https://www.um.edu.mt/library/oar/handle/123456789/90678 2026-04-11T07:43:55Z https://www.um.edu.mt/library/oar/handle/123456789/91166 Title: The application of SDD and EDD to notarial occasional transactions : a risk-based approach Abstract: In the past few years, much more importance has been given to anti-money laundering and combating the financing of terrorism owing to concerns following the rise in these two crimes. Hence, obligations were imposed on certain professions and financial institutions so one is able to detect any suspicious transaction. Money laundering involves a process whereby money obtained illegally is given a clean face by passing the money through a number of different transactions to make the source of funds appear legitimate. This is done through three stages; the placement stage where the illegal money is moved from its source and placed into the country’s financial system; the layering stage which conceals and losesthe trail of money from its source through complex transactions; and the final stage known as integration where the illegal funds are integrated into the legitimate economy, purporting to be licit funds, which allows the money launderer to use the money as he wishes. On the other hand, funding of terrorism refers to the process of collecting, receiving and providing funds, with the intention of being utilised to fund terrorist activities. However, the said funds may be derived through both legitimate and illegitimate sources. It is the intended use of said funds which makes this activity a crime. In view of the above definitions, notaries will encounter certain notarial transactions which may be involved in a ML/FT crime. On this matter, reference must be made to the definition of ‘relevant activity’ found in Regulation 2 of the PMLFTR. The occasional notarial transactions considered to constitute a relevant activity are sale of real property and business entities, and the creation of companies, trusts, foundations or similar structures i.e. trust deed, deed of foundation, etc. This is so because transactions used to launder and conceal illegal source of money could very easily be one of above mentioned. With regards to funding of terrorism, this may be done through the setting up of non-profit organisations who will receive donations, or by setting up legitimate businesses to collect funds, which might at time require notarial transactions. For these reasons, notaries are subject persons obliged to carry out AML/CFT obligations in order to avoid being involved in these crimes, and more importantly, to be able to detect any suspicious transaction which should be reported to the appropriate authorities. For the purposes of this report, the focus will be on occasional transactions as defined in Regulation 2 of the PMLFTR, specifically since the definition includes transactions exceeding €15,000, whether carried out in a single operation or in several linked operations. This is because business relationships require an element of duration which thus seems to target other institutions such as banks, other financial institutions and insurance companies. Thus, public deeds and private writings are deemed to be occasional transactions.8 The importance of remarking the distinction between occasional transactions and business relationships is because the latter brings about more CDD measures to be implemented by the subject person. Hence, in this report, such additional measures will not be explored by the author. Moreover, this report will strictly deal with CDD measures ancillary to notarial transactions and will not deal with other AML/CFT obligations which are more general and related to the ‘notarial office as a business’ such as having in place a BRA, ensuring that employees handling any anti-money laundering obligations themselves are aware of the measures and policies to be undertaken, carry out training of such employees and more. Despite this, it must be kept in mind that the BRA is still useful to assess the risks of ML/FT, since it provides for ‘an assessment of risk that one’s business is in general exposed to,’ by taking into consideration the nature and size of the business. However, the BRA is something, which although must remain updated especially if new changes in the business activities are made, or new risk factors are discovered, it does not differ for each and every customer or transaction but is commensurate to the business. Following the brief introduction on why notaries are considered subject persons, the focus of this report will shift on the risk-based approach, and SDD and EDD, since both these levels of due diligence are based on such an approach. Through this report, the author aims to answer the questions of what the applicable measures under SDD and EDD are and what they entail in more practical terms, which will further allow the author to observe the differences noticed between SDD and EDD. The author will also delve into situations where SDD and EDD may or shall be applied. The methodology implemented for this report is mainly a desk-based approach, focusing on current applicable legislation and publications by the relevant authorities. An informal interview with an FIAU representative will also be held which will assist the author with understanding the practical side of the AML/CFT obligations imposed on notaries. Ultimately, the use of both methods will allow the author to arrive at a clear answer to the chosen research question since the author will be able to comprehend both the theoretical as well as the practical situation. Description: LAW5006_Professional Practice for Notaries 2021-01-01T00:00:00Z https://www.um.edu.mt/library/oar/handle/123456789/91164 Title: Implementing the electronic signature on notarial instruments : a comparative study Abstract: In today’s fast-paced world, almost anything may be achieved instantly, primarily due to continuous