Malta held last-ditch talks with the US ahead of a secret vote to be held on Wednesday afternoon over whether the country is put on a list of untrustworthy financial jurisdictions.
The Financial Action Task Force (FATF), the leading global anti-money laundering watchdog, will come to a final decision if Malta is placed on the so-called grey list when its plenary votes this afternoon.
Various studies suggest that ending up on the grey list could have far-reaching repercussions on the country’s economy, impacting banking, ease of doing business and the island’s attractiveness to foreign investors.
Senior government officials have spent the past few days frantically lobbying international partners in a bid to avoid being greylisted. Sources said that Alfred Camilleri, permanent secretary at the Finance Ministry, had a telephone call with a senior US government official on Monday night.
The US is understood to be among some of the influential FATF members that have not looked favourably on Malta’s efforts to curb major financial crime.
Government sources have described a sense of “panic” among political, regulatory and law enforcement top brass ever since the FATF’s evaluators failed to give the island a clean bill of health in a secret meeting last week.
How will a final decision be taken?
A final vote will now be held among 37 jurisdictions and two regional organisations – the European Commission and the Gulf Co-operation Council – that are recognised as members within the FATF.
Malta will not have a say during the vote.
According to organisation procedures, today’s plenary will discuss the expert assessors’ findings and proposed ratings on Malta.
“Consensus among members” is required to overrule any of the experts’ draft conclusions. It is understood that Malta has lobbied members to speak on its behalf.
While a select group of senior Maltese government officials will know the result later today, the FATF won’t make an official announcement.
And although an FATF news conference is set for Friday, it is not clear if an official position on Malta will be announced until the final document is published between August and September.
A spokesman for the FATF would not even confirm that Malta is being reviewed by the global watchdog, saying the process is entirely confidential.
What is the FATF grey list?
Every year, there are three plenary meetings of the inter-governmental body that is tasked with rooting out money laundering by plugging loopholes in the international financial system.
The FATF identifies “jurisdictions with weak measures” through two public documents issued at the end of every week-long plenary.
The worst designation, known as the blacklist, includes countries or jurisdictions with such serious deficiencies that the FATF calls on the international financial system to apply “strict counter-measures”.
In other words, the FATF encourages the global community not to do business with blacklisted countries or to only do so under heightened scrutiny.
Only North Korea and Iran are currently on the blacklist.
The second public document issued by the FATF is called “Improving Global Anti Money Laundering Compliance: On-going process”. This is what is informally known as the grey list.
What does greylisting entail?
The list includes countries that have “strategic weaknesses” in their regime to counter money laundering and terror financing but have committed to fixing them.
Once listed as a “jurisdiction under increased monitoring” by the FATF, these greylisted countries will have to complete an action plan within a certain time period if they want to be taken off the list.
Only once the FATF and its partners are convinced that this action plan has been thoroughly implemented can a country be removed from the grey list.
Iceland, which, like Malta, was also rocked by the 2016 Panama Papers leak, spent one year on the grey list between 2019 and 2020.
Last year, the Icelandic government announced it had been formally taken off the list but said the impact on the economy during those 12 months had been significant.
FATF does not ask its members to implement additional due diligence measures against greylisted countries but encourages states to take this into account in their risk analysis when processing transactions to and from the island. Malta, however, will be hoping it does not end up on the grey list at all.
Instead, government officials are proposing that the FATF’s smaller brother, the Council of Europe’s Moneyval, be asked to continue to monitor the country.
Malta already underwent a review by Moneyval and, although initially failing in 2018, it eventually managed to turn this around to a scoring grade in March of this year.
In the words of one local regulator, today is a make or break day for Malta.
The 39 FATF members that will decide Malta's fate
The FATF plenary is made up of 37 member jurisdictions and two 2 regional organisations.
- European Commission
- Gulf Co-operation Council
- Hong Kong, China
- Republic of Korea
- New Zealand
- Russian Federation
- Saudi Arabia
- South Africa
- United Kingdom
- United States