Banks are required by law to ensure that the funds in cash or deposit held by the clients through the bank account are legit. This is required to banks by law in order to prevent money laundering and potential terrorist financing, through the Prevention of Money Laundering Act (Chapter 373 of the Laws of Malta).
What is the bank required to check?
The bank is required to check that the transactions undertaken are consistent with the customer business, risk profile and source of funds (for example, the salary). Usually banks use automated systems to carry out this activity.
Before opening a new bank account, the bank requires prove of the source of income (for example, the employment agreement). Furthermore, the bank may ask from time to time to provide updates on the source of income (for example, recent payslip, documents showing the sale of personal assets, loan agreements, etc).
