The coming days could be defining for Malta and the prospects of a couple of its major economic sectors, as the Financial Action Task Force is expected to meet and – possibly – decide to remove Malta from its grey list.

Malta was greylisted by the FATF in June 2021. The country had then made a high-level political commitment to work with the FATF and Moneyval to strengthen the effectiveness of its anti-money laundering/combating the financing of terrorism regime.

Malta had been told to further increase the focus of the FIAU's financial analysis on serious tax offences and related money laundering; increase the use of financial intelligence in pursuing criminal tax and related money laundering cases and to improve the identification of inaccurate beneficial ownership information provided by Maltese legal persons, and the application of dissuasive, effective and proportionate sanctions on legal persons and subject persons for failure to comply with their beneficial ownership obligations.

Then, in February of this year, the FATF made the “initial determination” that Malta had “substantially” completed its action plan and an on-site visit was warranted to verify the implementation of reforms.  FATF representatives, together with those from Moneyval, held the on-site visit in April, soon after the election.

The next step now is a set of meetings, including a plenary session, across the better part of this week where Malta’s situation will be discussed.

Source who spoke to The Malta Independent last week were cautiously optimistic about Malta being removed from the grey list, but there is no guarantee that this will happen.

While Malta was registered as having largely completed the action plan it was given, it remains to be seen whether recent developments – particularly those concerning people who used to work in the gaming sector and the police’s seeming inaction against one of those people, Iosif Galea, despite a European arrest warrant – will have a negative effect on the matter.

The fact of the matter is that the Iosif Galea case particularly has thrown a bad light onto the police for its handling of the matter, and definitely suggests that Malta still has a lot of work to do when it comes to enforcing the law on tax and money laundering offences.

This is on the basis that Galea was subject to a German arrest warrant related to – you guessed it – tax offences.

The risk of Malta remaining on the grey list could have consequences on an economy which is already battling heavy inflation along with the rest of Europe and an ever increasing deficit as the government shells out money to keep it in check.

So far, the government has seemingly succeeded in convincing the gaming and financial industry players that the country’s grey listing was a blip in the ocean which will be rectified as soon as physically possible. 

This week is the make or break for that. 

If Malta remains greylisted, the major stakeholders in these industries – which may already be thinking twice about sticking around in Malta – may start to seriously consider jumping ship to another jurisdiction.

The consequences to the economy on that would be far reaching.

All eyes and ears this week will no doubt be on the FATF.