Malta firm Credence involved in #MaltaFiles investigation fined €261,000 for AML non-compliance - AML Intelligence
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Malta firm Credence involved in #MaltaFiles investigation fined €261,000 for AML non-compliance

Maltese corporate services firm Credence

By Vish Gain for AMLi

Maltese corporate services firm Credence has been fined €261,000 by the country’s top regulatory authority for not complying with money laundering rules, MaltaToday reported.

The company offers financial advice to government institutions, public and private banks, multinationals and high net-worth individuals. Credence has previously been under fire for its involvement in a #MaltaFiles exposé conducted by The Black Sea and European Investigation Collaborations (EIC) on tax avoidance in Malta.

The fine-issuing authority, Malta’s Financial Intelligence Analysis Unit (FIAU), said it found shortcomings in the company’s AML obligations. Its Business Risk Assessment unit did not sufficiently identify ML/TF risks the company is exposed to, nor did it refer to the company’s measures to mitigate these risks, according to FIAU’s statement.

The statement said the company also failed to assess its control measures and determine the level of residual risk it was exposed to. Having failed to carry out 26 jurisdictional risk assessments, the company was also found to be guilty of increasing geographical risk arising from business relationships with its clients.

During an onsite examination, the FIAU found that Credence had files under the high-risk category that it had failed to carry out Enhanced Due Diligence (EDD) on. EDD is the additional information collected for higher-risk customers to provide a deeper understanding of customer activity to mitigate associated risks.

This included one client with links to Iran and Panama, two FATF high-risk countries.

The recurring theme in all of the inconsistencies and inadequacies of Credence’s risk assessment and accountability was that it was dependent on the clients’ third-party accountants to provide required information despite offering directorship services itself, the FIAU noted.

Credence describes itself as a company born out of the strategic alliance between two commercial law firms and an accountancy services firm, “conceived to create an accessible team of experts to advise on the increasingly sophisticated structures offered by Maltese financial services legislation”.

It has been under fire in the past for its involvement in Turkish President Tayyip Erdoğan’s family’s offshore network, revealed by online investigative magazine The Black Sea’s reports under the #MaltaFiles scandal. Credence also provided corporate services to Russian billionaire Oleg Boyko’s fast loan company that avoided millions in tax by remitting profits to Malta.

The Black Sea #MaltaFiles project in collaboration with the European Investigative Collaborations (EIC) has been at the forefront of investigating Malta’s financial crime problem, digging into over 150,000 documents to expose how international companies use Malta as a pirate base for tax avoidance in the EU and elsewhere.

The Mediterranean island nation and EU member-state has a reputation for financial crimes and being a haven for global tax avoidance. This is partly due to Malta’s imputation tax system which charges companies a high income tax rate of 35%, only to refund up to 6/7ths of the amount if the company’s activities and shareholders are mainly based abroad.

In 2017, Maltese investigative journalist Daphne Caruana Galizia was killed in a car bomb incident after her reports based on sensitive information acquired on Maltese politicians and businessmen through the Panama Papers.

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