Malta and AML: An Overview for 2021
Posted on 5 Oct 2021
As well as being a popular holiday destination, and a centre for insurance businesses, Malta is currently encouraging the development of its online gaming industry.
However, all is not well. Malta became of concern to the international community when the Panama Papers investigation by ICIJ in 2016 exposed illicit financial flows and resulted in tax probes centering on Malta.
Additionally, there have been several political developments arising from the murder of investigative journalist Daphne Galizia in 2017 that has led to some serious questions for the political establishment to answer. Ms Galizia had been investigating the award of certain contracts, high-level corruption, connections to organised crime, and the sale of Maltese passports to certain individuals. At the time of her murder, she had her bank accounts frozen by a government minister and was being sued by the Prime Minister.
Malta's Recent AML Issues
Malta is an EU country and so its categorisation could be presumed to be of low risk for money laundering and financial crime. Indeed as recently as 2019, Malta was considered a low-risk country according to the Basel AML Index. However, this Index did not consider the FATF 2019 Report which highlighted long-standing gaps concerning the country’s AML/CFT framework, despite the Maltese Governments commitment to enact EU money laundering directives.
The FATF, in its June 2021 report, considered Malta to be a “jurisdiction with strategic deficiencies” which is commonly referred to as their “grey list”. Countries such as Haiti, Iran, Myanmar, Syria and Panama are also on the grey list.
Futhermore, the UK issued Statutory Instrument 827 in July this year and now includes Malta on its list of high-risk third countries.
What does this mean for business?
This has serious ramifications for businesses in Malta and means that should customers be based there or have Maltese nationality then a re-assessment of the Money Laundering risk should be undertaken. Higher Risk customers should be subject to Enhanced Due Diligence and, additionally, Firms should re-assess the level of ongoing monitoring of customers based there or with Maltese nationality.
There are known instances of individuals sanctioned for financial crimes in other jurisdictions who have been able to acquire Maltese passports. Indeed, just a week ago, EU Commissioner Von Der Leyen visited Malta and made a public speech condemning the continuing sale of Maltese passports. This and other public announcements by EU officials indicates both the seriousness of the matter at EU level and the lack of action at a political level in Malta.
AML and Laven
At Laven, our consultants are on hand to help identify the actions your firm needs to take to ensure you are compliant with new regulations and aware of all the risks outlined in this report. Whether this is through assisting with new policies and procedures that need to be put in place or providing online/in-person training for staff to make them fully aware of the regulatory burden.
Laven has also built Laven Tech, a unique Regulatory Technology (RegTech) solution that leverages advanced technology combined with our vast subject matter expertise. Our RegTech solution is designed to assist fund managers, service providers and investors to meet today’s growing demands.