Regulators roped in to help with greylisting recovery

5th July 2021 • News

Regulators have been asked to help the government draft a new national risk assessment to address the “systematic shortcomings” which saw Malta greylisted by a leading global watchdog.

The heads of a number of administrative and law enforcement entities met in a private conference room at a St Julian’s hotel on Friday and agreed to prepare a document that will highlight weaknesses in Malta’s anti-money laundering regime.

The meeting was held a week after the Financial Action Task Force announced it had put Malta on a list of jurisdictions not doing enough to stem the flow of dirty money.

The FATF greylist includes 19 other countries ranging from Albania to Zimbabwe, Syria, Yemen and Myanmar as well as tax havens like Panama and the Cayman Islands.

Various studies suggest that being placed on the grey list could have far-reaching repercussions on the country’s economy, impacting banking, ease of doing business and Malta’s attractiveness to foreign investors.

The Maltese government says that it does not forecast any major ripples on the country’s economy.

Malta has signed up to an action plan to address the shortcomings highlighted by the global watchdog and sources said contact has been “ongoing” with foreign partners.

The main areas of concern for the FATF are understood to be tax evasion, Malta’s register of ultimate beneficial ownership of financial structures, and intelligence sharing among law enforcement and regulatory bodies.

Regulators and law enforcement sources that spoke with Times of Malta on condition of anonymity said that during Friday’s meeting, they were asked to draft a list of weaknesses in their areas of competence.

“These will form a much more detailed national risk assessment than the last one published. The idea is that this will help form a more problem-focused approach to tackling our systematic weaknesses,” one source who sat in on the meeting said.

The last national risk assessment to be published by the government was put together in 2018 and found that the country’s money laundering threat level was “high”.

This was mostly driven by tax evasion, local criminal groups, drug trafficking and fraud, the assessment concluded.

At the time, the authors of the risk assessment had said that Malta’s banking sector, corporate service providers, lawyers and trustees as well as remote gaming were found to pose the highest risk of being used for money-laundering.

Meanwhile, sources said Friday’s meeting was led by international anti-money laundering consultant Yehuda Shaffer who used to head Israel’s Financial Intelligence Unit.

Shaffer, who was brought on as a government consultant in the months prior to Malta’s FATF greylisting, also met with financial practitioners, informing them that the private sector was going to have to up its game when it came to flagging financial crime.

One source said Shaffer told industry’s prominent players that they were the first line of defence against financial crime and authorities relied on them to flag suspicious activity.

The source said Shaffer and private operators did not see eye-to-eye on their role in the financial services sector.