Malta decision on FATF grey-listing fate expected for 23 June

18th June 2021 • News

Malta yesterday endured a review of its anti-money laundering rules and protocols by the Financial Action Task Force (FATF), after tough weeks of questioning by international assessors.

The FATF’s International Co-operation Review Group (ICRG) analysed Malta’s anti-money laundering rules after its recent Moneyval assessment. Based upon its report, the FATF will decide whether Malta should be grey-listed.

While government authorities have been “cautiously optimistic” the country will avoid being grey-listed, one of the stumbling blocks for Malta also concerned an institutional deadlock imposed by the country that prevented the EU from ratifying the Council of Europe’s treaty on sports manipulation, the so-called Macolin Convention.

If Malta evades grey-listing, the FATF could recommend enhanced follow-up, involving a more intensive process of follow-up for countries with significant deficiencies.

A formal position could be announced on 23 June during the plenary meeting of the FATF.

In deciding whether to place a country in enhanced follow-up, the FATF plenary will consider both the level of technical compliance and of effectiveness reached by the country.

Malta has achieved full compliance with 12 of 40 FATF Recommendations constituting the international AML/CFT (Anti-Money Laundering and Countering the Financing of Terrorism) standard. But minor deficiencies remain in the implementation of another 28 recommendations, where Malta was found to be “largely compliant”. Malta no longer has “non-compliant” or “partially compliant” ratings, the Council of Europe said.

Assessors from the FATF were in Malta in the last weeks 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 Council of Europe’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. Two years ago, Malta failed the test of anti-money laundering rules and was in danger of being flagged as a risky jurisdiction.

But it is the FATF, which is also swayed by US influence, that has the final word on the whether Malta is placed on the grey list, which would be a signal to the global financial and banking system about heightened risks from transactions with Malta.

If grey-listed, Malta would be the first EU member state to be placed on the list.