Ganado Advocates

Ganado Advocates has contributed the Malta chapter in the 2024 edition of the Chambers Artificial Intelligence Global Practice Guide.

Ganado Advocates has re-contributed the Malta chapter in the 2024 edition of the International Comparative Legal Guide (ICLG) to Anti-Money Laundering (AML).

Introduction and Background On the 8th of May 2024 following an action for annulment by German credit institution Max Heinr.

Today, the European Securities and Markets Authority (“ESMA”) has published its Annual Report on Suspicious Transaction and Order Reports (“STORs”),

As the date of application of Regulation (EU) 2022/2554 (“DORA” or the “Regulation”) is drawing closer, on the 16th July, 2024,

Introduction On the 30th of May 2024, the Court of Justice of the European Union (the “CJEU”) laid down its preliminary ruling in the case of VT and UR v Conny GmbH[1],

In recent years, competition authorities in the US have focused quite heavily on tackling anti-competitive practices in labour markets,

The Court of Justice confirms the European Commission’s mandatory obligation in determining the existence of aid prior to assessing compatibility with the Internal Market

Many will have heard of the relatively recent adoption of the Corporate Sustainability Due Diligence Directive (CSDDD or CS3D) by the European Parliament back in April 2024.

Chris Grech has authored a case note in the European Competition and Regulatory Law Review (CoRe).

Introduction In the case Aretrop Limited (C49725) (the “Claimant Company”) vs Foundation for Tomorrow’s Schools (the “Foundation”) & the Hon. Dr. Justyne Caruana in her capacity as Education Minister (the “Hon. Minister”),

Last month, The Merchant Shipping Directorate published a notice concerning the enforcement of the EU Ship Recycling Regulation No. 1257/2013[1],

On 19th June 2024, the EU has published the AML/CFT legislative package in its Official Journal, comprising of the following legislative texts:

The role of Board committees has significantly evolved during past years as a direct consequence of ever-increasing regulation,

In a judgment delivered by the General Court of the European Union (the “Court”) on the 12 June 2024 in the case of Societe du Tour de France (“Plaintiff”) vs European Union Intellectual Property Office (“EUIPO”) and FitX Beteiligungs GmbH (“FitX”),

The Small Commercial Yacht Code (sCYC) 2024[1] updates and replaces the applicable requirements for Commercial Yachts smaller than 24 metres contained within the current Commercial Yacht Code (CYC) 2020[2].

On 21 December 2023, the Court of Justice of the European Union (the ‘’CJEU’’) delivered a preliminary ruling whereby it concluded that the Fédération internationale de football association (“FIFA’’) Statues (the “FIFA/UEFA Rules”) infringed EU Competition law,

On the 21st of March 2024 the Court of Justice of the European Union (the “CJEU”) delivered a preliminary ruling (C-90/22) clarifying the scope of the grounds for the refusal to recognise judgements of EU Member States in terms of Regulation (EU) No 1215/2012 on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters (“Brussels 1 Recast” or the “Regulation”).

The International Association of Young Lawyers (AIJA) will host an event in Malta from June 13th to 15th titled ‘Setting Sails in Turbulent Times’.

On 29th May 2024, the European Securities and Markets Authority (“ESMA”) issued a statement relating to the applicable requirements and corresponding good practices for issuers to consider when engaging in pre-close calls sessions with financial analysts in light of the Market Abuse Regulation (“MAR”).

The European Securities and Markets Authority (ESMA) recently published its Final Report covering conflicts of interest for crypto-asset service providers (CASPs).

Compliance officers are responsible for ensuring that their organisation complies with applicable laws and regulations, and in a regulated sector like financial services,

Virtual IBANs (“vIBANs”) are increasingly being used as payment account identifiers across the EU to redirect payments, yet the definition and the appropriate regulatory treatment thereof remains ambiguous.

The MFSA has, on 21 May 2024, issued a consultation on the revised Chapter 3 of the Financial Institutions Rulebook (‘FIR/03’) which will be applicable to both payment institutions and electronic money institutions once finalised. 

In a decision handed down by the Industrial Tribunal (the ‘Tribunal’) on 5th October 2022 in the names James D’Anastas vs Wembley Stores Company Limited (and confirmed by the Court of Appeal on 12th July 2023),

On May 16th, Ganado Advocates and the Maltese Embassy in Italy collaborated to host an event in Milan focusing on regulatory developments in the Maltese financial services industry.

