Malta's anti-money laundering watchdog last year received almost two reports a week of people who bought or were trying to buy cars, property, boats, jewellery and other expensive items costing over €10,000 in cash.

Most reports were about purchases of motor vehicles while the second highest number of reports concerned purchases of property, according to the Financial Intelligence Analysis Unit (FIAU) 2023 annual report tabled in parliament on Monday.

In 2021 Malta introduced a €10,000 cap on cash transactions to clamp down on money laundering activities.

The limit was imposed on the sale of property, antiques, jewellery, precious metals, precious stones, pearls, vehicles, seacraft, and works of art.

Transactions in excess of that amount must be made through a bank.

Cash payments for high-value items are favoured vehicles for criminals looking to launder the proceeds of their activities.

86 reports in 2023

In 2023 the FIAU received a total of 86 reports of suspected illegal cash transactions - a significantly higher amount than the 30 received in 2022 and the mere three received during the year the law was enacted.

Between 2021 and 2023, 45% of all reports were about the purchase of motor vehicles, 29% about immovable property, 9% about seacraft, 3% about jewellery, precious metals, precious stones and pearls and 2% about antiques.

During a press conference on Tuesday, however, FIAU chair Kenneth Farrugia and director Alfred Zammit clarified that in several cases - especially those concerning the purchase of cars - genuine people paid in cash only because they were not aware the practice was outlawed, and not because they had malicious intentions.

Other cases, however, clearly reek of illegal activity.

A person found to be in breach of this law will be subject to a minimum fine of 40% of the sum of money that was received or otherwise transacted.

Fighting money laundering and terrorism financing

The FIAU is Malta's central agency that fights money laundering and terrorism financing to keep the financial system safe and secure.

It receives reports from banks, financial institutions, lawyers, real estate agents, notaries and other relevant sources with suspicion of money laundering or terrorism financing activity, investigates them and shares its intelligence with other relevant authorities in Malta - such as the police and the tax commissioner - and with its international counterparts.

It also supervises businesses that are obligated to report suspicious activity, to ensure they are not used as vehicles for criminal activity.

Reports increasing annually

On Tuesday Zammit told reporters that in 2023 the FIAU received more than 9,000 reports - a five per cent increase over the previous year. The agency also saw a notable increase in reports from financial institutions other than banks.

The overall number of reports is also increasing year on year, he said, and 40 per cent of reports concern unexplained wealth.

"Meanwhile, we shared almost 6,000 reports with international entities, more than 600 reports with the local tax authorities, and almost 400 reports with the police," he said.

"In total, we shared more than 7,300 pieces of intelligence."

As Malta's economy and financial sector boomed in the last decade, so did the FIAU staff complement, which now has grown to 170 professionals, according to the agency's annual report.

The agency also dished out a total of €3.36 million in fines last year. But there are issues yet to be resolved there.

Some of the larger fines have been appealed and the courts have ruled that the FIAU issuing fines itself breaches the defendant's right to a fair hearing - that it acts as judge, jury, and executioner. This has led to successful appeals and challenges to fines.