Regulators have just endured a tough week of questioning by an international anti-money laundering watchdog but are “cautiously optimistic” the country will avoid being put on a list of untrustworthy jurisdictions.
Assessors from the Financial Action Task Force (FATF) were here over the past few days to hold a series of meetings with law enforcement and regulatory entities involved in the island’s fight against financial crime.
The police, the Financial Intelligence Analysis Unit (FIAU) and the Malta Financial Services Authority (MFSA) were among those interviewed by assessors.
The FATF will make the final decision if Malta is put on a so-called ‘grey list’, which could have far-reaching consequences for the country’s economy.
Sources who sat for the FATF review said the process was “thorough but fair”.
While questions were raised over the country’s ability to effectively tackle major financial crime, the assessors acknowledged that significant progress had been made over the past few months, the sources said.
“The truth is that, yes, we still have problems, the jurisdiction is far from perfect but this is a process and the FATF did recognise the significant body of work carried out over the past, say, two years to improve the effectiveness of our regulatory bodies,” one senior regulator said.
“The truth is that since this scrutiny began – a few years ago – many of the local bodies are now unrecognisable.”
The government is expecting to receive unofficial indications of the FATF’s position on Malta by the end of the month. A formal position will then be announced later in the summer.
Last month, Times of Malta revealed that Malta’s anti-money laundering regime had formally passed a review by the Council of Europe.
The CoE’s anti-money laundering expert committee, known as Moneyval, voted during a confidential plenary in Strasbourg in April to approve a final report on Malta.
Although the assessment report is still confidential, until it is officially published by Moneyval in summer, the final document looks favourably on the island’s efforts to address major shortcomings in its fight against financial crime, the sources said.
Two years ago, Malta failed an exhaustive test of its anti-money laundering rules and policing and has since been in danger of being flagged as a risky jurisdiction which could bring about a strict reform procedure and ‘hand-holding’ by global authorities.
The grey list, announced annually by the Financial Action Task Force, does not imply any economic sanctions but serves as a signal to the global financial and banking system about heightened risks from transactions with the country in question.
There has never been an EU member state on the grey list before.
Government insiders told Times of Malta on Friday that informal talks with FATF members had been ongoing for several months.
“This is a big decision that will have a big impact on the country. What is certain is that, even if we are given the all-clear, we cannot afford to just stop the efforts to improve,” one source involved in the national reform effort said.
“If we do so, we then risk being in the same situation.”