The news that Malta has been grey listed by the Financial Action Task Force has dealt a devastating blow for the Maltese economy which will stretch its resilience to its limit, the Malta Employers’ Association said.
Unlike the COVID pandemic, this crisis is entirely self-inflicted and the result of lax and corrupt practices by a minority of dishonest politicians and businesses, compounded with ineffective governance systems. Our justice system has also proven to be strong with the weak, whereas glaring transgressions and crimes, including a murder of a journalist that have made international news remain unresolved or languish in the labyrinth of our judicial system.
Our country has been shaken by too many scandals involving senior politicians and politically exposed persons as well as the major institutions. The best efforts of the current Minister of Finance, Clyde Caruana, to clean up the the mess left by his predecessor, failed to impress the FATF.
We need to realise that governance is not just about ticking boxes, but about values. We may have all the governance systems in place, but we will only be allowed to operate without the stifling straightjacket that we are now being forced to wear if we rebuild the trust of the international community to once again judge Malta to be a reliable and trustworthy business partner. This grey listing is unprecedented and humiliating for Malta. The first step of the uphill process to rebuild our national brand has to accept this outcome for what it is. It will be pointless to waste time in political bickering and point fingers in vain attempts to deny or downplay the severity of the grey listing. Rather than blaming the referee, we need to rethink our strategies and hold people to account where necessary, irrespective of who they are or what their connections might be. We are all aware that, as a small economy, the cards are often stacked against us, but we must also wake up to the realisation that we brought this on ourselves if we are truly committed to emerge from this disaster.
Unfortunately, the repercussions of the grey listing will be carried by honest businesses and their employees. The cost of added compliance procedures is already stifling many businesses. MEA has, for years, been campaigning for a reform at political level to have a clean administration, run by competent and trustworthy people. It is unfortunate that such appeals by the Association and other social partners which have also been made at the MCESD have been ignored by government.
Our focus should be on the need for national unity with the involvement of all. We have had to learn our lesson the hard way as a country, that governance is not to be taken lightly, the MEA said.
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Repeal of the sale of citizenship scheme immediately and close legal loopholes which have transformed Malta into a tax haven
The ADPD called for the immediate revokation of the citizenship by investment programme.
In a statement following Malta’s grey listing by the FATF ADPD-The Green Party’s Chairperson Carmel Cacopardo said:
“We are saddened by the decision of FATF (Financial Action Task Force) to have Malta on its grey list. We are saddened even though this was expected.”
During the past week, Government spokespersons have been emphasising that a lot of regulatory sprucing and reinforcement has been taken in hand. They did not tell us and the world that this has been done after several years of zero enforcement.
We have had all Labour MPs in Parliament refusing to condemn Konrad Mizzi and Keith Schembri when their Panama Papers involvement was made public. All of them have contributed to this grey listing.
We have had the Police Commissioner refusing to investigate money laundering cases for years on end. It is only recently that a new police commissioner has made investigations and prosecutions possible.
Unfortunately, the action against money laundering has been late in coming. Considerable damage has been done. Government criminal complicity in all this has seriously damaged the economy and society. It is those in the lower income levels who will feel most of the impacts of all this. They need our empathy. It is they who need the most protection at this point in time.
Government with the support of the Opposition has, over the years developed a national consensus on the financial sector including the setup which makes it possible for international tax evasion to make use of Malta as a base. Together with the sale of citizenship scheme this has further contributed to the erosion of Malta’s reputation as a trustworthy jurisdiction.
All this mess was directed by Joseph Muscat and Edward Scicluna, former Finance Minister who has been rewarded by his appointment as Governor of the Central Bank. Muscat is gone. Scicluna needs to follow him at the earliest. He should either resign or be dismissed forthwith.
It is also pertinent to point out that all this was the subject of the investigative journalism of Daphne Caruana Galizia who was blown up for her efforts to inform us and expose the criminal elite. We have lost a life: a mother, a wife and a journalist.
Immediate action is essential to start rebuilding Malta’s reputation, ADPD said. This should include the immediate repeal of the sale of citizenship scheme and closing the legal loopholes which have transformed Malta into a tax haven.”
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Malta committed to upholding standards
The Institute of Financial Services Practitioners (IFSP) said in a statement that it is regrettable that, despite the significant progress reported by Moneyval, the FATF has placed Malta on its grey list.
In light of this, the IFSP said that “it believes that any outstanding areas of concern will be tackled in an efficient and effective manner with the industry and the authorities each playing their respective part, and that Malta will soon be able to demonstrate that this level of compliance translates into the level of effectiveness that the FATF is seeking.”
