Malta greylisted by FATF as lobbying efforts prove futile

Last Updated on Wednesday, 23 June, 2021 at 6:06 pm by Andre Camilleri

Members of the Financial Action Task Force (FATF) have voted to grey list Malta in a vote taken during a plenary session on Wednesday.

The move, which has been widely expected, could have negative consequences on Malta’s financial services and banking sectors, as well as on its attractiveness to foreign investment.

The result will not be officially communicated today since the ballot was taken in secret, as is customary at the FATF. Malta did not have a vote.

Last week it emerged that the UK, the US and Germany wanted Malta to be grey listed – a term which means that the country will be placed under increased monitoring – despite the country having passed an equally arduous Moneyval assessment in March.

Senior government figures including Finance Minister Clyde Caruana and Foreign Affairs Minister Evarist Bartolo have spent the past few days lobbying to turn the table in Malta’s favour. Despite these efforts, however, Malta did not gather enough support to avoid being grey listed.

According to reports, the United States did not back Malta during Wednesday’s meeting. The vote must now be formally approved by the task force’s broader membership but this is considered to be only a rubberstamping process.

It is understood that the FATF also voted to grey list Romania. This means that the two countries will become the first two EU Member States to be placed on the grey list.

Once a country is grey listed, it is given an action plan which it must adhere to within a specific timeframe to be taken off.

The decision-making body of the FATF is the Plenary, which consists of 37 member countries and 2 member organisations. The FATF takes its decisions by consensus. Representatives from observer organisations and associate members also take part in discussions, representing a global network of 205 jurisdictions.

The plenary ends on Friday and the results will be officially announced then. Even then, there might not be a public announcement before at least a few weeks.

Iceland was placed on the grey list for a year in 2019 and said later that the economic effect had been “significant.”

The members represented at the FATF plenary are: Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Denmark, the European Commission, Finland, France, Germany, Greece, the Gulf Co-operation Council, Hong Kong, China, Iceland, India, Ireland, Israel, Italy, Japan, Republic of Korea, Luxembourg, Malaysia, Mexico, Netherlands, New Zealand, Norway, Portugal, Russian Federation, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, United Kingdom and the United States.

Finance Minister Clyde Caruana hinted last week that the motive behind the lack of support towards Malta could be “political.” He insisted that, should the process be a purely technical one, then Malta should pass, seeing that it had passed all Moneyval compliance requirements. He said, however, that should the process be vitiated by political motives, the FATF assessment is a “closed box.”

Caruana also insisted that Malta would do everything in its power to protect its interests. This, sources said, could include Malta using its veto powers at EU-level against countries who failed to back it at the FATF.

Grech calls for setting up of national task force to put Malta back on FATF white list

Opposition Leader Bernard Grech called on the government to work with the opposition by setting up a national task force with the goal of placing Malta back on the FATF white list as soon as possible. 

Following reports made by the media regarding the widely expected move by the members of the Financial Action Task Force (FATF) who voted to grey list Malta on Wednesday, PN Leader Grech said that he is very dissapointed with such a vote.  

During a press conference on Wednesday, PN leader Grech said “I am very disappointed that members of the FATF have voted to add Malta to its grey list. This is a punishment on all the Maltese people. This is not the time to dwell on why we ended up in this situation but to work together for the national consensus.”

Grech said that the Nationalist party seeks to instil hope within these sectors. 

“The FATF will meet again in October and Malta must be on the agenda – this time for our country to go back on the FATF white list”, Grech said. 

Grech remarked that “this will be made possible if we work together at a national level with the participation of both sides of the room, together with partners and financial experts in order to implement it more convincingly and with a national consensus. This will seek to limit the long-term damage on Malta’s economy.” 

He added that “I am confident that as a community and country we will be able to overcome this challenge, similar to the ways we have managed to overcome the great challenges of the past.” 

“The PN, as an alternative government, promises the Maltese and Gozitan people that the party will always work on improving Malta’s reputation by increasing transperancy, promoting integrity, increasing scruting and changing the mindset of the country’s highest institutions,” Grech said.

The PN said in a statement that it was calling an urgent parliamentary group meeting to discuss the matter on Wednesday.

Prior to today’s reports, PN Grech had written to the FATF, saying that a PN government would restore Malta’s reputation. 

PM, Finance Minister to address press conference after FATF grey-listing vote

Prime Minister Robert Abela and Finance Minister Clyde Caruana will address a press conference this evening after it emerged that the FATF voted to grey list Malta.

The press conference is scheduled to start at 6:30pm.

Malta has failed to garner enough support to avoid being grey listed, despite the lobbying efforts by senior government officials, including Caruana and Foreign Affairs Minister Evarist Bartolo.

Grey listing means that Malta will be placed under increased supervision by the FATF on matters related to anti-money laundering measures.

The move could have negative consequences on Malta’s financial services and banking sectors, as well as on its attractiveness to foreign investment.

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