A long-shelved plan to ban cash transactions in excess of €10,000 will be introduced in the coming days in a bid to avoid the country being labelled a money laundering risk.
Government sources told Times of Malta that legal amendments dating back some six years had been redrafted and would be published in February to introduce a €10,000 limit on cash exchanges.
At present, there is no limit on the amount of cash that can change hands. Soon, transactions in excess of the stipulated amount will have to be made through a bank.
Cash payments for high-value items such as property, cars, boats, jewellery and art are favoured vehicles for criminals looking to launder the proceeds of their activities.
The proposed ban had first been put to cabinet back in 2015.
A source familiar with the 2015 proposal told Times of Malta that the government had little appetite for the ban back then, fearing it would not go down well with the electorate, particularly the business community.
Since then, pressure from international institutions has mounted on Malta to clamp down on money laundering and tax evasion. The majority of EU countries (18) have similar bans of varying amounts, ranging from €500 in Greece to €15,000 in Poland.
One senior cabinet source said the government had been pressed to introduce the ban, along with a number of other reforms, by the Council of Europe’s expert body on money laundering enforcement, Moneyval.
Malta failed a review of its financial crime laws and their enforcement back in 2019.
Many view paying in cash as a fundamental freedom
Since then, state entities have been scrambling to get their affairs in order in a bid to avoid being put on a list on non-compliant countries that pose a heightened risk of money laundering or financing of terrorism.
Being placed on the so-called grey list could have far-reaching consequences for the economy, seriously impacting the country’s attractiveness as a financial centre.
Moneyval and the government have been in regular contact over the legal, regulatory and law enforcement changes needed.
It is understood that the Financial Intelligence Analysis Unit, Malta’s anti-money laundering body, will be responsible for investigating breaches of the cash transaction limit.
The unit will receive reports to analyse and pass on to the police for further investigations and prosecution.
In 2018, the European Commission had published a detailed report on the issue of cash restrictions.
At the time, Brussels said these would not significantly address terrorism financing but could be useful in the fight against money laundering.
The report also concluded that the impact on tax fraud would be limited, unless the threshold is very low.
The Commission had pointed out that having different cash transaction limits across various member states could distort internal competition, which in turn could result in relocation of businesses to other countries.
Restrictions on cash payments were a sensitive issue for European citizens, many of whom view the possibility to pay in cash as a fundamental freedom, which should not be disproportionally restricted, the Commission had said.
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