The COVID-19 pandemic has exposed several vulnerabilities. Beyond the implications for health and the world economy, however, another reality has been the growth of financial crime.
According to a report in Forbes magazine issued on August 26, the UK experienced a 33 per cent increase in fraud in April while, in the US, the FBI’s Internet Crime Complaint Centre (IC3) received almost as many fraud reports by the end of May as it had for the whole of 2019.
Reasons given range from the increase in the number of people working from home to an accelerated global shift towards a digital, cashless society. As we have seen in Europe of late with several big names, banking institutions have found it difficult to keep up with the methods devised by criminal networks.
The Council of Europe stated recently that organised crime is making more than €100 billion a year in the European Union. The UN, meanwhile, estimates that up to €2 trillion is laundered globally on an annual basis.
Criminals are increasing their use of online financial services and virtual assets to move and conceal illicit funds. The CoE said only a small proportion is ever confiscated by the authorities in member states and reiterated the importance of financial investigations, saying they are of utmost importance for the European Union in preventing and “combatting organised crime and terrorism”.
It is clear that this is a challenge for all of us. The Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (Moneyval) has noted that the threat to Malta is high given the size and international exposure of our country’s economy.
While praising our authorities’ understanding of this complex issue – stating that Maltese legislation sets out a comprehensive network for international cooperation and that our Financial Intelligence Audit Unit and police force interact with foreign counterparts – it said further steps were required.
Among others, Moneyval recommended conducting a detailed analysis of the threats of organised crime and the use of legal persons as well as assessing the vulnerabilities of the fintech sector and implications of corruption, tax evasion and black economy. It also advocated strengthening our supervisory authorities at all levels and arming them with increased powers.
Prime Minister Robert Abela’s administration is fully committed to the cause of fighting organised and serious economic crime. I have been entrusted with the delicate and sensitive task of proposing first-class legislation in this regard. I took the challenge head on and after the summer recess, we shall be discussing in parliament The Proceeds of Crime Bill, which is already published.
For the first time, our Asset Recovery Bureau will be given powers to confiscate assets acquired through criminal means without the need to secure a criminal conviction beforehand. This covers many items from property to vehicles and much else in between.
Malta’s Asset Recovery Bureau will be given powers to confiscate assets acquired through criminal means without the need to secure a criminal conviction beforehand- Edward Zammit Lewis
This is a significant breakthrough, since to date our authorities have only been able to seize and preserve an asset after instituting a criminal case. Furthermore, the ARB will be able to institute civil proceedings to confiscate assets on the basis of reasonable suspicion.
We have also introduced two bold procedural measures to facilitate our battle against money laundering: firstly, by placing the burden of proof on defendants to produce evidence that their assets were legitimately acquired rather than leaving our prosecutors with the uphill task of having to prove assets were obtained through illicit means.
Secondly, we have lowered the standard of proof. No longer will such cases have to be proved beyond all reasonable doubt as is the norm in criminal trials, but by the lesser benchmark of the balance of probabilities. This will also facilitate the work of our authorities in stamping out illicit practices.
The new law will also make it possible for our authorities to seize assets even if their owners cannot be traced or are abroad where there is reasonable suspicion that a particular asset is a proceed of crime. Therefore, when this bill will become law, with civil actions against objects (objects in ram) will become possible.
The ARB’s resources are being improved at all levels, since it will now also be able to issue monitoring, investigation and freezing orders and make use of a specialised civil court to ensure speedy and efficient resolution to its actions.
Our authorities’ increased powers will not target ordinary citizens, but will target organised crime, terrorism, money laundering, human trafficking and illegal arms dealing like never before and severe custodial sentences will be imposed for those found guilty.
While we do not claim to be reinventing the wheel since legislation of this nature is in place in certain other advanced countries, the firm action we are taking is a significant effort on our part to address long-standing gaps in our laws and enhance cooperation on a European and international level.
These measures can only serve to enhance Malta’s reputation as an important, serious, and well-regulated financial services jurisdiction for many years to come, and guarantee quality jobs for generations to come.
Edward Zammit Lewis is Minister for Justice, Equality and Governance .