proceeds of crime.

Cases varied from the use of prepaid cards to deposit potentially illicit funds in the remote gaming accounts with eventual withdrawal taking place through bank accounts, to an attempt to transfer funds held in the account to other persons, thereby transferring the ownership of the proceeds of the criminal activity.

Cases of this nature invariably involved foreign nationals.

The FIAU annual report says that a number of suspicious transaction reports were considered to be unrelated to money laundering or funding of terrorism and were therefore not subject to analysis.

Nonetheless, those that were subject to analysis were still considered to be of high quality, with a number of disclosures providing extremely valid information both for the unit itself and, eventually, for law enforcement officers.