Malta’s road to full compliance on anti-money laundering rules has just got longer, after the country was handed a new, hefty to-do list by international assessors.
The fresh tasks will not have a bearing on whether Malta will be put on a damning list of untrustworthy jurisdictions by the Financial Action Task Force late this month, after Malta came under intense scrutiny because of its weak regime in the last few years.
Assessors from the FATF, who were in Malta last month to grill the regulators, have written to Finance Ministry permanent secretary Alfred Camilleri with a number of reforms and improvements that the country still needs to enact in the fight against financial crime.
Among the shortcomings flagged by the FATF were low seizures of criminal assets, lax rules on lawyers providing fiduciary services, and the “low quality” of suspicious transaction reports being handed to the authorities by banks and other entities. The heads of two Maltese regulators told Times of Malta that the list of reforms sent by the FATF in recent weeks is lengthy and Malta would need at least a year to adequately address them.
“We had a very cordial meeting with them a few weeks ago that lasted about eight hours. It all appeared to have gone well, then the barrage of emails started coming in to ‘fix this’, ‘fix that’. It’s quite a lot of ground to cover at this late stage,” a senior source at one regulator said.
The police, the Financial Intelligence Analysis Unit and the Malta Financial Services Authority were among those interviewed by the FATF assessors in April.
Speaking on condition of anonymity, they both voiced concerns that Malta could end up on the grey list.
It has already been a long road for Malta’s regulators and law enforcement agencies. Last month, Malta’s anti-money laundering regime formally passed a review by the Council of Europe that first started back in 2017.
The CoE’s anti-money laundering expert committee, known as Moneyval, voted during a similar confidential plenary in Strasbourg in April to approve a final report on Malta.
Two years earlier, Malta had failed an exhaustive test of its anti-money laundering rules and policing and has since been in danger of being flagged as a risky jurisdiction which could bring about a strict reform procedure and ‘hand-holding’ by global authorities.
The decision over whether Malta will be grey-listed will be taken during a plenary session later this month. Malta is lobbying a number of member countries ahead of the vote. The government is hoping it has done enough so far to avoid being grey-listed. Instead, it wants to be sent back for continued monitoring by the younger brother entity, MoneyVal.
This would mean more hand-holding for local regulators but would not cause any reputational damage to the country.
On the other hand, the grey list, announced annually by the FATF, may not imply any economic sanctions but it does serve as a signal to the global financial and banking system about heightened risks from transactions with the country in question.
There has never been an EU member state on the grey list before and being placed on it could seriously impact Malta’s ability to do business as well as its attractiveness to foreign investors.