In ‘Puma v European Union Intellectual Property Office’ (Case T-647/22), decided on 6 March 2024,

Further to the public statement issued on 14 December 2023, ESMA has issued a final report outlining the guidelines in relation to fund names which utilise ESG or sustainability-related terms (the “Guidelines”).

The Institute of Financial Services Practitioners is set to host its annual conference on 22 May, 2024, at the Hilton Malta.

This article outlines the importance of succession planning as a basic tenet of good corporate governance.

On the 24th of April 2024, the General Court of the European Union (the “GCEU” or the “Court”),

Ganado Advocates has contributed the Malta chapter in the 2024 edition of Lexology Panoramic: Financial Services Compliance.

Ganado Advocates has contributed the Malta chapter in the 2024 edition of the Chambers Corporate M&A Global Practice Guide.

The Court of Appeal, in its Superior Jurisdiction, composed of Chief Justice Mark Chetcuti, Mr Justice Christian Falzon Scerri and Madam Justice Josette Demicoli, in the case Mediterranean Trading Shipping Co Limited vs the Vessel M/T Turu and others,

Luke Hili has contributed an article, that featured on the IFLR1000 portal, titled ‘Unlocking value: ESG due diligence as a catalyst for growth’.

As of 1st January 2024, the European Union (“EU”), welcomed the updated EU Emission Trading System (the “EU ETS”) rules which were duly extended to cater for the maritime sector by means of Directive (EU),

Recently, the Donations to Voluntary Organisations Rules, 2024 (the “Rules”) were published by means of Legal Notice 86 of 2024. 

In a dispute concerning a conflict of international jurisdiction, the Court of Justice (First Chamber) ruled on the applicability of the Brussels Ia Regulation[1] to agreements conferring jurisdiction from the perspective of the existence of an international element.

As the various practices employed by criminals to disguise economic benefits from illicit activities continuously evolve, organisations should be well-equipped to manage risks arising from such trends.

In its latest circular, the MFSA highlights the launch of a dry run ad hoc exercise by the European Supervisory Authorities (ESAs) and participating competent authorities such as the MFSA itself.

Council Regulation (EU) 2023/2878 of December 18, 2023, amending Regulation (EU) No. 833/2014 resulted in the adoption of the 12th package of sanctions against Russia,

The Maltese Parliament has just approved updates to the Virtual Financial Assets Act (Chapter 590, Laws of Malta) (“VFA Act”) to ensure further alignment with the Markets in Crypto-Assets Regulation (MiCA).

In its judgement delivered on the 1 March 2024 in the names of Dr. Cedric Mifsud (for and on behalf of Rene Edwin Bultena, the “Plaintiff”) vs The Registrar of Companies (the “Respondent”),

DORA represents a significant milestone in the EU’s efforts to strengthen the cybersecurity and operational resilience of financial entities.

On 21 March 2024, the European Court of Justice (“ECJ”) gave a preliminary ruling on the interpretation and scope of Regulation No 261/2004 of the European Parliament and of the Council establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights (the “Regulation”) in relation to case C-76/23 pertaining to the method of reimbursement following a flight cancellation.

On the 29 February 2024, the Commission de Surveillance du Secteur Financier (“CSSF”),

On 6 March 2024, the Organisation for Economic Co-operation and Development (“OECD”) published its report on global competition trends based on data from 77 OECD and non-OECD jurisdictions for the year 2022 (“Report”).

For a number of years the Government of Malta has sought to encourage the development of renewable energy projects through the grant of feed-in-tariffs. 

Amendments to the Consumer Credit Regulations, S.L. 378.12 (the “Consumer Credit Regulations”) and to the Credit Agreements for Consumers Relating to Residential Immovable Property,

On 11th January 2024, the Court of Justice of the European Union (“CJEU”) dismissed the action for compensation of damages of €176.1 million brought by Dyson.

