A comparative analysis of the implications of the fifth anti-money laundering directive for the notarial profession : a case study of Malta and Italy

Abstract

The rise of financial crime and the proliferation of terrorism led to the founding of the FATF, an organisation which combats money laundering and terrorism funding. The EU implemented the FATF's recommendations through the promulgation of successive AML Directives, which were transposed into Maltese law through the PMLA, the PMLFTR and the four Beneficial Ownership regulations. The Maltese AML legal and regulatory framework imposes AML and CFT obligations upon notaries, co-opting them in the fight against money laundering and terrorism funding. These obligations include the duties of risk assessment and management, compliance, and customer due diligence, as well as the duties of record keeping, reporting and training. To strike a balance between notaries' AML/CFT obligations and their duties of professional secrecy and client confidentiality, the Maltese regime limits notaries' AML/CFT obligations to only be applicable when notaries carry out relevant activity. A comparison with the AML/CFT regime applicable to Italian notaries reveals that both regimes are closely aligned: the AML/CFT obligations of Italian notaries are largely uniform with those of Maltese notaries, and Italian notaries’ obligations are also limited to only apply when relevant activity is carried out. However, some divergences do exist: the Maltese model adopts a prescriptive approach while the Italian framework affords a greater degree of discretion and flexibility, and the Italian attitude towards AML/CFT compliance differs from that which is found in Malta. This report comparatively assesses the impact of the Fifth Anti Money Laundering Directive on the Maltese and Italian Notarial Professions by discussing the legal and regulatory framework, and exploring the manner in which both professions fulfil their AML/CFT obligations in everyday practice.