technological developments. The electronic signature (e-signature) is an advancement that has paved the way to executing several business transactions electronically. It is a substitute to the wet-ink signature, at the same time it widens the options available to Notaries in the execution of notarial instruments, by providing the option of signing documents virtually. The professional services sector is one of several types of businesses benefitting from such electronic transactions. Indeed, the notarial field too cannot escape this modernisation, and in fact a number of European Member States are actively implementing communication systems between Notaries, public administration departments and clients via electronic channels. The e-signature allows for cross-border transactions, or where the parties to a contract may not be present at the same time before the Notary. The convenience of concluding notarial transactions at a distance, thus saving time as well as travelling expenses has become a priority. Indeed, this is reflected in the fact that several European countries already administer public registers in electronic form. In France, the notarised act is signed electronically. In Italy, although some notarial instruments are still signed in wet-ink, they are nonetheless all sent to the public administration departments electronically, after being authenticated by the Notary. By 2007, Civil Law Notaries were already investing in the implementation of e-signature infrastructures, when only a few years before, the advancement of such technologies was almost considered a threat.4 The e-signature enables the completion of documents that can be transferred over the internet with merely any risk of forgery. European Union Member States were encouraged to implement the e-signature with the coming into force of European Regulation No 910/2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC. This Regulation has created a European legal framework for the acceptance of the e-signature. Italy and France both recognised the e-signature earlier through other regulations, which were later standardised through the eIDAS Regulation. The main aim of this professional report is to examine the provisions of the eIDAS Regulation regarding the legal validity of the e-signature in the performance of notarial instruments, and how these regulations are being implemented by European Member States’ following the civil law system. The study will focus on state practice in this area in two European Union Member States, namely France and Italy. Consequently, their respective laws and regulations on the legal validity of the e-signature will be examined and compared. More specifically, the report will attempt to answer the following main research question: What would be the advantages and obstacles for the implementation of the e-signature in the performance of notarial instruments in Malta? Yet, the system comes with a price tag, as it requires an investment in technological resources to enable it to run efficiently, whilst also securely. Aims and Objectives Covid-19 lockdown and self-isolation restrictions have raised a number of issues in civil law states like Malta, where the e-signature has not yet been given the same legal effect as the wet-ink signature for use on notarial instruments. In fact, last year an assessment of the current laws was conducted for the purpose of establishing whether the electronic signature may be implemented by Notaries to execute promise of sale agreements and mandates in relation to acquisition of property. Indeed, the pandemic has brought more awareness on the need to reform this tradition, thus compelling both civil and common law jurisdictions to speed up the process of adopting the relevant laws and regulations to adapt to contemporary needs posed by the stay-at-home restrictions and social-distancing mandates. This professional report will look at two States, namely Italy and France, selected purposely from the civil law family to match with Malta. Unlike Malta, they have been implementing the e-signature on notarial instruments for a number of years. Thus, the aim is to learn by analysing the systems of both States, which have been up and running and in continuous development. This, in an attempt to provide the Maltese notarial field with the knowledge and expertise gained by other Notaries who have been actively making use of digital technologies in the exercise of their profession. A previous study on electronic notarisation (e-notarisation) focussed on the national laws of a number of European Member States to determine whether they allow the electronic signing of notarial instruments. It then also examined the amendments that the Maltese legislator would be required to make to national law, should it be made possible for the Maltese Notary to execute his functions electronically. The aim of this study on the other hand, is to examine how a notarial instrument may be signed electronically. This, with the aim of providing the Maltese notarial field with different practices adopted by Italy and France in the implementation of the e-signature on notarial instruments. The study will also attempt to provide insight on the required infrastructure for such a system to function safely and securely. This report adopts a comparative research methodology. It involves some analysis of primary sources which include national and international legal frameworks. The analysis is supplemented by information from secondary sources such as articles from international law journals and research papers. Official websites of Notaries of Europe, such as Notaires de France, Notaries of Europe and the Consiglio Nazionale del Notariato. These have been of fundamental importance, as they provide the latest and most reliable information in relation to the topic, which is in continuous development Section 1 will examine the electronic notarial instrument