'Malta should do more to mitigate risks from money laundering'

Malta needs to do more to mitigate the risks from money laundering, the European Commission said in its 2020 winter assessment. 

Published last week, the 2020 winter semester country report found that while Malta’s supervisory bodies have been strengthened in recent months, there has been insufficient action to tackle flaws in investigating and prosecuting alleged money laundering offences.

The island’s anti-money laundering regime last year failed an assessment by the Council of Europe’s MoneyVal assessors. Malta was given a year to get its act together or face potential blacklisting procedures. 

The Commission’s country report assesses member States’ progress in implementing a number of country-specific recommendations, across a wide range of issues.

In its report, the Commission warned that while the banking sector remains in good health, it is exposed to risks.

Banks have remained profitable while strengthening their capital base and maintaining sufficient liquidity owing to customer deposits. Non-performing loans have declined – a positive sign for the sector.

Weaknesses in the island’s governance framework persist

However, “tight lending standards”, the Commission warned, limit borrowing opportunities for companies, creating obstacles to business.

In addition, continued weaknesses in the anti-money laundering framework has put strains on relationships with correspondent banks – a matter of concern for the entire jurisdiction.

Weaknesses in the island’s governance framework persist, the semester report reads, particularly when it comes to the perceived independence of the judiciary.

All in all, Brussels said that limited progress has been made to strengthen the independence of the judiciary.

The government announced its intention to tackle the issue last year. Although police resources are being increased, efforts to detect and prosecute corruption also remain “insufficient”.

On the prosecution services, the government took steps to create an autonomous prosecution service, with the adoption of the State Advocate Act.

This measure aims at ending the Attorney General’s dual role as both the primary public prosecutor and the primary government consultant in legal matters.

However, the report says that the reform appears “insufficient to meet existing concerns about the independent functioning, effectiveness, and accountability of the prosecution services”.

Meanwhile, some energy reforms have been implemented, but environmental sustainability challenges remain.

“The growing population makes it all the more important to further strengthen environmental sustainability, especially by improving the energy performance of buildings,” the report says.