By Vish Gain for AMLi
Maltese card company Insignia Cards Limited has been fined €373,670 for non-compliance with anti-money laundering regulations.
The Financial Intelligence Analysis Unit (FIAU), the country’s top financial crime watchdog, issued a notice Friday stating the reasons behind the move. Apart from the fine, the company was also reprimanded and issued a set of follow-up directives in line with the Prevention of Money Laundering Act.
The Insignia Group, launched in 2011, describes itself as a luxury lifestyle management company that provides financial services to ultra-high net worth individuals in Europe, the US, and Asia. It rolled out its cards services for clients in Malta and Europe in 2013.
According to the FIAU notice, Insignia failed to meet several compliance requirements, including:
- Several deficiencies in Business Risk Assessment and Customer Risk Assessment
- Inadequate measures to obtain customer ID and documentation
- Deficiencies in Enhanced Due Diligence and Customer Due Diligence
- Failing to investigate suspicious transactions and report them to the FIAU
The notice also identified several instances where the company breached its obligations.
For example, one file pertaining to an individual was deemed high risk by the company due to his politically exposed status and adverse media links pertaining to ties with the Russian mafia. However, as an EDD measure to potentially mitigate the serious nature of the allegations and ML/FT exposure emanating from the customer, the company was satisfied with obtaining, through an independent source — the company’s internal source of wealth declaration form.
The notice stated that the form is based on estimated earnings and assets, and does not provide sufficient comfort pertaining to the legitimate origin of the source of wealth and source of funds which are to pass through the company, especially in view of the high-risk posed by the customer’s political status.
In another file, a married couple were raised from the medium to high-risk category after they were convicted of £2 million in fraud relating to the listing of thousands of pounds of illicit tickets. The customer used Insignia cards to perform illegal transactions with online ticket platforms that were connected to fraud activities the customer was accused of in 2012.
Despite sufficient knowledge that the customer was involved in money laundering, the company did not submit a suspicious transaction report to the FIAU.
The notice states that apart from the €373,670 fine and a legal reprimand, the company was also issued a sweeping set of follow-up directives to overhaul its high-risk business model. Through the directives, the FIAU is requesting the company to make available a detailed action plan pertaining to all the breaches identified following the compliance examination.
As a final warning, the company has been asked by the FIAU committee to provide the action plan within specified deadlines to avoid further administrative measures, including the imposition of an administrative penalty.
Insignia’s chairman Joseph Zammit Tabona has previously served as the Government of Malta’s High Commissioner to the UK and Ambassador to the Republic of Ireland till 2013. In 2013, he was appointed as Special Envoy to the Prime Minister of Malta for Investment Promotion.
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