The prime minister has been reported to have boasted that Malta will pass the Moneyval test this October and pass it with excellence.
Last September, Moneyval, the European branch of the Financial Action Task Force or FATF, ruled that Malta remains highly exposed to illicit finance but lacks the resources and infrastructure required to prosecute and seize assets from money launderers and the criminals they serve.
Malta has until October to implement Moneyval's 58 recommendations for bolstering its campaign against financial crime to avoid inclusion on the group’s grey list of high-risk jurisdictions.
In an article by Koos Couvee which appeared in a recent Moneylaundering.com post Malta’s new anti-moneylaundering agency was called 'still a paper tiger'.
The deadline had been extended to October because of the pandemic but according to Richard Daynes, a legal advisor with the US embassy in Malta, this country still has too many hurdles to clear. Mr Daynes was speaking to attendees of a webinar hosted by ACAMS Malta chapter.
He warned that unless something happens very quickly, the likelihood of grey-listing can really happen and it would be really disastrous for Malta’s financial market.
Last September, Moneyval was quite specific. Malta's prosecutors almost never tackle money laundering as a standalone crime. They have yet to secure a single conviction against a shell company or other legal entity involved in illicit finance.
Structural issues within Malta's justice system often delay investigations and prosecutions for years.
Maltese regulators tend not to use dissuasive sanctions for AML violations.
They have mostly failed to adequately supervise Malta's large and high-risk financial sector, which includes offshore banking services, online casinos and cryptocurrency firms.
In June 2019, three months before Moneyval published a report on its evaluation, Finance Minister Edward Scicluna announced that the government planned to create a Financial Organised Crime Agency to pursue, so he said, high-end money laundering cases more effectively. He did not elaborate; he did not detail how this new institution would operate in practice.
One year later and little progress appears to have been made according to a written reply to questions from moneylaundering.com from Malta's National Coordination Committee set up two years ago to oversee the country’s AML reforms, map emerging risks and enhance data exchanges between authorities.
The response vaguely referred to 'discussions with the relevant authorities, staffing issues and the like. Other reforms announced by Minister Scicluna such as allocating more funds towards investigating money laundering, recovering criminal assets and transferring authority for deciding whether or not to prosecute for serious crimes from the Malta Police Force to the Attorney General were still underway.
In 2018 just £2,760 and one vehicle were seized by the Asset Recovery Bureau. In the next year this went up to more than £1.2 million of suspicious funds in 134 bank accounts, 11 properties and 105 vehicles and vessels.
In November 2019, the first criminal case for tax evasion was prosecuted criminally in the Magistrate's Court, added the NCC spokesman.
The regulators have been inundating the specialist press with press releases, interviews and whatnot mainly focused on the future how they will beef up human resources no doubt with a couple of promotions thrown in.
But the events of the past days have shown the paper tiger in all its misery. We have heard from the man who until very recently headed the Economic Crimes Unit in the Police Force and could thus understand how no referral by FIAU passed his desk and how key figures remain out and about.
That Robert Abela has now pushed this person to a deskjob is the greatest indictment he can move against his predecessor who is still under his protection inside the Labour parliamentary group even though he was forced to resign in ignominy.
But more, much more needs to be done if we are to evade the Moneyval catastrophe.
He must inject a sense of urgency into the workings of the law courts (he could kickstart that by holding a general investigation into the many magisterial inquiries still awaiting resolution after months and years of delays).
And he could stop his ministers from making fools of themselves and spouting off on Blockchain Island at a time when such talk reminds the world of what a silly excuse of a nation-state we are.
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