The Financial Action Task Force (FATF) is set to vote on whether or not Malta will be grey-listed later on today.
Despite the fact that Malta passed the Moneyval test after introducing a raft of reforms, particularly to fight money laundering, the country still risks making the grey list. Grey-listing would not place any specific financial sanctions on Malta, but it would warn the international financial community that the Maltese jurisdiction is not doing enough to combat financial crime. If Malta is grey-listed, it would become the first EU member state to be placed on the list.
The FATF website reads that “when the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring. This list is often externally referred to as the grey list”.
The Institute of Financial Services Practitioners (IFSP) said in a statement that Malta has made substantial progress over the past years to address concerns about the effectiveness of its anti-money laundering regime. “Malta has now been found to be either largely compliant or fully compliant with all 40 of the FATF recommendations.”
The IFSP and its members expect that the demonstrable improvements made by the country will form the basis for any decisions taken by the FATF as it deliberates whether to place Malta under increased monitoring (that is, on the grey list) or not.
According to reports however, some countries including the United States, the United Kingdom and Germany, are against giving Malta a pass grade and have been trying to convince other FATF members to vote against Malta.
Last week, Malta’s Finance Minister Clyde Caruana hinted that there could be political motives behind these countries’ reluctance to back Malta, and has over the past days been holding meetings in efforts to persuade these members that Malta has done all it was asked to do in this field and will not stop there.
If Malta is to be grey-listed, Chairman of iGaming European Network (iGen), Enrico Bradamante said that the gaming industry will face “gradual” reputational and operational consequences.
Speaking with The Malta Independent, he said that a decision to grey list Malta would have an effect not just on the gaming industry, but on all the economic sphere.
One of the areas he believes would be noticeably hit is banking, where issues related to it will deal with more red-tape and reputational anxiety. “Banking will become more difficult than it has been in the past years if the FATF grey lists the country,” he said.
“Banks – especially foreign banks – would not want to keep accounts with Maltese registered companies, including gaming companies, so they would go through a de-risking process.”
Bradamante also remarked that reputational issues would also be of concern if the country is placed on the list. This would especially be the case for Malta as a lot of the gaming companies have their headquarters or their main operations based here in the country, and it would be worrying for them “especially if they are a publicly listed company.”
He said that grey-listing would have a negative impact on the image of the country, and that would reflect negatively on the image of those companies. “So they would make the decision to scale down or to change their structure,” he said.
Furthermore, Bradamante remarked that “it would become harder to attract foreigners to the industry.”
“Two thirds of the employees are foreigners, so if you need to convince them to move to Malta, it would become harder if Malta is a grey listed jurisdiction, there is no doubt about that. There would be a number of consequences that will make jobs at risk for sure.”
He remarked that companies would have already prepared in case such a scenario would materialise. “The companies would have made some contingency plans, so they would put those in place in case of grey-listing.”
However, the chairman doesn’t expect this to have “a life switch effect”, rather it would be “a gradual effect which would take place in the following weeks and months.”
“I don't think the companies would leave, but they would definitely look at reducing their exposure and their presence in Malta,” he said.
The Malta Developers Association (MDA) also spoke out on the situation, and said in a statement that it is closely monitoring the serious threat of Malta being grey-listed.
“Should this possible threat materialise, despite diligent efforts of all government officials and civil servants and following Moneyval’s positive feedback, the negative effect on the economy will spare no sector, employer or employee, but it will have a negative effect on Malta’s economy in general.”
The MDA said that it appreciates that “both the Prime Minister, Robert Abela, and the Minister of Finance, Clyde Caruana, have done their utmost to try and steer Malta out of this very serious and uncomfortable situation. In the circumstances, MDA assures the Prime Minister that it will always support any actions intended to benefit Malta’s economy and hopes that Malta will avoid the threatened grey-listing. It appeals to all stake-holders and genuine Maltese to cooperate with the current administration’s efforts on this issue.”