FATF welcomes Malta’s ‘significant progress’ as country gets off the grey list

Last Updated on Saturday, 18 June, 2022 at 8:15 am by Andre Camilleri

Getting off the grey list ‘confirms that Malta is a serious and reputable jurisdiction’ – PM

PN welcomes FATF news, but says it needs to be followed up by ‘clear vision’

Malta has officially been removed from the Financial Action Task Force’s (FATF) grey list, and the FATF has encouraged Malta to ‘strongly focus’ on continuing to strengthen its systems and measures to tackle money laundering and terrorist financing.

The news came after a secret vote was taken at the FATF plenary meeting in Germany. The news leaked on Wednesday, but was made official on Friday. The FATF is a global anti-money-laundering body. Malta was placed on the list of jurisdictions under increased monitoring – known as the grey list –  in June 2021. The country had then made a high-level political commitment to work with the FATF and Moneyval to strengthen the effectiveness of its anti-money laundering/combating the financing of terrorism regime. 

In its decision, the FATF said: “The FATF welcomes Malta’s significant progress in improving its AML/CFT regime. Malta has strengthened the effectiveness of its AML/CFT regime to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in June 2021, related to the detection of inaccurate company ownership information and sanctions on gatekeepers who fail to obtain accurate beneficial ownership information, as well as the pursuit of tax-based money laundering cases utilising financial intelligence. Malta is therefore no longer subject to the FATF’s increased monitoring process. Malta should continue to work with MONEYVAL to sustain its improvements in its AML/CFT system.”

In a press conference, outgoing FATF President Marcus Pleyer said that “the Maltese government in June 2021 agreed to an action plan which it has now completed. As a result, it is now better placed to tackle money laundering and terrorist financing. An FATF team held a successful on-site visit in April and the FATF congratulates Malta for being removed from list. That doesn’t mean there isn’t more work to do. Going forward, the FATF encourages Malta to strongly focus on continuing to strengthen its systems and measures to tackle money laundering and terrorist financing. “

He was asked what concerns he has about Malta’s appetite to continue with the current rate of reforms, and to comment on those who say the island may have never deserved to be grey listed.

Pleyer said: “Since its greylisting, Malta has taken dozens of enforcement actions related to beneficial ownership failings. Many of which were among gatekeepers. This compares to zero fines on gatekeepers before the greylisting. This clearly proves that this was technically the right way to go forward. The FATF is a technical body and decided this on purely technical grounds. Looking into the future, it is very clear that it doesn’t mean the work stops here for Malta. Malta must take advantage of this momentum to continue making improvements to its Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) system. This means it still needs to continue to improve the implementation of its laws, particularly in relation to the laundering of illegal proceeds from tax evasion and foreign proceeds of crime.”

Asked what kind of reforms Malta implemented in the last year for it to be removed from the grey list, Pleyer said that the country was given two action plan items a year ago when it was greylisted. “Since then, the country has doubled the resources of their business registry, conducted a thorough risk assessment and set out to inspect all of them, It has successfully identified companies that concealed their true owners, and as a result significantly more penalties were imposed in 2021 against companies. So you can clearly see that Malta is now applying effective and dissuasive penalties against gatekeepers – and by these I mean lawyers, accountants, company service providers – professions that open the door to the financial sector.”

“I already mentioned in my remarks that the country has taken dozens of enforcement actions related to beneficial ownership failings. Importantly, the majority of these breaches related to foreign owned companies. That shows that Malta is now cracking down on a major money-laundering risk related to shell companies. Malta also enhanced the use of financial intelligence to combat money laundering linked to tax crimes.”

Told that Malta has yet to see high profile convictions including former politicians, police officers in relation to such crimes, he said that the FATF is not an operational agency. “We are not investigating concrete cases, but check whether the overall AML/CFT system is robust enough to effectively address the risks the country has.”

