Updated 2.05pm, adds PN statement
Malta is considering lobbying for a six-month extension of the review of its anti-money laundering regime to allow more time to prove its systems are trustworthy.
The proposal has been discussed in meetings of a special government committee of advisers set up to fight financial terrorism and money laundering, Times of Malta has learnt.
It is a move that would damage Malta’s credibility for companies hoping to base themselves here, and would bring hands-on monitoring and forced reforms.
Greylisting, financial practitioners say, could be catastrophic for the local economy, as it would make it increasingly difficult for industries, including iGaming, to operate from the island.
Times of Malta understands that the government was already given a three-month extension due to COVID-19, moving the Council of Europe’s Moneyval assessment deadline from July to October.
Malta is to make its final submissions to the MoneyVal team, who, according to an internal action plan seen by Times of Malta, will then visit the island for talks.
According to that plan, crunch time will come in February, when MoneyVal will refer that matter to its international older brother, the FATF.
We could then have a bit more time to address the shortcomings
However, a source privy to the government’s efforts to rectify the situation said Malta could potentially avoid being put on the grey list at the end of the review period by extending the current process known as “enhanced follow-up procedure”.
This would place Malta under what is known as enhanced monitoring but not automatically branded untrustworthy.
It is a route that has been taken by other European Union member states, such as Latvia and Hungary, to avoid being branded noncompliant.
“We could then have a bit more time to address the shortcomings that we are yet to see to, such as the police and their low numbers of convictions on financial crimes,” a reliable source said.
Others involved in the internal discussions, however, seem to have divergent views on the matter.
While some told Times of Malta that they are resigned to Malta being put on the grey list, others say the country will not need an extension as it will pass the review on its own merits.
Central in Malta’s lobbying efforts is the United States, considered one of the main players at the FATF negotiating table.
Back in April, Times of Malta reported that talks were being held with the United States embassy over the matter. It is understood that the talks were ongoing with another round of discussions with US Charge d’Affaires, Mark Shapiro expected in the coming days.
Last September, the island failed the experts’ review of its money-laundering laws and enforcement, with MoneyVal expressing concerns that local law enforcement authorities are not in a position to effectively do their jobs.
According to the MoneyVal experts’ assessment, the country’s authorities appear unable to quickly pursue high-level and complex money-laundering cases related to financial, bribery and corruption offences.
Malta’s effectiveness in dealing with major financial crimes was cast in the international spotlight after government officials were exposed in the Panama Papers offshore haven leak in 2016.
Journalist Daphne Caruana Galizia, who was investigating related financial corruption, was assassinated in a car bomb not far from her family home in 2017.
What is grey listing?
The Financial Action Task Force’s ‘grey list’ is one stage away from the black list, applicable to countries the task force feels should not be trusted and which pose a threat to the entire global financial system.
At the start of this year, just two countries were on the blacklist – Iran and North Korea. The grey list, on the other hand, includes 18 jurisdictions.
Being put on the grey list comes with a strict reform procedure and ‘hand-holding’ by global authorities.
Being added to the grey list does not imply any economic sanctions but serves as a signal to the global financial and banking system about heightened risks in transactions with the country in question.
The current grey list includes Albania, the Bahamas, Barbados, Botswana, Cambodia, Ghana, Iceland, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Pakistan, Panama, Syria, Uganda, Yemen and Zimbabwe. There has never been an EU member state on the grey list.
The Financial Action Task Force is the global money laundering and terrorist financing watchdog.
With more than 200 countries and jurisdictions signed up, the FATF monitors countries and holds to account those that do not comply.
In a statement, the Nationalist Party said that while the Opposition welcomed any action which safeguarded Malta and its economy from the significant risks of grey-listing, such move demonstrated that contrary to what the government said, the institutions were not working.
As the country emerged from the challenges of a four-month economic hiatus, the government should be leading and concentrating efforts for the country to come out of the economic consequences of COVID.
But, instead, it was having to deal with a political crisis of its own doing which had economic consequences.
The government was refusing to be transparent on Moneyval, in particular by not bringing it up on the agenda of the Economic and Financial Affairs committee in Parliament.
The PN said it remained adamant that while no effort should be spared to avoid greylisting, Malta should be focusing on its recovery post-pandemic and keep authorities-induced uncertainties at bay.
If such extension was confirmed, Malta would be losing out six crucial months during which investors throughout the world would be looking for their next investment location to relaunch their post-COVID-19 activities.
While other countries would be welcoming such businesses and the jobs they created with open arms, the Maltese authorities would be busy putting out the fires stoked by a government mired in sleaze, corruption and ties to financial crime from day one of its return to power in 2013.
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