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A payment service provider (PSP) whose licence was revoked by the Malta Financial Services Authority (MFSA) has had a €156,000 fine for anti-money laundering failures slashed by a court of appeal.
The Court of Appeal confirmed the country’s Financial Intelligence Analysis Unit’s (FIAU) findings of inadequate internal controls by the company.
However, it opted to cut back the fine imposed, which now stands at €31,000.
According to the court, the original sanction was deemed to be “too high”.
Local press reports show that the FIAU had said the company, Corporate & Commercial FX Services Limited (CCFX), was failing to adequately carry out due diligence checks on its clients.
In addition, high-value transactions were not adequately scrutinised. In one instance, the FIAU said that the company had “ignored” a €1.2m transaction by a client, without seeking to understand the source and origin of funds behind it.
Another client was discovered to have executed over €2m worth of transactions, despite having told the PSP that turnover on that account would not exceed €50,000.
CCFX, whose website appears to no longer work, had its licence withdrawn by the financial services watchdog in August 2020.
At the time, the MFSA said that it has “determined that the Company failed to adhere to its obligations,” citing the fact that it was not complying with a conditional requirement to have at least two individuals who are effectively directing the business of the institution in Malta.
According to the MFSA, it had also failed to ensure and maintain an internal governance structure necessary for the undertaking of its activities and to ensure that effective procedures are in place to identify and manage the risks to which it is or might be exposed.
The company is now in the process of appealing the decision by the regulator to revoke its licence, taking the case to the financial services tribunal.
Malta has taken a tough approach to payments institutions in recent years, following criticism from EU bodies about the management of its large offshore banking sector.
For example, CCFX’s licence was withdrawn by the MFSA at the same time as a company called AYN.
Speaking to VIXIO at the time, the MFSA said that more payments and e-money institutions are likely to lose their licences, considering the fact that these are so-called "high risk" sectors.
Currently, the country is working to make its way off the Financial Action Task Force’s grey list, having been added last year.
FATF has recently conducted an onsite visit, alongside the Council of Europe’s MONEYVAL.