On the 31st January 2024, the Ministry for the Environment, Energy and the Regeneration of the Grand Harbour, launched a Preliminary Market Consultation (“PMC”) to assess market appetite for the development of floating solar technology projects, including photovoltaic farms within the territorial sea of the Maltese Islands.[1] This forms part of the Maltese Government’s strategy to becoming carbon neutral by 2050. A site situated 4 nautical miles from the Maltese coast has been identified as a potential location for the development and operation of floating solar farms, with the capacity of generating up to 50 megawatts of energy. These floating solar farms will be directly connected to the Maltese power station in Delimara, feeding directly into the national grid. The PMC identifies the following key considerations for the development of such floating solar technology project: Optimal land utilisation Enhanced energy generation Environmental Compatibility Reduced Transmission Losses Adaptability to water depth Diversification and Security of Energy Sources Innovation The PMC shall remain open until the 24th April 2024 (closing at 11:00am Malta time) and interested parties are invited to register as suppliers through the following link. Author: Saman Bugeja Footnotes [1] A link to the PMC Document may be found here

On 26 January 2024, the European Commission (the “Commission”) published its report (the “Report”),

On the 23rd of January 2024, the Malta Financial Services Authority (the “MFSA”) released a circular,

On 11 January 2024, in ‘AB Volvo v Transsaqui SL’, AG Szpunar handed down his opinion (“AG Szpunar’s Opinion”) on the applicability (or rather the lack thereof) of the single economic entity doctrine in relation to procedural matters.

The European Securities and Markets Authority (ESMA) has just published two consultation papers on two important aspects under the Markets in Crypto Assets Regulation (MiCA), namely:

The receipt of a letter informing a licence holder that the MFSA will carry out a compliance visit is generally met with trepidation at best, and often with panic.

Ganado Advocates is pleased to announce the appointment of Matthew Attard, Marina Grech and Matthew Xerri as new Partners of the firm, effective as of 1st January 2023. The firm is also announcing the promotion of David Borg-Carbott and Rosette Aquilina to ‘Of Counsel’ a role recently introduced by the firm signifying a high level of experience and expertise within the lawyer’s area of practice.

On the 3rd February 2023, the European Insurance and Occupational Pensions Authority (EIOPA) issued a Supervisory Statement on the use of governance arrangements in third countries to perform functions or activities (“Supervisory Statement”).  The EIOPA Supervisory Statement follows a public consultation which was launched by the European Authority on the 29th July 2022 relating to the use of governance arrangements in third countries (“Consultation Paper”).

In its judgment on the 23 January 2023, the First Hall Civil Court (Commercial Section) (hereinafter the “Court”) presided by Mr. Justice Ian Spiteri Bailey delved into the salient features of a request made to the court for the dissolution and winding up of a company by a creditor or creditors of such company by means of an application in terms of Article 218(1) of the Companies Act, Chapter 386 of the Laws of Malta (the “Act”).

On 19 January 2023, the Court of Justice of the European Union (the “CJEU”) delivered a ruling in the case of Unilever Italia Mkt. Operations Srl v Autorità Garante della Concorrenza e del Mercato (Case C-680/20) wherein it held that:

The Markets in Crypto-Assets Regulation (MiCA or the Regulation) will introduce the first European framework for crypto-assets. The regime covers three main types of crypto-assets, namely asset-referenced tokens (ARTs), e-money tokens (EMTs) and other crypto-assets (a catch-all category for tokens that are not ARTs or EMTs).

The Department of Contracts (“DOC”) has published a second circular (the “Supply Guidelines”) which guides a contractor in filing a claim for compensation arising out of the Ukrainian conflict where the public contract in question has a supply element. It is important to note that the wording used by DOC’s Supply Guidelines is not limited to public supply contracts but regulates “public contracts involving supplies”. Our understanding is that a compensation claim can be submitted even in the context of a works or services contract, as long as the claim in question concerning the supplies element. However, the contract value must exceed €10,000 (excluding VAT).

The Companies Act (Public Companies – Annual General Meetings) Regulations (the “Original Regulations”) were promulgated during the COVID-19 pandemic to (1) extend the period for holding of annual general meetings, and filing of audited accounts; and (2) authorise the holding of remote or virtual general meetings by certain public companies.

On the 22 June 2022, in the case of ‘A. Pace Balzan v Citadel Insurance p.l.c.’, the Court of Appeal in its inferior jurisdiction, presided over by Judge Lawrence Mintoff, delved into the concept of juridical interest in the context of an insurance claim.

