The voluntary sector has a crucial role in strengthening the social and cultural fabric of the country. It needs all the support it can get from ordinary citizens and government institutions that regulate their activities.
The appointment of former journalist Jesmond Saliba as the new Commissioner for Voluntary Organisations should lead to a rethink on how voluntary organisations operate in the context of the socio-economic realities that prevail today.
The recent incidents that led to the resignation of the former commissioner should be analysed to find a way of empowering the voluntary sector while ensuring that it operates in line with generally accepted good management practices.
Voluntary organisations differ greatly in their profiles. Some are small with limited assets and a modest income. Others are branches of international organisations like the Red Cross or Caritas Internationalis. Some others are large and, in some cases, managed by politically exposed persons.
This diversity calls for a risk-based approach to the oversight of these organisations to ensure that regulations are not modelled on a one-size-fits-all pattern.
Over the last several months, there has been an intensive effort by different regulators to ensure that all money laundering regulations were updated, loopholes closed, and the perception of Malta as a country that had little respect for anti-money laundering regulations wiped clean. This effort was not enough for the country to be spared greylisting shame from the FATF, the anti-money laundering international watchdog.
Unfortunately, the government’s rush to make good for years of neglect of proper enforcement of regulations to curb illegal practices may have led to excessive administrative burdens imposed on the voluntary sector. This reportedly led to undue interference by parliamentary secretary Clifton Grima in the executive decisions of the former commissioner.
While the voluntary sector must never be burdened with excessive administrative processes, it needs to understand that anti-money laundering regulations for voluntary organisations exist in every respectable jurisdiction in countries like Malta that have a substantial financial services industry.
Bermuda and Guernsey have detailed regulations that help voluntary organisations understand and prevent abuse by administrators, donors and beneficiaries of charitable organisations.
The new commissioner needs to engage with the voluntary sector to formulate high-level guidance intended to provide a broad framework for implementing a risk-based approach to the anti-money laundering process. A practical risk-based approach involves identifying and categorising money laundering and terrorist financing and establishing reasonable controls based on the risks identified.
Most local voluntary organisations have meagre administrative resources and a limited operating budget.
The government should provide these organisations with administrative support by seconding competent officials to advise these organisations on how to implement reasonable and non-burdensome anti-money laundering processes.
While most voluntary organisations adopt low-risk operating models, a few call for a more intense oversight.
Organisations in which politically exposed persons play a leading role have often been suspected of having little respect for transparency and good anti-money laundering practices.
Similarly, non-profit organisations should be effectively run by more than one person who takes responsibility and is accountable for controlling the organisation.
The new commissioner should put the empowerment of the voluntary sector at the top of his action list by ensuring that it respects regulations aimed to prevent financial crimes while at the same time not being burdened by excessive regulations.