The interplay between corporate governance and AML compliance in Malta : examining the evolving obligations, implications, and challenges for directors

Abstract

This dissertation examines the intersection between corporate governance and anti-money laundering (AML) obligations in Malta, focusing on the expanding duties and liabilities of directors of Maltese companies. It analyses national and EU legal instruments and best practices to explore how directors must navigate increasingly complex compliance landscapes. By assessing how AML obligations, particularly due diligence, risk management and reporting, interact with governance principles such as transparency and accountability, the study highlights the significant legal and operational challenges directors face in balancing compliance with corporate strategy. The relevance of this study lies in the growing convergence of corporate governance and AML obligations, both central to corporate accountability in Malta. It offers timely insights critical for legal reform, stronger compliance frameworks and sound corporate practice. This study addresses a gap in Maltese legal scholarship by examining how directors reconcile overlapping corporate governance and AML obligations, an area where practical challenges remain underexplored. The study combines legal analysis of desk research with empirical data gathered through questionnaires completed by five Maltese directors with the aim to gain insights from a practical perspective. Findings reveal that the absence of a uniform definition of corporate governance creates ambiguity around directors’ duties, increasing the risk of non-compliance. The financial strain of AML compliance on small and medium enterprises, particularly concerning technology and human resources, is significant. The rapid evolution of AML regulations further intensifies challenges for directors, who must balance compliance with strategic objectives amid heightened risks of fines and reputational damage. The study offers practical recommendations inspired by international best practices to enhance Malta’s governance and AML frameworks, supporting directors in balancing their dual obligations effectively by addressing the legislative gap, through government incentives, mandatory training and stricter board accountability.