As for comments that Malta got off the grey list in one year, Pleyer said that Malta was evaluated by MONEYVAL and the report displayed serious deficiencies. He said on that basis the country was granted an observation period, and in that period the country already had to address deficiencies. “So not everything started just a year ago, the reform process was much longer, starting with the end of the mutual evaluation report, several years ago.”

Getting off the grey list ‘confirms that Malta is a serious and reputable jurisdiction’ – PM

Friday’s official announcement that Malta has been removed from the Financial Action Task Force’s (FATF) grey list confirms that Malta is a ‘serious and reputable’ jurisdiction, Prime Minister Robert Abela said.

Abela spoke after a secret vote was taken at the FATF plenary meeting in Germany. The news of Malta making it off the list was leaked on Wednesday, but was made official on Friday. The FATF had placed Malta on the list of Jurisdictions Under Increased Monitoring – known as the grey list –  in June 2021. The country had at the time agreed on an action plan to tackle the main points that were highlighted.

In its decision, the FATF, which is a global anti-money-laundering body, said that it “welcomes Malta’s significant progress in improving its anti-money laundering/combating the financing of terrorism (AML/CFT) regime. Malta has strengthened the effectiveness of its AML/CFT regime to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in June 2021, which were related to the detection of inaccurate company ownership information and sanctions on gatekeepers who fail to obtain accurate beneficial ownership information, as well as the pursuit of tax-based money laundering cases utilising financial intelligence. Malta is therefore no longer subject to the FATF’s increased monitoring process. Malta should continue to work with MONEYVAL to sustain its improvements in its AML/CFT system.”

Addressing a press conference soon after the FATF announcement, Abela said that the country “worked hard and tirelessly” to address the action plan.

He said that Malta completed the action plan in ‘record time’.

“Today Malta stands as an example to other jurisdictions,” he said, while adding that Malta successfully implemented the plan while also maintaining strong economic growth and “achieving unprecedented levels of employment, including in the gaming and financial services sector.”

The Prime Minister pledged that the country’s efforts won’t stop here. “I will be clear, never again should our country end up on a list like this,” Abela said.

He mentioned how, when he became Prime Minister in 2020, he had found subsequent Moneyval reports that were negative, stating particularly that the 2018 one was “very negative.” He said he gave clear direction for these reports to be addressed. “Certainly I gave a different direction than what I understand was given prior to 2013, when these reports were placed on a shelf.”

He said that reforms in the country had started before June 2021, when the action plan was agreed upon with the FATF, and had even started in January 2020. Abela said that this proves that “these were reforms we truly believe in.”

The Prime Minister said that the government will continue to nurture a culture change, “deliver on our commitments and sustain our momentum. We remain open to engage as necessary, should any issues arise. Hopefully this will not be the case. As Prime Minister I can give my assurance that we will remain fully committed to prevent money laundering and terrorist financing, and to combat other forms of serious and organised crime.”

He expressed his trust in the country’s institutions, including the police, Attorney General and the FIAU.

“Today’s FATF announcement is a testament to our political will resolve and strong commitment,” he said.

Given that the FATF said that Malta should continue to work with MONEYVAL to sustain its improvements in its AML/CFT system, The Malta Independent asked whether this means Moneyval will keep a closer eye on Malta than it did before greylisting. Abela confirmed that this will not be the case.

He said that the 58 recommendations made by Moneyval had already been successfully addressed by the government prior to the greylisting. He said that “on the contrary, Moneyval has just seen Malta pass the FATF test. Therefore, this process will not add further supervision.”

Abela also added that when the Moneyval assessment is next due for Malta, he aims to achieve a result that will see Malta pass with flying colours.

Asked what the government will do to ensure Malta remains off the FATF’s Grey List, Abela insisted that the government will work on keeping a consistent reform process. “We must continue to work for our country in order to remain being considered as a jurisdiction of excellence, and as a country which is looked at as being good for investment,” Abela said.

