The EU Commission never informed the FIAU of its intent to publish a formal opinion on actions it believes must be adopted by the unit, with the Maltese financial regulator only discovering the news following the comments Vera Jourova, the EU’s justice commissioner, gave to The Financial Times.

“The FIAU finds it extremely inappropriate for the Commission to release information to the media without having first communicated with the Maltese authorities, and this is not the first time that this has happened,” the unit told The Malta Independent.

The Financial Times article quoted Jurova as saying that the EU will “react because the EBA’s report since it has concrete proposals for improving the functions of [Malta’s] financial intelligence unit.

“The situation obliges us to come with an opinion,” something which has “surprised” the FIAU given that it that it had already begun to implement a revised and comprehensive action plan following the the European Banking Authority’s damning report into its handling of Pilatus Bank, which also flagged some ‘general shortcomings’ in the unit.

The unit also revealed that the report and action plan, which covers a number of areas including its procedures, policies, protocols, supervisory and enforcement processes, and resources, that was submitted to the EBA on 25 July was yet to receive any reply or feedback almost ten weeks later.

“Nonetheless, the FIAU is implementing this action plan and intends to provide regular updates to the EBA on the status of its implementation,” the unit said.

In fact, the Commission or EBA are still yet to contact or communicate with the FIAU at the time of publication, with the only “communication [the FIAU] have had is the EBA’s report issued in July 2018.”

The commission’s opinion will be formally binding on the FIAU, with the EBA able to give direct orders to Maltese banks to bring them in line with EU regulations.

The commission has until mid-November to formally issue the opinion, after which the FIAU has 10 days to reply and set out what changes it intends to make.

Asked why the commission had decided to pursue this action despite the FIAU reviewing and initiating action following the EBA’s recommendations last July, the FIAU said that it was unaware as to why the commission chose to take this action.

“Particularly because the Commission has never been in contact with the FIAU with regard to the EBA's report and recommendations.

“Moreover, the FIAU has not been made aware of any assessment that the Commission may have made, nor has it been given an opportunity by the Commission to provide any explanations or information on actions that the FIAU has taken or is currently taking.

“The FIAU, therefore, cannot understand what has led the Commission to pursue this course of action which comes as a complete surprise to the FIAU.”

Pressed as to whether the unit felt that it was being treated unfairly, in view of the changes they have already begun to implement, the FIAU simply said that:

“As far as we know, neither the EBA nor the Commission have so far taken similar action against other European supervisors notwithstanding supervisory failures resulting in those banks laundering several billionsof Euros,” the unit said.

Sources who also spoke to this newspaper described a sense of political pressure being placed upon the European Institutions to act strongly in view of the growing scandals erupting around the continent, namely Denmark’s Danske Bank, Dutch bank ING and Latvia’s ABLV, ahead of the crucial post-Brexit MEP elections that will take place in May 2019.

Asked to give further details as to what has been achieved so far in terms of the action plan, this newsroom was informed by the FIAU that several developments have already taken place, including enhanced and improved coordination with the MFSA during the licensing process, in the risk assessment of subject persons, and in the supervisory processes. 

“Furthermore the FIAU has now initiated the design and development of a tailor-made software that will significantly improve the FIAU's supervisory processes, particularly with regard to data collection and risk assessment,” the unit said while also noting that it has addressed internal procedures leading to the sanctioning for breaches of Anti-Money Laundering/Countering Financing of Terrorism (AMT/CFT) obligations, and compliance of subject persons.