The European Commission is expected to issue a stern warning to the Maltese Financial Intelligence Analysis Unit on what must be done to tighten up its money laundering monitoring, saying that concerns raised by the EU’s banking authority had been ignored.
The EU’s justice commissioner, Vera Jourova, told the Financial Times that a “formal opinion” would list the actions that the FIAU must take, which had first been raised by the European Banking Authority in July. The commission’s opinion will be formally binding on the FIAU.
The opinion will be issued by mid-November, and the FIAU will need to specify within 10 days how it intends to rectify the situation.
This is the first time that the Commission will intervene in a member state to insist on enforcement of its anti-money laundering rules, the FT reported.
The EBA’s report had warned of “general and systematic shortcomings” in aspects like ‘know your customer’ and other checks. Should the FIAU not take action, the EBA would be empowered to give direct orders to Maltese banks to bring them into line with EU rules, the Financial Times said.
Finance Minister Edward Scicluna had told the Times of Malta that the government was already working on a review of the various entities that monitor and regulate the financial sector.
The EBA had honed in on Malta following allegations about Pilatus Bank, which has been mired in controversy over the ultimate beneficial owners of a company called Egrant, as well as over the arrest of its chairman in the US over allegations of evading sanctions against Iran.
“We have to be quicker than the criminals. Money laundering has the potential to destroy the coherence and working of the EU’s financial sector,” Ms Jourova told the Financial Times.
The 28-nation bloc is grappling with a string of high-profile cases of money laundering at banks in several member states, including Estonia, Denmark, the Netherlands, Luxembourg and Latvia.
European Central Bank Vice President Luis de Guindos said on Tuesday that the EU needed clearer rules against money laundering that would apply equally to all member states.
"A higher level of harmonisation of the applicable rules in the form of a regulation should be considered", de Guindos told EU finance ministers during a public debate in Luxembourg.
An EU regulation is directly applicable in all EU countries, but EU rules against money laundering are currently defined in directives which give governments broad leeway in their application. This has resulted in different levels of enforcement and gaps in the EU framework.
However, EU governments have long been reluctant to give away national powers to monitor banks and fight crime.
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