Brussels writes to Malta asking about missed deadline for antimoney laundering directive

● Malta could face infringement procedure

The European Commission has sent a letter to the Maltese government asking why it failed to transpose the fourth anti-money laundering directive into law by the 26 June deadline. The directive aims to make it harder for terrorist and crime organisations to hide their money.

A typical move by organisations to conceal their wealth is by shifting money around European capitals. Earlier this week, media reports emerged detailing how Brussels rebuked national governments in the EU, including Malta, for failing to apply the rules associated with the directive.

A Commission spokesperson under the justice directorate confirmed that Malta was among the 14 member states that received a letter asking to “submit observations on why is has not (yet) adopted the required legislation (or informed the Commission that it did) within two months of receipt of this letter.”

The spokesperson also confirmed that the Commission had not yet received a reply from the government, acknowledging, however, that the letter had only been sent two weeks prior.

The only way the EU can ascertain that rules and legislation have been transposed into national law by Member States is through a procedure of notification. Malta, along with 13 other Member States, has failed to notify Brussels of the changes made to its national law by the agreed upon deadline, with a further three Member States having partially transposed the directive, all attracting a rebuke by Brussels.

The measures require countries to set up national registers showing the ultimate beneficial owners of companies which can then be accessed by authorities throughout the EU. Europol and other EU law enforcement agencies have said that the plans would make it harder for people to hide assets behind complex corporate structures and simpler for authorities to work together to track suspicious cross-border transactions. They also set together due diligence requirements for banks, lawyers and accountants.

In addition to this, intermediaries must carry out extensive risk assessments of their customers in order to fight money laundering and the financing of terrorism. The directive broadens the definition of a politically exposed person, which effectively means that a wider variety of people will be subject to stringent checks, including spouses, family members and close associates of the classically defined politically exposed person.

Back on 30 June 2017, shortly after the missed deadline, The Times of Malta reported Finance Minister Edward Scicluna as having said that the government would transpose the new rules into national law before Parliament broke for the summer.

When asked about the fallout from missing the 26 June deadline, the minister said that the Commission had been assured that the new legislation would make it to Parliament.

In light of a formal letter being sent to the government, such assurances appear not to have had any effect, as a search for the rules having been transposed came up empty. Questions were sent to the Ministry for Finance late in the day to confirm that the directive had not yet been transposed into law, despite the summer parliamentary recess having begun. The reason for the delay was also requested. Answers are expected in the coming days.

The fourth anti-money laundering directive rules were supposed to take full effect across the EU on 26 June but the only nations to provide full confirmation to Brussels that the measures had been implemented on time were the UK, France, Germany, Italy, Spain, Slovenia, Sweden, Austria, Belgium, the Czech Republic and Croatia.

EU Justice Commissioner Vera Jourova said that the performance was unacceptable at a time when the EU has made the fight against illegal finance one of its top priorities in the wake of a spate of terrorist attacks.

In terms of what happens next, it is up to the government to respond to the letter, explaining its position. If no observations are sent to the Commission by the government in the space of two months, the Commission may, “if appropriate”, issue a reasoned opinion.

Should no resolution be reached after this, the Commission may file a case with the European Courts of Justice.