Money laundering fuels serious crime and terrorism. It is an essential tool of the corrupt, authoritarians and organised crime groups to benefit from their illicit activity, move dirty money and extend their influence. Drug gangs, gun traffickers and people smugglers need to launder their illicit cash to make it appear legitimate.
This contributes to a host of societal issues, including the high cost of living, inequality and job losses, while strengthening organised crime. That is why tackling money laundering needs to be a priority for all governments. Unfortunately, far too often, it is not.
As the global anti-money laundering and terrorist financing standards watchdog, the Financial Action Task Force (FATF) sets international standards, assesses countries and publicly names those not doing enough to stop money laundering. The FATF identified serious issues in the effectiveness of Malta’s anti-money laundering and counterterrorist financing system in 2019.
As an international financial centre, and gateway to the EU market and citizenship, the deficiencies posed a risk to the global financial system. After being given the opportunity to carry out reforms, Malta had a number of remaining issues. That is why Malta became the first EU country in over a decade to be ‘greylisted’ by the FATF last June.
Following this, the Maltese government gave a high-level political commitment to work with the FATF and embarked on a targeted reform programme to help crackdown on illicit finance. After extensive efforts involving major organisational and operational changes, Malta was removed from the ‘grey list’ earlier this month.
The positive outcomes of the FATF greylisting process are evident for all to see. Malta has bolstered information gathering on the ultimate ‘beneficial’ owners of companies, often used to launder illicit funds. This includes focusing on higher risk companies and carrying out inspections, which has led to successfully identifying companies that concealed their true owners.
Authorities have recently imposed penalties for beneficial ownership violations. Just as importantly, gatekeepers to the financial system, such as lawyers and accountants, are being held to account if they fail to comply with their legal obligations to identify and verify owners. Authorities have taken dozens of enforcement actions in the past year, including fines – this compares to zero fines on gatekeepers in recent years.
It is imperative for authorities to improve implementation of Malta’s laws- Marcus Pleyer
Malta has increased the focus of its financial analysis on serious tax offences. The quality of intelligence has improved, with new staffing hires, the expanded use of technology and outreach to banks and other businesses. This has helped law enforcement detect and investigate cases in line with Malta’s most significant money laundering risks, involving the proceeds from tax crimes.
These achievements only happened due to the hard work and determination of officials who recognised that changes needed to be made. These changes have improved the strength and transparency of Malta’s financial system. This does not mean the work stops for Malta. The threat from criminal and terrorist groups is constantly evolving, so all countries need to remain vigilant.
The Maltese government has given a clear, ongoing and high-level commitment to continue to strengthen its systems. The FATF welcomes this commitment.
Going forward, I strongly encourage the Maltese authorities to take advantage of the momentum from the greylisting process and continue to prioritise the fight against illicit finance. It is imperative for authorities to further improve implementation of Malta’s laws, particularly related to the laundering of illegal proceeds from tax evasion and foreign proceeds of crime.
Malta, like many countries, faces significant challenges. But if Malta’s leaders support national authorities’ efforts to follow the money behind serious crime, it will make a positive difference.
I hear the assurances of Prime Minister Robert Abela, Finance Minister Clyde Caruana and other high-ranking government officials to proactively pursue effective anti-money laundering measures and create a safer environment for the financial and business communities. The FATF’s regional partner in Europe, Moneyval, will monitor Malta’s progress and report on any issues.
By going after dirty money, the Maltese government will help prevent the harm caused by money laundering and terrorist financing in their own country and worldwide. This will help make peoples’ lives safer, fairer and help create stronger, sustainable and inclusive economic growth. It is worth fighting for.
Marcus Pleyer is the president of the global anti-money laundering standards watchdog, the Financial Action Task Force (FATF).