A Look Through the Obligation of Transaction Monitoring

11th April 2023

Subject persons (SPs) have a number of obligations under the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR), including the obligation to carry out on-going monitoring. A main aspect of on-going monitoring is that of scrutinising unusual, anomalous and suspicious transactions detected through the systemic and continuous review of customers’ transactions. When properly executed, transaction monitoring allows SPs to single out transactions that are to be reported to the Financial Intelligence Analysis Unit (FIAU), and enables them to gain deeper insights into their customers’ activities, transactional patterns and behaviour. The ultimate goal remains that of minimising the risk of illicit funds entering the Maltese economy, thus safeguarding the integrity and stability of the financial system.

While all SPs have a critical role to play in the fight against financial crime, this guidance paper focuses on the transaction monitoring requirements pertaining to institutions which process payments and similar transactions for and behalf of customers, including but not limited to, banks and other depository institutions, electronic money (e-money) institutions, payment service providers (PSPs) and merchant acquiring companies. This document provides an overview of the statutory requirements that these institutions must fulfil from a transaction monitoring perspective, and describes the optimal transaction monitoring measures and systems that such institutions should strive towards implementing in order to meet their legal obligations.