Abela was also asked what has become of the investigations into people like Joseph Muscat and Konrad Mizzi. In reply, Abela said that this government respects its institutions, allowing them to work freely. “We made sure to equip all magistrates with the resources they need to work, but other than that, the government does not intervene in any magisterial processes or inquiries,” Abela said.

PN welcomes FATF news, but says it needs to be followed up by ‘clear vision’

The PN has said that the news of Malta’s removal from the grey list ‘is positive’.

“With this news comes the onus of maintaining standards, building further robust control mechanisms and heightening our collective vigilance. We cannot afford to let our guard down. Everyone, including the cabinet of ministers, is painfully aware of how government’s lax governance structure negatively impacted the country’s potential and cast a long shadow on us.”

“We need to learn from this sad experience brought about by serious shortcomings in Malta’s governance system. The opposition will continue to shine a bright spotlight on good financial governance,” the PN said.

“This positive news now needs to be followed up by a clear vision of maintaining robust controls whilst at the same time making Malta once again a reputable jurisdiction of choice able to compete with all others.”

“It would be a shame to stop at being removed from the greylist and not following up with the ambitious target of once again being amongst the best.”

The statement was signed by PN MP Jerome Caruana Cilia.

The Malta Chamber of Commerce, Enterprise and Industry welcomes the FATF’s decision to remove Malta from its greylist

The past year has been challenging for many businesses exposed to international payments as a result of the grey listing and has seen AML compliance costs rise significantly for operators in the financial services sector. We have also seen intensive efforts by regulatory authorities such as the FIAU and the MBR to address the concerns flagged a year ago in the shortest time possible. The target of being removed from the list has been achieved, but this is only the first step. The next objectives need to be achieving a sustainable regulatory environment whereby AML obligations will be more risk-based, proportionate to the size of the business, and effective at rebuilding our reputation as a reliable and competitive jurisdiction. Striking this balance going forward will be key to restoring our position as a leading financial services provider and developing those segments of the industry where we can have a competitive edge.

The experience of the past couple of years has built competences within the financial services industry that will not only help us be more selective as a jurisdiction about the type of business that we service, but also provide expertise in the field of regulatory compliance that will broaden the offering of our financial services industry.

It is imperative that both Government and regulatory authorities, and the private sector, collectively ensure that we do not let standards slip.  We should turn this unpleasant experience into a springboard for a proactive renewal of the financial services industry in Malta.

Malta Bankers’ Association welcomes FATF decision on Malta

The Malta Bankers’ Association (MBA) welcomes the FATF decision to remove Malta from its increased monitoring (grey) list.

This is a moment to acknowledge the significant efforts and hard work carried out by the competent authorities and the financial services industry in particular, a noteworthy example of public-private collaboration, leading to overall progress in the island’s remediation journey.

On its part, the MBA underlines that its member banks remain fully committed to the highest standards required of them as gatekeepers in the constant fight against money laundering, terrorist financing and all forms of economic crime.

Malta Institute of Accountants welcomes Malta’s grey-list exit, appeals for vigilance

The Malta Institute of Accountants expresses its satisfaction that the Financial Action Task Force (FATF) has taken Malta off its grey-list.

A timely exit from the grey-list, which the Institute had immediately called for, was imperative to limit the impact of this decision and offer the jurisdiction the opportunity to get back on track in its efforts to place itself among the most reputable counterparts in the industry.

The Institute commends the efforts of financial services practitioners and other professionals who have worked tirelessly over the past months to ensure the strengthening of the financial services sector’s reputation, an effort which has contributed in no small way to this desired result.

Malta’s de-listing should not however, constitute a point of arrival. All stakeholders have a responsibility to remain vigilant at all times and to continue improving on the higher quality that has been reached today.

While the exit from the grey-list is an important and a welcome achievement, it is our collective duty to restore Malta’s place where it deserves – as an international financial jurisdiction of high repute, which attracts high quality investment based on substance, and contributes to sustainable economic growth and job creation.

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