The decision of the Financial Action Task Force (FTAF) to greylist Malta is terrible news for the country.
We have basically been told that our best efforts have not been good enough to convince international anti-financial crime watchdogs that we genuinely want to wipe out our past shortcomings and failures in implementing anti-financial crime regulation.
It is now time for stakeholders – primarily the government and its financial watchdogs – to search their souls to determine why Malta has found itself in this dire situation.
The recent comments made by government representatives were based on a strategy of blame. They ranged from the prime minister blaming the leader of the opposition to the foreign minister’s claim that tiny Malta is being bullied by large states which are far from faultless in preventing financial crime.
The reality is that the present administration has some undesirable baggage that many other nations find objectionable. The insistence on Malta’s right to sell EU citizenship, with little to no consideration of how this might affect the security of other member states, won us no friends.
The government still encourages investment in economic activities, including cryptocurrencies and certain e-gaming activities, that other states consider as presenting a high risk of financial crime. Despite some cleverly-crafted legislation, it remains to be seen how effective anti-financial crime regulation enforcement will be.
The government’s recently-published economic vision document must have confirmed to the anti-financial crime watchdogs that there was no inclination to diversify Malta’s strategy to less objectionable economic activities. Prime Minister Robert Abela argues that it would not be wise to change a winning economic formula, one that has given Malta such strong GDP growth. Basically, in aspiring to be “best in the world”, Abela wants the best of all worlds. Yesterday’s decision is a harsh reality check.
The day after this major blow to the country’s inward investment prospects, the government should be thinking of how to start mending fences with other countries to win back the respectability that forms the bedrock of any investment strategy. Smart legislation, playing the victim game and constant denial of the endemic risks to the country’s economic strategy will never be enough to limit the damage caused by eight years of economic adventurism.
As members of the EU, we need to understand that we have to give more weight to union priorities than to narrow national interests that are perceived to hinder collective progress.
When Malta decided to join the EU, it was always clear that we would have to sacrifice some of our sovereignty to benefit from being members of a large economic block.
The day after the FATF decision, we all need to understand the implications of the strategic changes we need to implement, first to absorb this decision’s immediate shock and then to build a more sustainable economic model.
This effort may take more than just another year to show results. But if the country’s political leaders can agree on some sustainable economic strategies, we will have a better chance of underpinning our prospects of future prosperity with sound planning.
‘More of the same’ is not the mantra that will see us out of this difficult situation. ‘Continuity’ is the economic strategy that has led to our being greylisted by FATF. It is at best fallacious and at worst irresponsible.
Malta’s economic vision must be built on more durable competitive advantages, such as investment in human capital, good governance and a steely determination to implement all regulations based on international best practice.