The Maltese economy, the financial services sector in particular, breathed a sigh of relief on Thursday after it emerged that Malta has passed the crucial Moneyval test.

Malta had been facing the prospect of failing this important assessment and, as a result, face being grey listed by the Financial Action Task Force.

It may not sound like much, but such a move would have killed off the industry.

To give an idea of what that would mean for the country, financial services account for 11% of the country’s Gross Domestic Product. The sector employs over 10,000 people and Malta hosts hundreds of investment funds worth some €14 billion.

Malta did well to venture into financial services over the past couple of decades and had for a time established itself as a centre of excellence in this field.

But as the sector grew at a very fast pace, the authorities failed to keep up, especially when it comes to the complex legislation, structures and enforcement required in this field.

Then we ventured into gaming and things started to go sideways, with mafia involvement and money laundering establishing a strong foothold within the sector. 

Malta fast became a target for other countries who had similar sectors and an interest in pointing out our shortcomings.

Our attractive corporate tax system quickly earned Malta the title of a tax haven.

The international financial regulators and anti-money laundering authorities turned their gaze upon us.

Then came the Panama Papers, which exposed how senior officials were avoiding tax and laundering the proceeds of God-knows-what. The lack of action by the authorities, coupled by the lack of action taken by then Prime Minister Joseph Muscat did not help alleviate the pressure the country was already facing. On the contrary, that pressure increased, and Malta was suddenly being mentioned in international forums for all the wrong reasons. Other political events and the assassination of Daphne Caruana Galizia, who had exposed numerous financial crime-related scandals only helped put Malta under an even bigger microscope.

For years, the situation remained unchecked, the shortcomings unaddressed. It was only after Malta failed its first Moneyval assessment that things started moving.

Over the past couple of years, important reforms were carried out. The regulators, namely the Malta Financial Services Authority and the Financial Intelligence Analysis Unit were beefed up both in terms of resources and powers, and companies who did not abide by strict anti-money laundering procedures started receiving hefty fines or other sanctions.

The police also upped their game and established the Financial Crimes Investigations Department. The FCID has recently investigated and arraigned several high-profile individuals after acting on the conclusions of magisterial inquiries.

The judiciary was also given specialised training in the field of money laundering crimes and the rate of prosecutions has increased significantly over the past months.

While the official report is not yet out, and won’t be for at least a few more months, it emerged this week that Moneyval has approved of the raft of reforms carried out and has given Malta a pass grade.

Much has been said about Moneyval in the past couple of years, including that the government only introduced reforms so that the country would pass the test, and that it would not have changed anything had it not been facing such a serious threat.

The important thing is that the reforms are now in place and that Malta averted disaster. This is a win for the entire country.

But this should not be just a means to an end. The story does not stop here and much more needs to be done. We cannot rest on our laurels and let ourselves fall behind once again.

It is now crucial that the authorities do not repeat past mistakes and that they keep up with this fast-paced sector. Money launderers will always find new, innovative ways of moving their ill-gotten gains, and the authorities need to remain on top of the situation.

More importantly, Malta needs to start cleaning up its name and it can only do so by ensuring that all financial crimes, particularly those committed by senior political figures, are investigated and prosecuted.

This does not only apply to wrongdoings that took place under the Muscat administration but even those that happened under the current one.