MONEYVAL report on Malta IFSP looks forward to working on effective and proportional remedial action
The IFSP notes recent press reports that suggest that Malta appears to have failed to reach a satisfactory level in its assessment by MONEYVAL in the Mutual Evaluation Report following the assessment of Malta’s anti-money laundering and combating the financing of terrorism system as at November 2018.
The IFSP has not been privy to the MONEYVAL report or the Government of Malta’s remedial action plan to address the MONEYVAL findings, as these are not yet available to the public. Therefore, while it cannot comment in detail, in principle the IFSP welcomes steps to “raise the bar” and improve levels of anti-money laundering enforcement across the country as this is important for the reputation of the jurisdiction as a whole and all those who work in financial services and the many indirectly affected industries.
The output of the mutual evaluation process is that countries are placed either under regular follow up or enhanced follow up procedures. It is understood that Malta may be placed by MONEYVAL into an “enhanced follow-up” status which involves a more intensive process of follow-up, and is intended for countries with significant deficiencies, or countries making insufficient progress. In deciding whether to place a country in enhanced follow-up, the Plenary session of MONEYVAL considers both the level of technical compliance and effectiveness reached by the country.
If this is the case then the follow-up procedures should include a range of graduated measures to be taken if countries fail to meet their commitment or make insufficient progress in addressing their priority actions. The follow-up procedures should also include a process through which countries can be moved to “regular follow-up” from “enhanced follow-up” if the country no longer meets the criteria for enhanced follow-up. This should naturally be the immediate priority for Malta.
The IFSP notes that the MONEYVAL assessment process refers to a historical period between 2013 to 2018, and therefore excludes recent legislation and other initiatives that have already been enacted in a number of areas in anticipation of improvements that were necessary, or other initiatives such as the recent announcement regarding the setting up of a financial organised crime agency. It also notes that a number of countries, such as Hungary, Iceland and the Isle of Man, have also faced enhanced follow up procedures and remedial action plans in the past similar to what the IFSP understands Malta may be has been requested to implement.
The situation Malta therefore finds itself in is not without precedent and was perhaps not unexpected, but it is important that this remedial period is used wisely. It is also imperative that enforcement action is undertaken and maintained by the relevant authorities in a manner that is effective, fair and proportional.
The Institute looks forward to working with the authorities to ensure that remedial action is undertaken effectively, thoughtfully and in a timely manner to safeguard the integrity of the industry and Malta’s position as a credible and transparent financial services centre, particularly within the wider context of the increased risk driven by the sophistication of international criminal organisations laundering the proceeds of criminal activities through seemingly legitimate business ventures.
In the meantime, the Institute appeals to the entire spectrum of financial services practitioners to ensure that the highest levels of scrutiny and vigilance are consistently applied in the course of their day-to-day activities, for the timely pre-emption and detection of any suspicious business transactions, in line with all applicable legislation.