The Malta Independent 4 August 2020, Tuesday

How to pass the Moneyval test

Timothy Alden Sunday, 28 June 2020, 08:36 Last update: about 2 months ago

This week, a legal advisor to the US Embassy in Malta has been quoted as saying that Malta is unlikely to pass the Moneyval test. I have warned for years now that the economic strategy of the previous administration was unsustainable. These words of warning, as well as the alternatives on offer, were dismissed as doom and gloom. However, we now find ourselves with enormous reputational damage as a country.


This is because we have pursued an economic model whereby those loyal to the powerful get special privileges and find themselves above the law. Direct orders reward the faithful, and permits are dished out like candy at the tremendous expense to the physical and mental health of residents. What about the tourism product of the country? We still advertise Malta using postcards and snapshots of the past, when in fact the Malta that we know and love has fast been transformed into a concrete jungle, simply for the sake of votes and unsustainable growth lining the pockets of a select few. Were Malta to now also fail the Moneyval test, our financial services would take a tremendous hit at a time when we are most vulnerable.

What is the Moneyval test? Moneyval is the European branch of the Financial Action Task Force - FATF. Last September, it had concluded that Malta’s exposure to financial crime was significant. It stated that our country did not have the resources or infrastructure or even the willingness to investigate and prosecute financial crimes.

Consider the Moneyval test as a sort of exam. If Malta fails this exam, it will not have the certification to continue doing business in the financial services sector like before, as we will be labelled as a high-risk jurisdiction. This is, of course, enormously unfair on the lion's share of the financial services sector in Malta, which is composed of hard-working men and women of integrity and calibre, who have dedicated their lives to offering reliable and quality service. These are the people who are now panicking most, their livelihoods at risk. The government has not failed to take action since Moneyval offered its 60 recommendations last September. A Financial Organized Crime Agency was promised, the MFSA has strengthened its financial crime compliance department and the headcount of the Malta Police Force’s financial crimes investigations department has been increased.

Let us not make the mistake of assuming the whole sector, or even the whole government, is rotten. The entire point of the push against tribalism is not to condemn one group of people or another. It is to lift the illusion that we are different from each other. We should not be opposed to one another on cosmetic or sectarian lines. In reality, it is a few bad apples who manage to ingrain themselves in positions of tremendous social, political and economic influence, who manage to throw the train off its tracks so as to enrich themselves at the expense of others. The case of Pilatus Bank is a case in point; the same strict standards applied to other companies and institutions were not applied to it. It received what appeared to be special treatment, because it served a special function to those in power at the time. With the change in administration, we must all attempt to all pull the same rope - so long as the intention is genuine to make amends.

The time has come for Malta to make a dramatic shift towards good governance. Due to the economic hardship of COVID-19, this is more desperately needed than ever. There is no amount of flattery or talking pretty which will make our problems go away. We must confront them boldly. The primary criticism of the Moneyval report was Malta's failure to investigate or prosecute criminals. Let us therefore start with untangling the profound mess and tragedy of the assassination of Daphne Caruana Galizia. As I stated in my column the previous Sunday, last October, the U.S. Embassy in Malta released a loaded statement, claiming that "Not too late to bring Daphne’s killers to justice in credible manner". In a recent court testimony, acting Police Commissioner Magri stated that the FBI "are no longer involved but I’m not sure why.” It does not take a genius to wonder why the FBI were removed from the case, and why the U.S. Embassy spoke in this way. If we are worried about the Moneyval report based on the words of a legal advisor in the U.S. Embassy, perhaps we should also be taking their offer of assistance more seriously. Since then, I have reconfirmed with the U.S. Embassy that their offer of assistance is still valid. In the interests of truth and justice, as well as the economic health and the success of our nation, let us take their offer. The consequences are otherwise staring us right in the face.


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