FIAU publishes Guidance Note on ‘The Use of Cash and the Banking Sector’

Last Friday, the FIAU published a Guidance Note entitled ‘The Use of Cash and the Banking Sector’, which applies primarily to credit institutions and other subject persons that carry out activities that involve the deposit and withdrawal of cash.

The note provides guidance as to how these subject persons can comply with their AML/CFT obligations under the Prevention of Money Laundering & Funding of Terrorism Regulation, the FIAU Implementing Procedures and the Use of Cash (Restriction) Regulations (S.L. 373.04) when dealing in cash. The Guidance Note provides a detailed overview and a series of examples as to how cash-associated money laundering and terrorism financing risks can be detected and mitigated, while also outlining cash-related red flags.

The Use of Cash (Restriction) Regulations (S.L. 373.04) came into force in March 2021 with no retroactive application. As a mitigating measure considered necessary following the publication of the National Risk Assessment in 2018, these Regulations aim to deal specifically with cash-associated ML/FT risks and to contribute towards the curbing of cash payments within the sectors that are considered to be the most vulnerable for money laundering and terrorism financing purposes. These Regulations prohibit the carrying out of cash transactions amounting to €10,000 or more (or its equivalent in another currency) for the sale or purchase of certain high-value goods, specifically antiques, immovable property, jewellery, precious metals, precious stones and pearls, motor vehicles, sea-craft and works of art.

In relation to cash deposits, the guidance note emphasises the importance for subject persons of having in place sufficiently robust and detailed business and risk profiles of customers, as well as the ability to have a holistic view of transactions for their customer base, particularly on the expected volume of transactions. Indeed, subject persons are expected to have the capability of determining from the outset the type and volume of activity they can expect from their customers, while also detecting any unusual depositing patterns. In relation to cash withdrawals, the FIAU stresses that ongoing monitoring is key, and that doubts on the legitimacy of deposits should be cleared when the funds are placed on the customers’ accounts, and prior to the customer effecting any withdrawals. In addition, the FIAU advises subject persons to focus on the manner in which withdrawals are made, rather than merely concentrating on the value of withdrawals.

Subject persons are reminded of their duty to report breaches of the Use of Cash (Restriction) Regulations via the GoAML portal. The general public can report any suspected breaches of these Regulations here.

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