Identity Verification
Also: Identification, KYC, Know Your Customer, ID Check
Identity verification is the legally required establishment of a customer's identity when buying or selling precious metals above certain cash thresholds, under Malta's anti-money-laundering framework (PMLFTR).
Anyone who buys or sells gold, silver or other precious metals for cash will sooner or later encounter identity verification. Under Malta's anti-money-laundering framework, dealers are obliged to establish the identity of their customers as soon as a transaction exceeds certain thresholds or grounds for suspicion arise. The aim: to prevent money laundering and terrorist financing through the precious metals trade.
Legal basis
In Malta, the relevant framework is the Prevention of Money Laundering Act (Chapter 373 of the Laws of Malta) together with the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR, Subsidiary Legislation 373.01). These transpose the EU Anti-Money Laundering Directives into Maltese law. Dealers in precious metals and stones who accept cash are classified as "subject persons" and must apply customer due diligence (CDD) measures, which include identifying the counterparty. The following thresholds apply to cash payments:
| Threshold | Situation | Obligation |
|---|---|---|
| From EUR 10,000 (cash, single or linked) | Purchase or sale of precious metals | Full identification |
| Below the threshold | Suspicion of money laundering | Identification and, if applicable, FIAU report |
| Deliberately split part-transactions | Total ≥ EUR 10,000 | Identification still required (anti-structuring rule) |
Note that Malta, in line with the EU, also enforces a general ceiling on cash transactions; the AML identification duty is separate from that ceiling. For non-cash payments (bank transfer) separate rules apply; there the identity is usually already evidenced by the payment channel.
Note: Thresholds and their interpretation may shift through legislative amendments. This is not legal or tax advice.
What is checked?
The dealer records and documents the following details:
- Full name (first and last name)
- Place and date of birth
- Nationality
- Residential address
- Type and number of the identity document (identity card or passport)
The data is generally copied or scanned and retained for the period required by the PMLFTR. A valid official photo identity document is mandatory. A health card is not accepted; a driving licence alone is generally not regarded as a sufficient identification document either – only an identity card or passport is recognised.
Procedure at the precious metal dealer
A typical identity verification proceeds as follows:
- The customer wishes to buy or sell gold coins or bars at or above the threshold for cash (for example via the purchase price calculator).
- The dealer requests a valid identity card or passport.
- Data is recorded, the document is copied.
- The transaction is documented internally and archived in an audit-proof manner.
- Only then is the transaction settled.
If a customer refuses identification, the dealer must decline the transaction and, where appropriate, file a Suspicious Transaction Report (STR) with the Financial Intelligence Analysis Unit (FIAU).
Over-the-counter transactions and anonymity
The so-called over-the-counter transaction – an anonymous cash purchase without identification – is only possible in the precious metals trade below the legal thresholds. Above these limits there is no legal means of acquiring or disposing of precious metals anonymously for cash. This applies regardless of whether the purchase takes place at a precious metal dealer, a bank or a pawnbroker.
Even with several transactions that are evidently split to circumvent the cash limit (so-called "structuring"), the dealer is obliged to establish identity and report the matter.
Relationship with tax obligations
Identity verification has no direct effect on the tax treatment of a gain from the sale of precious metals. In Malta, private disposals of movable assets such as precious metals are generally not subject to capital gains tax – Maltese capital gains tax applies only to specific categories of assets (immovable property, securities, business interests). There is no German-style speculation period. Nevertheless, the statutory documentation creates transparency towards the authorities. Not tax or investment advice – when in doubt, consult a tax advisor.
In brief
Identity verification is a legally mandatory instrument for combating money laundering in the precious metals trade and affects every buyer or seller who conducts cash transactions above the applicable thresholds under Malta's PMLFTR. Anyone buying or selling gold and exceeding the limits should always carry a valid identity document.