Suspected money laundering cases flagged to the FIAU have skyrocketed as Malta faces international scrutiny.

According to an internal government document, the number of suspicious transactions flagged to the Financial Intelligence Analysis Unit, Malta’s anti-money laundering watchdog, increased by more than 200% since international scrutiny began some three years ago. 

It is understood that the increased acti­vity at the FIAU is particularly focused on local businesses that are believed to have been flouting money-laundering rules. Times of Malta is informed that more than 300 local businesspeople are currently being investigated by the unit.

The figure of money laundering probes is considerably higher than previous years and represents around a third of all investigations being carried out by the unit at present, a source said. 

The FIAU is an intelligence gathering entity, compiling reports that are handed over to the police for further investigation.  The unit also inspects banks and other financial institutions to ensure rules are being adhered to.

The bulk of FIAU investigations were the result of suspicious transaction reports filed by banks and other credit institutions; however, the FIAU has also started gathering intelligence on suspected financial crime by local entrepreneurs following tip-offs and other leads. 

The government document was prepared as Malta’s legal and regulatory framework has been put under the microscope by international assessors. 

The global watchdog known as the Financial Action Task Force will be in Malta next month to assess whether Malta is being effective in the fight against major financial crime. 

A team of FATF experts will be grilling senior officials from Malta’s regulatory and law enforcement bodies in a week-long visit scheduled for May. Sources said local stakeholders are pre­paring for the FATF assessment by sitting for mock grilling sessions being conducted by a foreign consultant engaged by the government in recent months.

So far, these grilling sessions have presented “mixed results”, one senior source said. 

The FATF review comes hot on the heels of an assessment by the Council of Europe’s own experts known as MoneyVal. 

The MoneyVal assessment, which began in 2018, focused mainly on the country’s laws on paper. The FATF’s priority, on the other hand, is to establish whether those laws are adequately enforced by the country’s institutions. 

Weaknesses in Malta’s law enforcement regime were cast in the international spotlight when high-level government corruption cases in the Joseph Muscat administration went unprosecuted for several years.

That changed as international scrutiny on the country intensified, and most notably saw Muscat’s former top aide, Keith Schembri being charged with corruption and money laundering. He and his business associates spent some two weeks in prison until they were eventually granted bail.

Times of Malta has reported that preliminary indications are that MoneyVal will give Malta the thumbs up with a final vote by the Council of Europe in two weeks’ time. 

However, the decision over whether or not Malta is placed on a list of untrustworthy jurisdictions, will ultimately be taken by the FATF, MoneyVal’s global big brother.

Sources said the FATF hurdle would be trickier to navigate than that posed by MoneyVal.

If Malta fails, the FATF assessment then could be placed on what is known as the ‘grey list’. 

Grey-listing could have far-reaching consequences for the economy, seriously impacting the country’s attractiveness as a financial centre. 

The FATF’s ‘grey list’ is one stage away from the blacklist, applicable to countries judged to pose a threat to the entire global financial system.

Its grey list includes countries deemed to be not doing enough to keep money launderers at bay.

At the start of 2020, just two countries were on the blacklist – Iran and North Korea. The grey list, on the other hand, includes 18 jurisdictions, from Albania to the Bahamas.

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