Malta must not risk taking its eye off the ball in the fight against financial crime, the former Financial Action Task Force (FATF) president has warned.
Speaking on the sidelines of the recent FinanceMalta conference, Marcus Pleyer said he has seen this happen in “many countries” after an FATF evaluation.
Pleyer held the global anti-money laundering watchdog’s rotating presidency during Malta’s one year spent on the FATF’s grey list.
The process made Malta a much better place when it comes to fighting money laundering
He said that after FATF’s evaluations, he has often seen countries divert resources away from key authorities needed to fight money laundering and terrorism financing.
“My advice is to seize the opportunity to continue reforms after the grey-listing,” he said.
“The process made Malta a much better place when it comes to fighting money laundering. People in key authorities have a much better understanding of the risks, and have better structures in place to detect, investigate and disrupt illicit financial flows.”
Pleyer said the grey-listing had also initiated a change in mindset and culture when it comes to financial crime.
“Seize this opportunity by continuing on this path of reform,” he urged.
Money flowing into places of integrity
Pleyer said money was no longer attracted to places with deficient anti-money laundering controls. Rather, it was now flowing into financial centres with a high degree of integrity.
Pleyer said recent reforms to the FATF would see the period between its evaluations of different countries’ anti-money laundering regimes become more frequent.
“Because of these reforms, the next evaluation will no longer be a decade away. There is a continuing pressure for all countries to keep up with reforms,” he said.
Malta was greylisted by the Financial Action Task Force in 2021, after the country was put on notice in 2019 when a Moneyval assessment identified a lack of understanding and will to fight high-level financial crime.
Although the authorities managed to address the bulk of Moneyval’s concerns by 2021, Malta was nonetheless greylisted over failures to crack down on tax evasion, as well as deficiencies in the country’s beneficial ownership registry.
The country was removed from the grey list in June.
Access to company ownership information
Pleyer stressed the importance of journalists maintaining access to information to identify the ultimate owners of companies in the EU.
A European Court of Justice ruling last month declared that European Union anti-money laundering rules, designed to offer more public transparency on company ownership, were “invalid”.
As a result, the Malta Business Registry cut the general public and media off from accessing the beneficial ownership registry, which holds information on the ultimate owners of Malta-based companies.
Several other EU company registries have also restricted access as a result of the court ruling.
Pleyer said that while the ruling must be respected, a balance must always be struck between privacy and transparency, and he disagreed the court decision means that media access to beneficial ownership registries should be restricted.
The European Court of Justice said it recognises that civil society and the media have a legitimate interest in accessing such information, given their role in the fight against money laundering.
Pleyer noted that the media and NGOs pass the legitimate interest test.
“We need to see that this interpretation is consistently applied in that way [across the EU],” he said.
We all have to recognise that in the past, many scandals were revealed by journalists. This is something we should respect, value and enable.”
Transactions still subject to extra checks – Galdes
Although Malta was removed from the FATF’s grey list six months ago, former FIAU director Manfred Galdes said transactions linked to the country are still being subjected to extra checks.
Speaking during a panel discussion at the FinanceMalta conference, Galdes said the financial sector is still in a situation where enhanced due diligence is carried out on transactions connected to Malta.
Enhanced due diligence means that transactions are investigated more thoroughly due to the potential for additional risks associated with them.
To change this, Malta needs to keep conveying a message that standards are high and the country has become more risk-averse, Galdes said.
The former FIAU director also expressed his support for the idea of having a centralised due diligence agency, though he questioned what had become of the proposal.