A whopping 88 per cent of businesses fear Malta's recent greylisting will have a negative impact on the economy, with more than half saying the blow will be felt within the next six months. 

The gloomy outlook emerged from a survey conducted by the Malta Employers Association (MEA) among 190 respondents published on Friday. It was conducted between June 24 and July 1, after the Financial Action Task Force (FATF) voted to add Malta to its greylist, effectively placing it under enhanced monitoring.

71 per cent fear impact on their business

The MEA survey found that along with the impact on the economy in general, businesses fear they will also be directly hit, with 71 per cent of respondents saying the greylist will affect their business. 

They also fear it will not take long for the repercussions to start being felt, with 63 per cent anticipating they will start seeing negative impacts within the coming six months.

Which sectors are most worried?

While 62 per cent of those working in hospitality and tourism, manufacturing and wholesale and retail expressed concern the greylisting will impact them, this shot up to 89 per cent of those in the gaming, financial, insurance and professional services sector. 

On costs, the survey found that 72 per cent of respondents reported an increase in compliance expenses over the past year. Some companies had to employ more people to deal with the added bureaucracy of compliance, the MEA noted. 

Employers outline the challenges they expect to face after greylisting. Source: MEA

Why was Malta greylisted?

The majority of respondents blamed the greylisting on money laundering, rule of law, institutional corruption, bad governance and lack of transparency.

A good portion of businesses also pointed to an ineffective justice system, selective enforcement and weak institutions as having led to it, with the IIP scheme, murder of journalist Daphne Caruana Galizia and fallout from the Panama Papers also listed as critical in the decision to put Malta on the grey list. 

'Survey exploratory, too early to determine impact'

In its conclusion, the MEA described the survey as exploratory, with its purpose not to quantify the impact of the greylisting on the economy.

"It is too early to determine this. However, the findings are highly indicative of the situation. The longer we remain greylisted, the more severe the damage and the longer the recovery," the MEA said. 

The association also expressed regret that the greylisting had occurred at a time when businesses were still trying to recover from the blow caused by the COVID-19 pandemic.

"The majority of our members even made recommendations on the way forward and that could help when we come to discuss getting off the list," MEA head Joe Farrugia said. 

Farrugia said if all the stakeholders work together, the time spent on the greylist will be shorter. 

According to Farrugia, employers are not worried about additional scrutiny but rather lack of enforcement or, even worse, selective enforecement. 

"Employers worry that while they incur costs to follow proper compliance, the authorities do not act in cases where they need to," Farrugia said.