Due Diligence Process
The due diligence process which has been developed and adopted by the Malta Individual Investor Programme Agency (MIIPA) has garnered several international positive reviews. This is the result of an open-minded approach and the continuous development of internal processes to ensure that only the rightful applicants make it through the programme. The programme is not about numbers, but more about quality and attracting talent who can prove to add value to the country.
The Different Stages of MIIPA’s Due Diligence Process
The Malta IIP has a four-tier due diligence process, which is considered the most stringent, and of the highest standard, in the industry.
The first tier is the standard KYC due diligence done by both the IIP Unit and the Agent through databases such as World-Check.
The second level is the clearance obtained from the Police Authorities following thorough checks through a number of databases, such as Interpol, Europol and others. Any issues encountered at this stage are reported back to the IIP Unit. It has to be pointed out as well that to be able to visit Malta, Third Country Nationals (TCNs) have to go through the standard Schengen screening procedures.
The IIP team takes care of the third tier of due diligence. There are two stages at this level. The first is that of completeness and correctness of the application. This in itself would identify anomalies in the application form that highlight any potential risk. Every kind of accompanying documentation submitted to the IIP Unit is checked to ensure that it has been filled in correctly and that the documents are submitted in the proper format, correctly translated, and apostilled or notarised as the case may require. Where documents are missing or not in the correct format, or errors are identified, a request for submission is made to the agent representing the family applying for Maltese citizenshiup and the application process is paused until everything is in order. The second stage is that of a thorough and in-depth online due diligence check and verification of documents submitted. These checks involve checking with international databases for sanctioned individuals and companies. Searches are conducted on all the members of the family applying for citizenship, their corporate affiliations, any significant one-time transactions, donations, or inheritance, and any significant business partners or very close associates.
The fourth level is conducting outsourced due diligence. Two reports are commissioned from international companies on every family to ensure that as much ground as possible is covered and no stone remains unturned. These checks would include verification of all the information submitted, checks with databases, both international and local, in each of the family’s country of residence, and even discreet on the ground interviews with individuals who know the family.
As soon all these checks are done, another member of the due diligence team reviews all the information collected both internally and externally and puts all the pieces of the jigsaw puzzle together to prepare an internal memo. In cases where more clarity is required, the IIP Unit goes out with further questions to the applicant to ensure it has the right and proper picture of the family’s application. Where necessary, information is bounced back with the due diligence companies to ensure coherence.
Once all questions are answered, every application is first discussed internally within the IIP Due Diligence team. The team is composed of eight individuals from a banking and audit background, and who are trained in anti-money laundering regulations. Together, they share the information internally and corroborate the information gathered, which is then discussed again with the senior management team within the IIP Unit. If the team deems that more information or clarifications are required before a recommendation is made to the Minister, these are requested from the applicant. In some instances, another report is requested on specific areas of concern.
Finally, the senior management of the IIP takes a collective decision where a recommendation is prepared and submitted to the Minister responsible for Citizenship, with all supporting documentation of due diligence reports and findings. The Minister, together with the team, reviews the findings again upon which a final decision.
Due diligence within MIIPA is taken very seriously. All employees working in the due diligence section go for an AML course to have a better understanding of what is expected of them. In addition, the employees within this section all have previous experience in either Risk and Compliance or Audit.
The due diligence process has evolved substantially during the past years. The IIP Unit has developed an internal risk matrix, which ensures that every application is being examined thoroughly in a consistent manner, and that decisions are taken systematically and transparently. The matrix has seven categories, and every application is treated similarly without deviations.
Identification and verification
Identification and verification is the first category of the risk matrix and looks at how the identity of the applicants has been established and verified, while considering all the countries the applicants have resided in over the ten years preceding the application.
Business and Corporate Affiliations
The second category looks at the Applicant’s business and corporate affiliations and takes into consideration ties with offshore activity, jurisdictions and industries.
Politically Exposed Persons (PEPs)
A category in itself is where applicants are politically exposed persons (PEPs) and are or have been on sanctions or watch lists.
The fourth category of the risk matrix, which today constitutes of the most significant focus of the due diligence process, looks at establishing how the family have accumulated their wealth, and from where the funds for financing the application originate. The risk assessment under this category has an even stronger focus on documented evidence, at times delving into extremely granular detail such as bank statements, articles of association, share registers and certificates of incorporation, certified copies of contracts, and transactions amongst others.
The applicants’ reputation constitutes the fifth category of the risk assessment matrix, taking into consideration the overall reputation observed through OSINT, reports and on-the-ground intelligence.
Legal and Regulatory Matters
We have established that the sixth category would focus on legal and regulatory matters with incremental risk factors based on any charges or convictions for criminal or civil offences, including fines at an incremental interval.
Relative Impact on the PAs Immediate Network
Decisions within MIIPA are documented and substantiated with the required rationale, and signed off by the responsible person, to ensure transparency and accountability.
As an oversight of the whole process, there is also a regulator who reviews all the applications to ensure that the procedures were followed correctly. The regulator is appointed by the government after consulting the opposition party. The regulator prepares a report, which is then presented to a monitoring committee composed of the Prime Minister, the Minister Responsible for Citizenship and the Leader of the Opposition.