Malta has officially been removed from the Financial Action Task Force's (FATF) grey list, and the FATF has encouraged Malta to 'strongly focus' on continuing to strengthen its systems and measures to tackle money laundering and terrorist financing.

The news came after a secret vote was taken at the FATF plenary meeting in Germany. The news leaked on Wednesday, but was made official on Friday. The FATF is a global anti-money-laundering body. Malta was placed on the list of jurisdictions under increased monitoring - known as the grey list -  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. 

In its decision, the FATF said: "The FATF welcomes Malta's significant progress in improving its AML/CFT regime. Malta has strengthened the effectiveness of its AML/CFT regime to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in June 2021, related to the detection of inaccurate company ownership information and sanctions on gatekeepers who fail to obtain accurate beneficial ownership information, as well as the pursuit of tax-based money laundering cases utilising financial intelligence. Malta is therefore no longer subject to the FATF's increased monitoring process. Malta should continue to work with MONEYVAL to sustain its improvements in its AML/CFT system."

In a press conference, outgoing FATF President Marcus Pleyer said that "the Maltese government in June 2021 agreed to an action plan which it has now completed. As a result, it is now better placed to tackle money laundering and terrorist financing. An FATF team held a successful on-site visit in April and the FATF congratulates Malta for being removed from list. That doesn't mean there isn't more work to do. Going forward, the FATF encourages Malta to strongly focus on continuing to strengthen its systems and measures to tackle money laundering and terrorist financing. "

He was asked what concerns he has about Malta's appetite to continue with the current rate of reforms, and to comment on those who say the island may have never deserved to be grey listed.

Pleyer said: "Since its greylisting, Malta has taken dozens of enforcement actions related to beneficial ownership failings. Many of which were among gatekeepers. This compares to zero fines on gatekeepers before the greylisting. This clearly proves that this was technically the right way to go forward. The FATF is a technical body and decided this on purely technical grounds. Looking into the future, it is very clear that it doesn't mean the work stops here for Malta. Malta must take advantage of this momentum to continue making improvements to its Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) system. This means it still needs to continue to improve the implementation of its laws, particularly in relation to the laundering of illegal proceeds from tax evasion and foreign proceeds of crime."

Asked what kind of reforms Malta implemented in the last year for it to be removed from the grey list, Pleyer said that the country was given two action plan items a year ago when it was greylisted. "Since then, the country has doubled the resources of their business registry, conducted a thorough risk assessment and set out to inspect all of them, It has successfully identified companies that concealed their true owners, and as a result significantly more penalties were imposed in 2021 against companies. So you can clearly see that Malta is now applying effective and dissuasive penalties against gatekeepers - and by these I mean lawyers, accountants, company service providers - professions that open the door to the financial sector."

"I already mentioned in my remarks that the country has taken dozens of enforcement actions related to beneficial ownership failings. Importantly, the majority of these breaches related to foreign owned companies. That shows that Malta is now cracking down on a major money-laundering risk related to shell companies. Malta also enhanced the use of financial intelligence to combat money laundering linked to tax crimes."

Told that Malta has yet to see high profile convictions including former politicians, police officers in relation to such crimes, he said that the FATF is not an operational agency. "We are not investigating concrete cases, but check whether the overall AML/CFT system is robust enough to effectively address the risks the country has."

As for comments that Malta got off the grey list in one year, Pleyer said that Malta was evaluated by MONEYVAL and the report displayed serious deficiencies. He said on that basis the country was granted an observation period, and in that period the country already had to address deficiencies. "So not everything started just a year ago, the reform process was much longer, starting with the end of the mutual evaluation report, several years ago."