Avoiding the grey list
The deadline by which Malta has to up its game on its anti-money laundering efforts or risk being placed in the so-called grey list is fast approaching.
The country has been warned, on several occasions, that it needs to step up its fight against money laundering and, while great strides have been made when it comes to legislation, we are still lacking when it comes to the prosecutions.
In simple terms, the regulatory authorities, namely the MFSA and the FIAU, have done their job and have updated legislation and the means to identify cases of money laundering, but when it comes to criminal investigation and prosecution by the police, we are still lagging.
Last year, Moneyval, the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, gave Malta a fail grade in its assessment of anti-money laundering laws and their enforcement. It gave us until this October to address the shortcomings found.
If we fail to do this, Moneyval will recommend that Malta is placed in the Financial Action Task Force’s grey list. The FATF is the international agency governing anti-money laundering compliance.
If Malta ends up in this list, it will face enhanced monitoring procedures and possibly even sanctions. As a result, the country will become less competitive and attractive to foreign investment.
The consequences could be disastrous in a normal scenario, let alone at a time when Malta, like the rest of the world, is struggling, economically, through the Covid-19 pandemic. And it is very likely that the economic effects of this pandemic will be felt throughout this year and even the next.
It is therefore of paramount importance that Malta acts fast and makes sure that it does not end up facing the added complication of being placed in such a list.
Malta’s image abroad has already been damaged heavily by the political events of the last three years. Malta has been labelled by some as being a tax haven and even a mafia state. Our controversial passport sale scheme has not done much to elevate our standing in the EU, even if other countries have similar programmes, and the apparent lack of will to prosecute high-level corruption has also often been used to criticise the country.
We have already taken too much damage and a grey listing could spell a deadly blow to an economy that is already on its knees.
In a rare interview with this media house, Acting Police Commissioner Carmelo Magri insisted that these shortcomings in the police force are being addressed.
He outlined how the Financial Crime Investigations Unit has been tripled in size, with the addition of new officers and civilian analysts. The unit, he explained, will soon be moving into new premises boasting modern equipment that will help unravel financial crime cases. The unit’s officers are also receiving training from foreign specialists.
The Acting Commissioner told The Malta Independent on Sunday that he is confident that the police will plug the gap and help Malta avoid being placed on the grey list. We truly hope that this will be the case. The police force, while doing sterling work in other areas, has been lagging in the field of financial crime investigations for far too long. Magri’s predecessors, it seems, did not give much importance to the sector, even if Malta has been boasting of being a financial centre of excellence for almost two decades.
The police have solved many high-profile cases over the past few years – anything from murders to human trafficking, child pornography and drugs. But we seldom hear of money laundering cases from the courts. The FIAU, for example, had drafted several reports that highlighted the possibility of money laundering by politically exposed persons, but these were not followed up by the police. And some prominent cases of corruption, embezzlement and trading in influence were botched up, including the infamous oil scandal.
The police need to keep up with the times and adjust to new realities. While the fight against violence, drugs and other serious crimes will never die down, the fight against financial crime is just as important, for the consequences of inaction in this field can be far more severe for the country on an international level.
Similarly, the judiciary needs to be better trained and equipped to handle cases of financial crime. We understand that efforts are being made in this direction, but time is of the essence.
Our reputation abroad has taken a beating, and we need to show the world that we can be trusted, and that Malta can live up to its name of being an attractive country with stringent laws and effective prosecution.
This will be more important than ever in the post-Covid-19 world.