The Malta Independent 23 September 2017, Saturday

Malta could face infringement procedure

Thursday, 10 August 2017, 09:19 Last update: about 2 months ago

The European Commission has sent a letter to the Maltese government asking why it failed to transpose the fourth anti-money laundering directive into law, which is aimed at making it harder for terrorist organisations and criminal gangs to hide their money, by the 26 June deadline.

A typical move by organisations to conceal their wealth is by shifting money around European capitals. As this paper reported exclusively last week, Brussels rebuked national governments in the EU, including Malta, for failing to apply the rules associated with the directive.

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A Commission spokesperson in the justice directorate confirmed to this paper that Malta was among the 14 member states that received a letter asking to "submit observations on why is has not (yet) adopted the required legislation (or informed the Commission that it did) within two months of receipt of this letter".

The spokesperson also confirmed that so far the Commission has not yet received a reply from the government, while acknowledging that the letter had only been sent just two weeks before.

The normally attentive and combative government and ministry have not so far replied to this story.

The only way of the EU having any knowledge that rules and legislation its ministers have agreed upon have been transposed into national, member state law, is by a procedure of notification. Malta, and 13 other member states failed to notify Brussels by the agreed upon deadline of the changes made to its national statute. A further three member states partially transposed the directive and so, a total of 17 have been rebuked by Brussels.

The measures require countries to set up national registers showing the ultimate beneficial owners of companies which can then be accessed by authorities throughout the EU. Europol and other EU law enforcement agencies have said that the plans would make it harder for people to hide assets behind complex corporate structures and simpler for authorities to work together to track suspicious cross-border transactions. They also set together due diligence requirements for banks, lawyers and accountants.

In addition to this, intermediaries must carry out extensive risk assessments of their customers in order to fight money laundering and the financing of terrorism. The directive broadens the definition of a politically exposed person, which effectively means that a wider variety of people will be subject to stringent checks, including spouses, family members and close associates of the classically defined politically exposed person.

On 30 June, shortly after the missed deadline, The Times of Malta reported Finance Minister Edward Scicluna as saying that government would transpose the new rules into national law before Parliament breaks for the summer.

When asked about the fallout from missing the 26 June deadline, the Minister said that Commission has been assured that the new legislation would make it to Parliament.

Now Parliament is in its summer recess, having chosen to spend time on the same sex marriage bill but not on the anti-money laundering directive. It is always a question of choices and priorities. In our opinion, whatever one may say on same sex marriages, it was particularly important for Malta to do its duty on the anti-money laundering directive, considering the controversies and the negative publicity regarding this issue in the pre-electoral period.

The fourth anti-money laundering directive rules were supposed to take full effect across the EU on 26 June but the only nations to provide full confirmation to Brussels that the measures were implemented on time were the UK, France, Germany, Italy, Spain, Slovenia, Sweden, Austria, Belgium, the Czech Republic and Croatia.

EU Justice Commissioner Vera Jourova said that the performance was unacceptable at a time when the EU has made the fight against illegal finance one of its top priorities in the wake of a spate of terror attacks.

In terms of what happens next, it is up to the government to respond to the letter, explaining its position. If no observations are sent to the commission by the government in the space of two months, the Commission may, "if appropriate", issue a reasoned opinion.

Should no resolution be reached after this, the Commission may file a case with the European Courts of Justice. 


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