Is it time to extend the register of beneficial owners, of Maltese legal persons, to foreign legal persons having sufficient link to Malta?

Abstract

In a world characterised by heightened global connectivity and the persistent threat of money laundering, the necessity of robust beneficial ownership registers has come to the forefront of regulatory discourse. Legal entities have been utilised as conduits for money laundering for many years. Their appeal lies in their ability to enable criminals to establish layers of opacity between their identities and the illicit proceeds of their activities. Similarly, foreign legal entities have become instrumental in facilitating money laundering activities. The establishment of foreign legal entities in other countries for illicit purposes has become a significant challenge that jurisdictions must address comprehensively. Malta’s existing beneficial ownership register is currently restricted to Maltese beneficial owners only. The persistent challenge of money laundering has raised questions about the adequacy of the existing beneficial ownership register and measures to address this financial crime. In this study, the author first examines the importance of beneficial ownership registers and the current Maltese beneficial ownership register with the “Multi-Pronged Approach” that it adopts as per FATF recommendations. Through the course of this study, a thorough analysis of the possibility of extending the Maltese beneficial ownership register for foreign legal persons having a sufficient link to Malta is to be addressed. This analysis is to highlight the importance of enhancing corporate transparency and the urge to mitigate financial crimes. In light of this, reference is made to the UK’s new register of overseas entities. Given that the UK is currently the only jurisdiction with an operational ROE, it serves as an ideal model for assessing how Malta could potentially extend its beneficial ownership to mitigate risks associated with foreign legal persons. This study explores various recommendations for the incorporation and establishment of this register. Additionally, in addressing what can constitute a sufficient link to Malta, the author analyses different sufficiency tests that could be adopted to determine qualification.