In the latest episode of the ‘Ganado Meets Finance’ podcast, Stephanie Farrugia, senior associate at Ganado Advocates, speaks with Paulianne Nwoko, managing director of Apex Fund Services Ltd, on the representation of women in finance.

On the 28 July 2022 the Malta Financial Services Authority (the “MFSA”) issued a new Banking Rule, namely BR/25 on Financial Holding Companies and Mixed Financial Holding Companies (“BR/25”). 

In the first episode of the ‘Ganado Meets Finance’ podcast, Ganado Advocates’ Managing Partner Andre Zerafa speaks with MFSA CEO Joseph Gavin about regulation, supervision and the future of the industry. Listen to the podcast here: https://open.spotify.com/episode/55yqlCMx0JFSFMALbvIqGm The experience for Joseph Gavin as the MFSA’s CEO has been a fascinating and busy journey so far. He does, however, believe that notwithstanding the finance industry being dampened for a while by the pandemic and Malta’s greylisting by FATF, admirable progress has since been made and we now seem to be in a clear path which has given rise to a much greater sense of confidence among practitioners, regulators and the industry in general. The financial services sector remains diverse and there is a very strong base for the continued growth of the sector. Going forward, Gavin says that the MFSA needs to be seen as an effective regulator, gatekeeper, supervisor and enforcer which is committed to supporting the industry, particularly in terms of identifying growth opportunities as well as niche growth opportunities. The MFSA has recently carried out an internal assessment to identify aspects which need to be enhanced to further engage with the sector. The MFSA continues to strive to improve efficiencies and processes, and also assisting in changing the framework to allow for wider growth opportunities. Forward looking: On a global level, technology is advancing swiftly and overtaking steadily. In the eyes of Gavin, this will be one of the MFSA’s biggest challenges in the coming years. Both short-term and long-term changes will need to be undertaken to ensure that Malta’s platforms are and remain operative and effective. Considering, Gavin deems there to be great prospects for our payment and e-money institutions. Innovation: When it comes to innovation, the MFSA wishes to place itself in a more competitive position when compared to the larger jurisdictions, which may be done by making processes more efficient, expanding the capacity of Malta’s legal and financial instruments, and by developing and allowing for new products, such as a notified PIF (product information file). Competition: There are various areas of the financial services sector which are indeed competitive but there is still the need for more proportionality. This will accommodate competitiveness within the EU and allow smaller jurisdiction, like Malta, to compete effectively with other larger jurisdictions. Where the opportunity arises, Malta should negotiate revisions to the EU framework and put forward the proportionality argument. MFSA’s supervisory priorities for the next few years The MFSA has a very comprehensive strategy in terms of supervisory priorities. For instance, in the banking sector, the MFSA’s priority will be to continue to supervise closely while working towards consolidation. The insurance sector, on the other hand, is a well-established sector and is very well covered by insurance legislation and has a good variety of innovative structures (such as the protected cell company legislation). Interestingly to note, the insurance sector has sustained itself very well throughout the pandemic. As regards payment institutions, that there has been a significant growth in the sector both in terms of volume of payments and activity passing through the various regulated firms. The MFSA continues to be supportive of innovation. There is an opportunity for firms to develop technology and change the way of doing business, which the MFSA encourages, using the sandbox. While noting that there is also great potential for the asset management sector in Malta, Gavin says that a number of things need to be improved, including (i) our legislative framework; (ii) our engagement with the industry; and (iii) the arrival of international depositaries. The arrival of the international depositary, or the opening up of the restriction which exists at the level of the AIFMD (requiring a local depositary for the Alternative Investment Fund (the AIF)) would be very welcome by the industry. The blockchain island The regime Malta has for virtual financial assets is probably one of the best in the world. Presently, the island has around 15 operators and 15 virtual financial assets agents. Although the industry isn’t the largest, Ganado Advocates’s managing partner Andre Zerafa deems it strong enough for Malta to be able to build on what there is, and this needs to be done particularly in response to the needs of the investors, who deem exposure to crypto assets to be extremely important. Conclusion It is clear that Malta and the MFSA are open for business, which needs to continue to be compliant with the expectations both at EU level and even at a national level. From 2008-2016, Malta has had exponential growth and while the country has seen some consolidation in the past two years in particular, it is now ready for the next challenge. Author: Bettina Gatt May 27, 2022

In its judgement delivered on 25 February 2021, in the names “Dr. Antoine Naudi as special attorney on behalf of the foreign company UR s.r.l vs. Talocan Ltd of Malta”, the Civil Court (Commercial Section), presided over by Hon. Justice Joseph Zammit McKeon, analysed the requirements necessary to uphold a dissolution and consequential winding up request in terms of Article 214 (2) (a) (ii) of the Companies Act, Chapter 386 of the Laws of Malta.