It said that the fact that Malta is now either largely compliant or fully compliant with all 40 of the FATF recommendations is an acknowledgement that Malta has made big strides forward in its fight against money laundering and financing of terrorism.
Substantial progress made by Malta over the past years to address shortcomings in its anti-money laundering regime has been recognised by the FATF during its June 2021 plenary meeting, IFSP said.
The IFSP was reacting to the reports made by the media regarding the widely expected move by the members of the FATF who voted to grey list Malta on Wednesday.
“Unlike a number of other countries (including some EU Member States and other large countries) Malta does not have any “non-compliant” or “partially compliant” grades and has therefore fared better when viewed through the lens of the FATF’s own risk-scoring matrix,” IFSP statement read.
The financial services industry is proud to have been part of the process to raise the bar in AML and CFT compliance and that its cooperation with the authorities over the past months has led to this significant progress.
In addition, the IFSP and its members have said that “we remain committed to continue progressing and addressing the areas of concern throughout the FATF’s increased monitoring term, designed to assist Malta keep its focus on any remaining issues that require attention.”
The IFSP noted it is confident that, with the country making a concerted effort towards addressing those aspects which may require further progress, Malta can demonstrate that the effectiveness outcomes sought will naturally follow the substantial progress already achieved on the technical front, thus bringing about removal from the grey List within a short period.
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Need for a national approach to restore our reputation
The Malta Chamber called for all key stakeholders in the country to come together, analyse the implications and devise a clear action plan on how to move forward following the disappointing result of the Financial Action Task Force (FATF) evaluation. It must be borne in mind that Malta has very recently obtained a positive Moneyval assessment which attests that it is technically compliant. We are now at a stage where we must convince the FATF of the effective implementation and enforcement of our recently established rigorous regulatory framework to be removed from the greylist in the shortest time possible.
The repercussions of greylisting by FATF will have a negative impact on many important sectors of the economy and on the international reputation of the country. The cost of compliance of the Anti-Money Laundering (AML) regulatory framework, which is now more rigorous than that of many other jurisdictions, is being borne by our financial services’ sector. The costs of this greylisting will be borne by the whole economy for as long as we retain this status. We therefore need to show the same rigour that we have shown in becoming technically compliant over the past two years, in terms of effective implementation.
The Chamber has always insisted that success can only be achieved by having an effective unified effort. The country’s economic wellbeing needs to come first in such a delicate moment; political maturity in a time of crisis is crucial whilst personal, sectoral and partisan interests need to be secondary.
Evidently, compliance clearly needs a joint Government and stakeholder approach which binds all towards a commitment towards our country and more importantly its people. The key to turning around this situation, is by joining forces to enforce the existing framework and have effective monitoring systems to safeguard our jurisdiction.
The Malta Chamber will work with all the key stakeholders in the country to make sure that an action plan is drawn up to respond constructively and diligently to the situation, to ensure that the country’s international reputation is restored.
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Malta can recover
The Malta Union of Bank Employees – MUBE reiterates that all stakeholders should continue to insist on good effective governance at all times since it is the only way for Malta to regain the level of credibility our nation has been once renowned for. Being disciplined in approach, proactive and acting in a timely manner in support of transparency will help our Nation to regain credibility.
With a coordinated effort at national level, Malta can recover its white-listing status by showing determination in the way governance is applied across all levels of business and society. As a jurisdiction, Malta should have never reached such a low point especially after a hard-earned EU membership status and ably sealed with the timely introduction of the euro. Lessons learnt, the nation must look forward and show resolve in execution by applying a zero-tolerance approach in support of an established system that effectively counters corruption, fraud and money-laundering. Whilst improvement has been registered, collectively and unconditionally, the nation needs to show consistency by ensuring that the impact on Malta’s financial services and banking sector is minimal so attractiveness to foreign direct investment is kept at high levels.
Very relevant is how the Institutions conduct business at all levels. The MFSA being the regulator and a firm driver of the process cannot accept anything short of the highest of standards as it is the only way our nation can recover its previous long-time good reputation that directly supports all those who work in the Banking and Finance Industry. As the world gradually heads into a gig economy, Malta should avoid self-inflicted reputational damage as it seriously poses potential unwarranted risk to the country’s future wellbeing which supersedes any kind of politics and one that leaves no room for complacency.
After so much sacrifice, we should work to recover as soon as possible and make sure we never allow this to happen again.