Category: News

Information on Beneficial Ownership: Trusts and Trustees

On the 1st January 2018, new regulations came into force concerning the operation of a Central Register of Beneficial Owners for trusts and trustees, for companies, for associations and for foundations.  This Central Register collects information on beneficial ownership of these structures or entities, in a continued fight against financial crime.

What does it mean for trusts?

For trusts and trustees, the rules only apply to express trusts generating tax consequences.  Within 14 days from being appointed as a trustee of an express trust, authorised trustees must submit a declaration of ownership to Malta Financial Services Authority (MFSA) where such trust has tax consequences.

The regulations list the information to be provided by the trustee regarding every beneficial owner, and this without prejudice to any customer due diligence (CDD) carried out under the anti-money laundering regulations. CDD must be carried out before any such information is passed on to MFSA.

Where the beneficiaries of a trust are a class of beneficiaries, special rules apply concerning the description of the class as well as inclusion of family members.  Limited information is to be provided where the trust is set up for charitable persons without any beneficiaries or classes of beneficiaries in whose name the trust is set up (drafting is a little unhappy here).

The MFSA will keep a register for this purpose, and information must be such as to allow MFSA to fulfil its duties under the regulations.  Changes in beneficial ownership must be notified to the MFSA within 14 days.

If the change is made to the trustee, the latter is required to inform MFSA.  An declaration stating that there has been no change is to be submitted yearly after the first declaration made, to be signed by the trustee.  MFSA should make such information available to listed competent authorities for tax and anti-money laundering.

It is worth noting that changes to be notified include a change in passport number (e.g. issue of a new passport) or a change in registered address of the UBO.

In exceptional cases where disclosure of such information would expose the UBO to danger, such information must not be disclosed.

Obligations to file beneficial ownership information

Subject persons may not rely solely on the register to fulfil their CDD.  Trustees cannot solely rely on their compliance with these regulations and must comply with requests for information from any subject person carrying out CDD obligations when onboarding or servicing customers.  Data protection rules still apply to information processed in terms of these rules.

For trusts having tax consequences where a trustee was appointed before 1st January 2018,  trustees have six months within which to provide information to the MFSA.

Administrative penalties of up to EUR 150k are applicable for failure to comply with the regulations.

The MFSA’s Central Register shall be connected to a centralised European Register.

The regulations provide for electronic submission of such information, making it easier to comply.

Get in touch if you need help changing the information that the authorities held in respect of your business.

Opinion: A Commercial Court for Malta ?

Update (2025): Since this article was first published, a Commercial Court has been established in Malta under the Code of Organisation and Civil Procedure. This opinion piece is retained for archival purposes, reflecting earlier commentary on the topic.

Earlier in 2017, the Ministry for Justice, Culture and Local Government held a public consultation, titled “Setting up of the Civil Court, First Hall, Commercial Section“.  The consultation was then concluded in July 2017.

Wide Range of Questions

Consultation questions included whether there should be a commercial section within the civil arm of the Maltese courts. The consultation also asked whether the remit should be limited to the Companies Act or wider.

Feedback Received

The feedback received applauded the initiative of introducing this section. In the past the Maltese courts included a Commercial Court section. The commercial court was eventually discontinued.

However, in the current litigation climate, both the Government and those participating in the consultation felt that the introduction of this section would increase in the efficiency of justice being delivered.  Naturally, it was considered imperative that the necessary human and other resources are provided.

During the consultation, the feedback mentioned that matters falling under the Commercial Code should also be included within the scope of this section’s jurisdiction. Others suggested that other laws such as the Trusts and Trustees Act and other codes that deal with matters of a commercial nature (e.g.  banks) should also fall under this court’s jurisdiction.

Existing Procedures and the New Court

The court’s general area of competence and procedure are still unclear.  Most procedural matters are generally regulated by the Code of Organisation and Civil Procedure. A new court would need to have its own rules of procedure, or somehow be regulated by this Code.  The Code regulates the procedure of all the civil courts in Malta.

The use of alternative dispute resolution mechanisms, including pre-trial conferences and/or arbitration or mediation were also considered an efficient means to resolve disputes.  They can provide direction in cases that are deemed to be high-risk or that are of a delicate nature.

The consultation respondents further referred to the implementation of online filing and payment of fees.  At the time of writing, only physical payment and filing of court cases is possible.   This renders the process inconvenient and unwieldy for most professionals and increases crowding in court.

Respondents additionally suggested other legislative amendments to be made alongside the setup of this new commercial court.  These amendments would ensure that the new Bill respects the current legal framework.

In late 2017, the Government published its response to the consultation. In the response, the Government stated that, subject to Parliamentary approval, it plans to enact the new legislation in early 2018. The plan is for the new Commercial Section  to commence operation in the second quarter of 2018.

FIAU Press Release on Penalties

Following the coming into force of the Various Financial Services Laws (Amendment) Act, 2017 (Act XXVIII of 2017) on the  1st December 2017, publication of administrative penalties imposed by the Financial Intelligence Analysis Unit (“FIAU”) for one or more contraventions of the Prevention of Money Laundering Act (“PMLA”) and/or of the Prevention of Money Laundering and Funding of Terrorism Regulations no longer falls under Article 13A of the PMLA but by the new Article 13C.

Article 13C now provides for the publication of administrative penalties where these exceed €10,000 and have become final and due.  Publication is to take place in accordance with policies and procedures set by the FIAU’s Board of Governors.

The then-existing Policies and Procedures were revised on the 22nd  December 2017, to take into account the changes brought about by the new Act as well as the requirements of Directive (EU) 2015/849 relative to the publication of administrative sanctions.

The revised version of the said policies and procedures is available on the FIAU’s website and can be accessed through the following link – http://www.fiumalta.org/penalties .

The FIAU advises subject persons to become familiar with these policies and procedures.

Queries on the matter are to be sent to legal@fiumalta.org.