The main objectives of the Payment Services Directive (EU) 2015/2366 (PSD2), transposed under Maltese law by inter alia the Financial Institutions Act, Chapter 376 of the Laws of Malta (FIA), were mainly to create a safer and more secure space for payments, to enhance protection for European Consumers and businesses and to contribute to an integrated and efficient European payments market. However, as Maired McGuinness, Commissioner for Financial Services, Financial Stability and Capital Markets Union stated: “The PSD2 has driven innovation in retail payments, to the benefit of consumers and financial service providers. It is now time to take stock with all stakeholders, and prepare our next steps. We want to boost innovation and increase consumer choice in payments and open finance, while keeping the companies and people who generate data in control”. With regards to this, the European Commission launched a public consultation to collect evidence regarding the application of the PSD2 together with any benefits and challenges which may have been encountered and any amendments which may be appropriate.

In line with the EU Digital Finance Strategy and the EU Retail Payments Strategy, the European Commission has just launched a series of consultation documents primarily aimed to collect market feedback on open finance rules and on any potential amendments to the EU Payment Services Directive 2015/2366 (“PSD 2”) – which directive sets out the legal foundation for the development of an integrated internal market for payment services within the EU and inter alia sets out rules on licensing regimes for payment institutions, open banking, and rights and obligations of payment services users and providers.

In the third episode of ‘Ganado meets Finance’ podcast, Matthew Bianchi, partner and head of the insurance practice at Ganado Advocates meets the Malta Insurance Managers’ Association Chairperson Elizabeth Carbonaro.

The European Securities and Markets Authority (“ESMA”) recently updated its question and answer document on the Market Abuse Regulation (“MAR”). The updated document sees the introduction of two new questions and their corresponding answers which, broadly, provide that:

In the second episode of the ‘Ganado Meets Finance’ podcast, Nicholas Curmi, partner and head of the capital markets practice at Ganado Advocates, meets the Malta Stock Exchange’s Executive Chairman Joseph Portelli for a frank chat on the inner workings of the Malta Stock Exchange, and the way forward for the Maltese capital markets space.

In terms of the Fifth and Sixth EU Anti-Money Laundering Directives [1] (“AMLDs”), the European Commission issued a communication accompanied by a series of reports paving the way forward for further discussions on the improvement of the anti-money laundering EU framework.

The reliance of financial entities on the use of technology within their business infrastructure is increasingly on the rise, given that it helps save on costs, increases efficiency and ultimately benefits consumers by offering a better end product. A number of insurance undertakings are in fact increasingly incorporating ‘tech’ within their product-lines and services, as well as within their operational functions in the course of creating, distributing or administering insurance products.

The European Court of Justice (the “ECJ”), on 7 April 2022, delivered a preliminary ruling with regards to Regulation (EC) No 261/2004 which establishes common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights (the “Air Passenger Rights Regulation”) and as a result, has extended the scope for passengers to seek compensation. In particular, for delays pertaining to connecting flights consisting of two legs which are serviced by non-EU air carriers.

On 2 August 2021, the European Banking Authority (the “EBA”) launched a public consultation on the  on policies and procedures in relation to compliance management and the role and responsibilities of the anti-money laundering and counter financing of terrorism (“AML/CFT”) compliance officer under Article 8 and Chapter VI of Directive (EU) 2015/849 [1].

Through a circular issued on the 7 January 2022, the Malta Financial Services Authority (MFSA) advised that Banking Rules BR/01, BR/12, BR/14[1], BR/15 and BR/21 had been revised primarily to transpose Directive (EU) 2019/878 of the European Parliament and of the Council of 20 May 2019 amending Directive 2013/36/EU (“CRD V”). Additionally, for the first time, the Banking Rules now include a specific banking rule dealing with governance of banks, namely BR/24 on Internal Governance of Credit Institutions. The revisions to the Banking Rules and BR/24 are in force.

