The Malta Independent 14 December 2018, Friday

TMID Editorial: Money laundering - Something must be done to stop the rot

Thursday, 7 September 2017, 10:24 Last update: about 2 years ago

The revelations that Italian mafia clans had set up an extensive money laundering ring in Malta are not new nor but the shock and concern over the state of affairs never abates.  The latest instalment in this sorry tale is this week’s report by Europol’s Financial Intelligence Group, which makes a point of highlighting the case of Malta and the €2 billion that mafia clans are believed to have at least sought to launder through Malta.

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As Europol reports, Malta was at the heart of a massive a massive illegal gambling and money laundering operation until the Italian authorities took down a huge network of companies involved in online betting, headquartered in Malta and controlled by a notorious Calabrian criminal organisation.

Europol goes on to note that while the numbers of suspicious transactions reported to the authorities by banks, legal firms and other financial intermediaries in countries such as Italy and France ‘appear to reflect the size of those countries’ regulated sectors, certain other jurisdictions, notably Cyprus and Malta, receive very few reports given the size of their banking sectors and the significance of these jurisdictions in offshore financial services’.

The European police agency adds, ‘As such it is highly likely that there will be an increase in reports from the gambling sector in the near future, which may affect particular European Member States who have a significant online gambling sector, for example Malta.’

The Italian mafia online gaming-money laundering story has been brewing for a long time now but as the veil is slowly lifted on exactly how the mafia set up an intricate, multi-layered web of companies, this time in the remote gaming sector, ostensibly aimed at laundering the proceeds of its multi-billion euro criminal network, an ever-darker shadow is being cast on Malta’s corporate structure regime, and the use of shell companies to hide and/or launder ill-gotten funds, and the use of Malta to actually launder those ill-gotten gains.

Such international news does Malta’s image as a financial centre of excellence with a robust regulatory regime no good at all, quite the opposite in fact.  Malta had spent years carefully building that reputation, which is being slowly but surely undone. 

That is for the simple reason that the full extent of the mafia’s use of Malta is still unknown and is still to surface through prosecutions in the Italian courts.

Of course, all those companies were set up in Malta under the laws regulating trusts and fiduciary services, and as far as the Maltese companies offering such services are concerned, all was above board and in line with the law.

If that is truly the case, then there must be something wrong in the law itself.

The mafia set up a hoard of Maltese companies and used those companies’ activities in the remote gaming sector to launder untold millions or even billions of euros that were the proceeds of crime

We have a case of the mafia using Malta as a hideout and a money laundering base – accusations that would naturally cause any would-be investor in Malta’s financial services industry, or other industries for the matter, to think twice before investing in Malta.

Following the mafia’s operations in Malta and the ensuing scandals, the accusations of Azerbaijanis and several others using Malta to either launder money or as a staging post to launder money, and the revelations emanating from the Panama papers, one wonders what could be next. 

Such a question will easily not only dissuade serious operators from setting  up shop in Malta, particularly in the wake of Brexit, but the truth is that with each new revelation Malta’s hard earned reputation as a financial centre of repute is taken down several notches.  Something, at least on a regulatory level, must be done to stop the rot.

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