by looking at the eIDAS Regulation, the European legal framework whose aim is to create uniformity amongst European Union Member States in relation to the legal validity of the e-signature. Therefore, the relevant provisions to this effect will be analysed. The study will then move on to explain the role and functions of the Italian Notary. Subsequently, the Italian laws and regulations in relation to the e-signature will be examined, after which a detailed analysis of the process of signing an Italian notarial instrument electronically will be given. A similar overview about France will follow, which includes the role of the French Notary, and an examination of the laws regulating the electronic notarial instrument, which is in line with the eIDAS Regulation. The section will then move on to give detail on the technological requirements for the system to operate and the steps involved. Section 2 will look at the notarial field in Malta, the role of the Maltese Notary and the formalities for the execution of the notarial instrument. Nonetheless, the highlight is the fact that the electronic signing of public deeds is not yet legally permitted under Maltese law. Subsequently, the study will look at the relevant provisions from the Electronic Commerce Act, Chapter 426 of the Laws of Malta (EC Act), as well as the recent amendments through Act No.XXXIII of 2021, to examine what is permissible under Maltese law and whether these latest amendments allow Notaries to exercise any of their functions electronically. The conclusion will present and tie together the main findings of the report, and provide an answer to the third research question. Where possible, recommendations to the Notarial Field on the subject of the implementation of the e-signature on notarial instruments will also be provided. Description: LAW5006_Professional Practice for Notaries 2021-01-01T00:00:00Z https://www.um.edu.mt/library/oar/handle/123456789/91159 Title: Safeguarding vulnerable testators from vitiated consent : an analytical study of the protective role of the notary Abstract: A will is arguably the notarial deed which by its nature, elicits the rawest form of human emotion when being drawn up since the testator intends to dispose of the accumulation of assets that he has earned throughout his life and his legacy to individuals or recipients of his choice, usually those of which he holds dear or feels that deserve his estate. Toullier holds that a will is one of the greatest comforts that a dying individual experiences. This is why it is of the utmost importance, perhaps even more so than other deeds, that the dispositions contained in wills are entirely an expression of the testator´s will. Having a determining element of outside influence or coercion in a deed of sale for instance, while still bringing about unjust consequences on one of the parties to the deed, is incomparable in substance to testamentary dispositions being inconsistent with the testator´s wishes where the legacy and estate of an individual is at stake. Ensuring the credibility and genuineness of testamentary dispositions should be given high regard in the notarial profession. The notary´s role in this aspect is critical because when one looks at the process of drawing up a will, the notary is the only person besides the parties themselves and the witnesses who is afforded the opportunity of recognising and halting the publication of wills tainted by opportunistic outside influences. Analysing the local situation which essentially pertains to most of Europe and other developed countries, the need to shield vulnerable testators from the predatory intentions of those who seek to seize their estate is gradually increasing. This is due to the fact in Malta and most of Europe, the average life expectancy of the population continues to rise, and this is inevitably associated with a greater possibility of deteriorating mental capacity and cognitive impairment. The challenging of wills is also predicted to escalate as long as the process of an aging population and medical advancements continue. This reality, coupled with the fact that there will essentially always be individuals who intend to take advantage of these vulnerable testators, highlights the need for the legislator to substantiate Malta´s current legislation with additional layers of protection concerning vulnerable testators. It is important to keep in mind that not every instance of influence is sufficient to invalidate a will and render the testamentary dispositions of said will different from the testator´s true intentions. It is human nature to try and place oneself in a more advantageous position when the opportunity presents itself. In the historic case of Wingrove vs Wingrove, Sir James Hadden stated in his decision that “It is only when the will of the person who becomes a testator is coerced into doing that which he or she does not desire to do, that it is undue influence.” Despite the critical importance and potentially grievous ramifications surrounding this area of law, the notary is left largely unguided when it comes to dealing with instances of coercion of testators. In addition, one must keep in mind that it is extremely difficult to challenge the validity of a will on the basis of lack of understanding and volition on the part of the testator, since the testator would not be present to verify or deny claims made in Court and because a will is usually drawn up years before it is opened and its contents take effect. This makes it even more challenging since one must prove in Court that at the moment when the will was drawn up, the testamentary dispositions did not reflect the desires of the testator. This sheds light on the current precarious position of the notary and the necessity of legislative assistance for him to able to adequately deal with these cases. A diligent notary must be attentive to any potential