FIAU Fines Maltese Investment Fund €300,000 for ‘disregard’ of AML Rules

The FIAU said that Southern Cross Sicav showed ‘disregard’ for its anti-money laundering obligations, which gave way to the flow of ‘millions’ in the absence of ‘robust’ controls.

The Financial Intelligence Analysis Unit (FIAU) said in a public notice that the Southern Cross Sicav showed ‘disregard’ for its anti-money laundering obligations. As a result, there was a lack of ‘robust’ controls to prevent money laundering and terrorism financing. 

The fund is currently in the process of surrendering its MFSA license and was fined €300,000 by the FIAU for ‘serious’ AML failures during its years in operation.

According to the FIAU notice, the ‘lack of regard’ from Southern Cross Sicav for its anti-money laundering obligations impacted not only its operations but also had negative effects on Malta. 

Last year, Malta was graylisted by the FATF (Financial Action Task Force), a global financial watchdog, for failure to combat financial crime. The FIAU found Souther Cross Sicav to lack adequate documentation for its internal processes to combat money laundering and failed to conduct background checks of customers before accepting their money.

The FIAU unit also found that Southern Cross failed to ask one of its clients, a university, the reason for investing its returns into the fund. Even though Southern Cross successfully identified the high-risk nature of its relationship with the university, it was unable to gather sufficient information and documents to determine the potential risk of money laundering.

“This would include evidence to confirm that the university could in fact afford such involvement, that the source of wealth of the university is backed with the necessary evidence and that the rationale for the university investing its returns from tuition fees in aircraft leasing made economic sense for it”, said the FIAU.

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