The Financial Action Task Force (FATF) has highlighted three points which Malta must fulfil in order to move off the grey list of financial jurisdictions.

In a press conference on Friday, meeting president Marcus Pleyer explained that even though good progress has been made since a report in 2019 found serious deficiencies in Malta’s jurisdiction, there still remains work which has to be done.

The issues concern placing an increased focus on criminal tax related issues and money laundering issues, and more support from the Financial Intelligence Analysis Unit to authorities in such cases.

Furthermore, the action plan also consists of Malta having accurate and up-to-date Beneficial Owner databases, especially on previously anonymous shell companies.

“There remain serious weaknesses in areas which must be addressed, and there need to be systems strong enough to address money laundering, terrorist financing, and organised crime.  Authorities must not downplay the importance of these measures”, Pleyer said.

Regarding his statement warning the Maltese government not to downplay the measures and action plan, Pleyer was asked what gave the impression that the government is downplaying them. "Of course I have followed the news and I know that every country that is moved onto the grey list are not very happy about this. But in the end, the government of Malta gave its clear political commitment to work together with the FATF to address all the deficiencies and this is just a signal for cooperation. I am very thankful for this commitment by the Maltese government." He said that in the long-term this will help the country to improve its anti-money laundering systems which will then ensure that the country has a strong rule of law, that it has sustainable and fair economic growth, social cohesion.

Told that Malta passed its MONEYVAL technical evaluation, he was asked about the concrete reasons to place Malta on the grey list and when he expects Malta to satisfy the commitments made on the action plan.

He explained that the MONEYVAL evaluation "only looked at what we call the technical compliance. So they checked whether the FATF's standards are implemented in the country's legal system, whether they find the FATF standards in the law books. But the FATF looks at technical compliance and also beyond that -  whether the FATF standards are also implemented effectively on the ground. So the effectiveness is what the FATF looked at, in contrast to only looking at the technical compliance aspect like MONEYVAL did. The deficiencies were in the area of beneficial ownership transparency and in the area of financial intelligence, especially when it comes to tax crimes. Each country that goes on the grey list gets an action plan with certain timelines and so Malta knows exactly when to address what efficiency."

Last Wednesday, the news was leaked that Malta will be placed under increased supervision by the FATF, otherwise known as the watchdog’s grey list.

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”.

In its report published on Friday, the FATF confirmed Malta’s inclusion on the list, along with Haiti, the Philippines and South Sudan.

“In June 2021, Malta made a high-level political commitment to work with the FATF and MONEYVAL to strengthen the effectiveness of its AML/CFT regime,” the FATF statement read.

“Since the adoption of its Mutual Evaluation Report (MER) in July 2019, Malta has made progress on a number of the MER’s recommended actions to improve its system,” the FATF said, mentioning, among other things,  improving the analytical process for financial intelligence; resourcing the police and empowering prosecutors to investigate and charge complex money laundering in line with Malta’s risk profile; introducing a national confiscation policy as well as passing a non-conviction based confiscation law; raising sanctions available for the crime of terrorist financing (TF) and capability to investigate cross-border cash movements for potential TF activity.

The report read that Malta will work to implement its FATF action plan by continuing to demonstrate that beneficial ownership information is accurate and that, where appropriate, effective, proportionate, and dissuasive sanctions, commensurate with the ML/TF risks, are applied to legal persons if information provided is found to be inaccurate. It will also do so by “ensuring that effective, proportionate, and dissuasive sanctions are applied to gatekeepers when they do not comply with their obligations to obtain accurate and up-to-date beneficial ownership information.”

It will also work on the plan by “enhancing the use of the financial intelligence unit’s (FIU) financial intelligence to support authorities pursuing criminal tax and related money laundering cases, including by clarifying the roles and responsibilities of the Commissioner for Revenue and the FIU.” In addition, it was also work on it by “increasing the focus of the FIU’s analysis on these types of offences, to produce intelligence that helps Maltese law enforcement detect and investigate cases in line with Malta’s identified ML risks related to tax evasion.”