Understanding Malta’s New Due Diligence Process – The 7-Step Risk Matrix
Malta has introduced a Risk Matrix as part of its rigorous due diligence process on applications for the newly announced regulations for the Granting of Citizenship for Exceptional Services by Direct Investment (CDI) as per Legal Notice 437 of 2020.
The Community Malta Agency (CMA) is responsible for carrying out the due diligence and verification process of each applicant, who will now undergo additional due diligence checks.
The due diligence comprises a four-tiered due diligence assessment and an internal assessment using a Risk Matrix developed by the Agency.
The CMA has introduced this additional internal risk matrix to ensure the appropriate risk weighting has been carried out following the four-tiered assessment. The risk matrix comprises seven categories to further scrutinise applications as illustrated below.
According to the CMA, the risk matrix has been designed to not only ensure applicants are thoroughly examined, but to ensure applications are assessed consistently, systematically, and transparently. This way all applications are treated and handled in the same manner, thereby eliminating any room for negotiation and ad hoc decisions.
Furthermore, details from all applicants are also submitted to the Financial Intelligence and Analysis Unit (FIAU) for full transparency.
Risk Matrix – The 7 Categories
| 1.Identification & Verification | Analyses how the identity of the applicants has been established and verified including checks on all the countries resided in by the applicants in the 10 years prior to the application. |
| 2.Business & Corporate Affiliations | Analyses the Applicant’s business and corporate affiliations including ties with offshore activity, jurisdictions and industries. |
| 3.Politically Exposed Persons (PEPs) | Analyses whether applicants are politically exposed persons (PEPs), on watch lists or have sanctions against them. |
| 4.Source of Funds & Source of Wealth | Analyses how applicants’ have accumulated their wealth and the source of funds used for the application. Focus is placed on scrutinising detailed documented evidence in: bank statements, articles of association, share registers, certificates of incorporation, certified copies of contracts, and transactions. |
| 5.Reputation | The applicants’ reputation is taken into account assessing on- the-ground and open-source intelligence (OSINT) and reports. |
| 6.Legal & Regulatory Matters | Analyses risk factors based on any charges or convictions for criminal or civil offences of the applicant. |
| 7.Relative Impact on the Main Applicant’s Immediate Network | Analyses the activities and relative impact on the immediate network of the applicant and within society. It includes any incidental area not covered in the other six categories. |
Throughout the due diligence process, if further information is required at any given stage, the CMA will seek additional clarifications. Once the findings of each assessment are finalised these will be presented to the Minister on the eligibility for citizenship.
The CMA continues to monitor the successful applicant for five years.
Kenneth is the Managing Director and co-founder of Vertex Alliance. By profession, Kenneth is a qualified and warranted accountant and tax advisor, and his expertise lies in residency and citizenship, international taxation, and wealth structuring. Previously, Kenneth held the position of Senior Director at an international law firm for a span of fifteen years, whereby he led both the Tax Advisory and Tax Compliance Departments as well as the Residency and Citizenship team responsible for the Asian market.