indicators that such pressure is being applied on the testator. Various red flags have been identified over time by legal professionals which may serve as a valuable guideline for a notary aiming to ascertain that such an illicit practice is not taking place in his office. One of the most evident signs of this is when the current testamentary dispositions are inconsistent from those previously drawn up by the same testator in previous wills, while substantially benefitting an individual. Such a situation should give rise to questions on the part of the notary and it should not simply be ignored or assumed to be mere coincidence. While the testator is legally free to dispose of his property in an uneven manner, cases where family members or other close relatives are excluded to the benefit of an individual currently holding a position of potential power over the testator, such as a caretaker could be an indication that the testamentary dispositions being made in the will at hand are not a reflection of the testator´s intentions. Furthermore, the notary must stay attentive to any individuals accompanying the testator who attempt to dominate said testator when the latter is attempting to explain what he wishes to include in his will. Such an individual may be attempting to overpower the testator and influence him into making testamentary dispositions in his favour. There is nothing to exclude the possibility of coercion being applied by the witnesses, who are generally brought in to ascertain that due diligence was present in the drawing up of the will, particularly when the witnesses are individuals who have some sort of connection with the testator. Ultimately, if pressure to a substantial degree is being applied on a testator, there will likely be signs highlighting this that a diligent notary will be able to identify. Despite this, one should be mindful that in order for a will to be challenged successfully on the aforementioned basis, the vitiated consent of the testator must be consistent with what legislation and case law have established. Description: LAW5006_Professional Practice for Notaries 2021-01-01T00:00:00Z https://www.um.edu.mt/library/oar/handle/123456789/91154 Title: The notary as a subject person : where is the line drawn? Abstract: Money Laundering started to gain ground when there was a public concern over organised crime and so governments thought it would be best to trace money and the movement of it in order to detect any suspicious activity. In essence, money laundering is best described as the process through which the illegal nature of criminal proceeds are concealed to give a legitimate and legal appearance. Traditionally, money laundering involves a three-stage process which include placement, layering and integration. Placement is considered to be the first stage of the money laundering process where money is derived from predicate offences. The latter is where an illegal activity takes place from which funds are also derived, for instance, drug trafficking. Drug trafficking is the predicate offence and the money derived therefrom is considered to be the laundered money. This stage is where subject persons have the best chance to identify such funds as being derived from illicit sources. The layering is said to be the most complex stage of the process. Its aim is to make it more difficult for subject persons and enforcement authorities to detect and uncover a money laundering activity by concealing the true origin of the funds. The process through which money is laundered may not be from an illegal activity such as the sale of movable or immovable property which were initially acquired through laundered funds. The last stage is that of integration and this is where the laundered money is integrated with the patrimony of the culprit in a manner that does not raise any red flags with subject persons. There are various ways in which integration could happen, for instance, refund from a life insurance policy which is directly debited to the personal bank account. This three-stage system, although it is widely used, is starting to be cast away due to the increase in monitoring and investigative techniques of Company Service Providers. In fact, throughout the years a shift has been seen as to how money launderers carry out their operations, as the banking sector was being thoroughly regulated, such criminals focused their operations on non-bank financial sectors amongst which is notaries. The notary may be used as a vehicle by criminals to facilitate their illicit acts; to this end, notaries have been placed at the pivot of these pre-emptive measures. In terms of the Prevention of Money Laundering and Funding of Terrorism Regulations (S.L 373.01) hereinafter referred to as the PMLFTR- , anyone who carries out financial activity is subject to anti-money laundering obligations. It is for this reason notaries, as subject persons, have the responsibility of scrutinizing their clients. Due to this, notaries find themselves at a crossroads, between professional secrecy and a position of trust and the legal obligations of Anti Money Laundering - AML. The research question focuses on the obligations of the notary as subject persons. Regulators in Malta dramatically stepped up in their enforcement of AML law and this effort was brought to light with the recent fines being imposed on subject persons. The interest in this research question stemmed from a recent seminar provided by a compliance advisory company where it was observed that notaries are rather lost when it comes to assessing the risk a customer poses. Through a qualitative and a black-letter law approach, the obligations of the notary will be analysed along with the lengths such a professional is expected to go to ensure that their services are not being used for money laundering purposes. Description: LAW5006_Professional Practice for Notaries 2021-01-01T00:00:00Z