Controversial rules that are meant to tackle financial crime in the voluntary sector will be watered down following an outcry by NGOs.

Government sources told Times of Malta that a list of changes will be drafted to the rules introduced to combat money laundering within the voluntary sector.

The regulations will be discussed in consultation meetings set to be held with a sectoral council before they are redrafted, a source said.

The move follows fears that the new changes could stifle the NGOs’ ability to raise any funds whatsoever. 

The rules, described as excessive by concerned NGOs, require voluntary groups to seek the approval of the commissioner of voluntary organisations in various steps involved in raising funds.

Apart from having to apply for a permit, which expires after just six months, NGOs seeking to use donation boxes for collections need to pick them up from the office of the Malta Council for the Voluntary Sector and then return there to count the money collected under supervision.

Envelopes containing donations require a warranted professional to be present when the money is counted and volunteers involved in collections also need to be registered.

Although the rules were first drawn up last September, a moratorium until July 2021 had subsequently been announced. 

Anthony Abela Medici, the Commissioner for Voluntary Organisations, recently wrote to NGOs urging them to get in line with the new rules. This prompted a strong pushback by the sector.

Through new rules, voluntary organisations have become state agents

At the forefront of the push against the new rules was rule-of-law NGO Repubblika, which, last week, said the heavy-handed approach towards the voluntary organisations needed to be reconsidered immediately.

“Through these new rules, voluntary organisations have become state agents. They are controlled by the state and can collect funds only if they have the state’s permission while the state will know who is donating money to whom,” the NGO lamented.

“If an organisation abuses a system, then proportionate and adequate action should be taken against it but it is wrong to treat everyone with suspicion.”

Abela Medici said consultation was concluded last week.

“Consultation between the council and voluntary organisations was completed on Friday,” he said.

“The commissioner looks forward for the conclusions derived from this process and whenever possible will do his best in order to safeguard the sector’s interest.”

A high-ranking government official, privy to the drive behind the initial introduction of the rules, told Times of Malta that, while the intention behind the reform was good, it appeared the rules had indeed “gone a bit overboard”.

The government, the official added, acknowledged the concerns raised and would be introducing amendments to the law in The Malta Government Gazette. The source ruled out the outright repealing of the rules, noting that, instead, the authorities would be discussing the matter with the voluntary sector council, a stakeholder body.

The rules had first been drafted in the context of international scrutiny of Malta’s anti-money laundering regime.

Back in 2019, the Council of Europe’s Moneyval experts had given Malta a failing grade in their assessment of anti-money laundering laws.

Moneyval had cautioned Malta over shortcomings in the police force and state regulators, as well as low conviction rates for financial crimes. The report had also pointed to lax rules in the voluntary sector, which, it warned, was vulnerable to abuse.

Since then, the island has introduced a raft of reforms and, last month, Times of Malta reported how preliminary indications were looking positive.

Malta will officially be informed of how it has fared in a plenary vote later this month.

Independent journalism costs money. Support Times of Malta for the price of a coffee.

Support Us