Introduction This article discusses stowaways on board ships and vessels generally. Since time immemorial, stowaways have been an ever-present concern for the international community and particularly the shipping industry. In more recent time, we have seen controversy arise as to the manner in which stowaways are treated, by both ship operators and the authorities concerned. For the master and crew, a case of stowaways on board their vessel is always trying, as difficult decisions need to be taken, which, on the one hand respect the human dignity of the stowaway whilst on the other hand, respect both the law and the security and safety requirements of the vessel concerned. In this article, we explore the legal obligations that come into play in such cases and how stowaways are dealt with under Maltese Legislation.

In the fifth episode of the ‘Ganado Meets Transport’ podcast, Daniel Aquilina, partner within the transport law practice at Ganado Advocates, meets Kristian Zarb Adami, a pioneer in Malta’s space sector.

In accordance with the Malta Commercial Yacht Code (“CYC”), on the 2nd September 2021, the Merchant Shipping Directorate of Transport Malta issued the ‘Commercial Yacht – Pleasure Yacht Changeover Guidelines’ (“the Guidelines”).

What ESG is and what it is not Increasingly becoming the flavour of the month in business circles and topping the agenda at most conferences, ESG is quite often misrepresented as a synonym for Corporate Social Responsibility (CSR) or a polite way of reminding us that we should print less and recycle more. But ESG is far greater than that and the purpose of this article is to shed some light on what ESG means in practical terms for Maltese issuers.

2021 will be remembered (or outright forgotten) for a variety of reasons. Indeed, in and amongst the pandemic-related doom and gloom, 2021 may be viewed as a watershed moment for all matters ESG – i.e. environmental (E), social (S) and governance (G) criteria, of course. The pace at which the regulatory landscape has changed over the past year in particular has been nothing short of unrelenting – with the implementation of the ‘Level 1 Disclosures’ found under the Sustainable Finance Disclosures Regulation (“SFDR”) meriting an honourable mention. Additionally, some much-needed, concrete action was also taken locally, with the launch of the much-anticipated Malta ESG Platform towards the latter end of the year providing the market with a number of useful metrics for the assessment of the ESG credentials of companies listed on the Malta Stock Exchange.

In its judgment delivered on the 8 November 2021, in the names of Air X Charter Limited and Air X Aircraft Finance I Limited vs. (1) Firm Mamo TCV Advocates as Deputy Curators acting on behalf of Avmax Aircraft Leasing Inc (Canada) (“Avmax”) as beneficial owner of eight (8) aircraft (the “Aircraft”) and Bank of Utah (United States of America) acting as owner trustee of the Aircraft and (2) The Malta Transport Authority, the First Hall Civil Court, presided over by Hon. Justice Robert G. Mangion, examined whether a warrant of prohibitory injunction can be issued to inhibit the holder of a registered Irrevocable Deregistration Export Request Authorisation (“IDERA”) from enforcing its rights arising from an IDERA in Malta.

In the first episode of Ganado Meets Transport podcast, Ganado Advocates’ Matthew Xerri, Senior Associate within the shipping and aviation team, met with Captain Charles Pace to discuss the latest developments on Aviation in Malta.

In the third episode of the “Ganado Meets Tech” podcast, Ganado Advocates’ IP/TMT partner Paul Micallef Grimaud, met with consultant nuclear medicine physician, Dr. Andrew Mallia, Professor Alexiei Dingli – University of Malta Senior Lecturer of Artificial Intelligence and entrepreneur and lawyer Dr. Gege Gatt to look at how AI is positively impacting the health sector and providing us with unprecedented levels of cure and health management, whilst also discussing the legal and ethical risks involved.

In the third episode of the “Ganado Meets Tech” podcast, Ganado Advocates’ IP/TMT partner Paul Micallef Grimaud, met with consultant nuclear medicine physician, Dr. Andrew Mallia, Professor Alexiei Dingli – University of Malta Senior Lecturer of Artificial Intelligence and entrepreneur and lawyer Dr. Gege Gatt to look at how AI is positively impacting the health sector and providing us with unprecedented levels of cure and health management, whilst also discussing the legal and ethical risks involved.