Malta received some good news from the FATF this week, and the country is cautiously optimistic about reaching its goal, to get off the grey list, sooner rather than later. When that does happen, another important journey – quite related to the first – must begin.

Malta had been placed on the grey list in June last year. The country was grey listed by the FATF after Malta was deemed to have made insufficient progress in two areas. These are related to information about the Ultimate Beneficiary Owners of companies and on efforts to combat money laundering deriving from tax evasion.

The FATF on Saturday however gave some good news, saying in a briefing that Malta has made three key reforms.

The first is “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; and 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.”

The second is “enhancing the use of the FIU's 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.”

The third is “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."

The FATF said that it will continue to monitor the country’s Covid-19 situation so that it can conduct an on-site visit at the earliest possible date.

In a press conference on Saturday, Prime Minister Robert Abela welcomed the news and said that this development meant that what the government did to combat money laundering has been noted by the FATF.

He however warned that work still had to be done and that Malta had to remain cautious and continue working.

It is no doubt good news that the FATF has made such a statement on Malta, and it shows that, while possible dates are as of yet unclear, the country is well on the road of getting off the greylist.

It means that the legislative reforms required for this to happen have been done, and the necessary institutions have been strengthened in accordance with what the FATF itself had recommended.

As it appears that the journey to get Malta off the greylist is reaching it’s conclusion, now a new journey must start: that of repairing Malta’s reputation as a jurisdiction for industries such as the gaming and financial services.

These have been an important sector in Malta’s modern-day economy, however the country’s greylisting will have certainly spooked companies based here and, more so, companies who may have been thinking of bringing their operations to the country.

This is especially important in a global scenario where one of Malta’s biggest pull factors for foreign businesses in its preferential tax rate is also about to be removed, as discussions for a global minimum tax rate continue.  That means that we as a country need to rely more on legislative structures and reputation in order to attract such investment.

The legislative structures, it appears, are there – so now it’s a matter of reputation.  That’s one of the foremost tasks for Malta’s next government.