Large-scale corruption, involving wealthy criminals and politicians who steal from the people and then look to invest those funds, erodes people’s trust in government and private institutions and undermines confidence in the fairness of the free market. Unchecked money laundering breeds contempt for the rule of law.
Malta’s anti-money laundering efforts have, in the past, mainly focused on upgrading its banking regulations. Lately, there seems to have been some progress made in the actual investigation of suspected crimes – such as in the recent Pilatus Bank case, which has finally made it to a court of law – but activity on this front remains painfully slow.
It needs to be acknowledged, though, that thanks to Malta’s greylisting by the FATF, more action is being taken by both the financial regulators and the police to make suspected criminals face the legal consequences of their illegal activities. Unfortunately, Malta’s lax regulatory regime has, over the last few years, attracted a few banking and gaming operators that have seriously damaged the country’s reputation, hopefully not permanently.
Internationally, money laundering has tainted a number of banks that previously enjoyed an aura of respectability. The Vatican bank IOR, Danske Bank in Estonia, HSBC in Mexico, Deutsche Bank in Russia and NatWest Bank in the UK have all been involved in money-laundering scandals.
Other banks, such as the Malta-licensed Pilatus Bank, never enjoyed a respectable reputation. Investigations are ongoing into how this bank may have helped some oligarchs, such as the daughters of Azerbaijan president Ilham Aliyev, launder their money.
Money laundering transcends borders and represents a significant threat to the national and economic security of countries. While heavily fining banks that break anti-money laundering regulations and even withdrawing their licence is a powerful weapon to curb financial crime, more needs to happen to promote intensive cooperation among international law enforcement agencies.
Local anti-financial crime resources will always be limited. Malta needs to ratchet up its efforts to fight financial crime by seeking to cooperate with and participating actively in international anti-financial crime networks. One such network is the Europol Money Laundering Operational Network, formed in 2012.
AMON is an initiative to create an informal network of national contacts from law enforcement anti-money laundering units, focused on all aspects of the fight against money laundering activities. Its main goal is to enhance and optimise the existing legal frameworks for international cooperation in this area.
Despite recent improvements in the country’s anti-money laundering processes, we still face significant challenges in bringing to justice those who threaten our financial system and national security by laundering the proceeds of crime. Moreover, international organisations are watching to see how credible our commitment is to turn the page and prevent a repeat of money laundering abuse by banks and other gatekeepers like accountants, lawyers and brokers.
Our policymakers can turn this challenge into an opportunity to help the country quickly regain its reputation for zero tolerance of severe white-collar crime. To do this, the country’s law enforcement agencies need to collaborate with international agencies, like the FBI, to address the challenges they face.
For instance, the pervasive use of front companies, shell companies, nominees and other means of concealing the actual beneficial owners of assets is one of the main obstacles for anti-money laundering regimes. FATF has highlighted that the lack of beneficial ownership information can significantly slow investigations of suspected criminal activities.
The war against financial criminals can only be won when money laundering agencies cooperate at a cross-border level to facilitate effective and speedy criminal investigations.