Defending Malta
Iaddressed the EP’s TAX 3 committee on Monday, during the hearing on Financial Crimes, Tax Evasion and Tax Avoidance in Malta. It was yet another occasion during which I had the opportunity to put the facts on the table and correct all the false impressions, given even by those who know better.
It is a pity that some are so keen to harm our country for local partisan reasons. Whenever my colleagues or I are representing
Malta, we always do our utmost to do whatever is necessary to defend and safeguard our country, which unfortunately cannot be said for the representatives of the party in Opposition. Here I include the MEPs and the stark difference in their ways.
Politicians have very important responsibilities to shoulder. We must not allow that the most crucial institutions in any democracy be caught in the political crossfire. We have to act responsibly.
The role of the politician is by all means to raise issues, criticise, ask questions and trigger procedures if necessary but the politician must then also have the prudence to stand back and let the institutions to do their work and not push for particular conclusions. When Malta applied to join the European Union, the screening processes naturally found our legal system fully compliant with the Copenhagen criteria and with the principles of separation of powers and the rule of law.
I reiterate that since the 2013 election Malta has been undergoing a continuous process of reform to keep improving our legal system. I had many an opportunity to discuss these numerous reforms in my previous articles.
The Government remains committed in favour of a continuous process of reforms to strengthen the country’s institutions and good governance and to maintain an open and ongoing dialogue with the European Commission and other institutions on governance, enforcement of the Anti-Money Laundering framework and to continuing the fight against financial crime.
Malta is being accused of being practically indifferent to money laundering or at least this is the impression which some try to shamelessly create. This is absolutely not the case. Like any other country, we certainly cannot claim to be perfect on all counts, but even where there are shortcomings, we are fully committed to remedy them and our institutions work in good faith.
Malta is currently undertaking improvements in its capacity to supervise anti-money laundering compliance.
I remind all who conveniently forget this Government’s commitment in this sphere, that a National Risk Assessment was carried out in November 2013, completed in 2015 and updated in 2017 following an assignment by international consultancy firm, Oliver Wyman. Following this risk assessment, the international firm came up with a strategic action plan. I stress that this exercise was conducted on our own initiative and without anyone telling us what to do.
After conducting the National Risk Assessment to identify the main vulnerabilities and institutional weaknesses, in April 2018 the authorities adopted an integrated strategy to fight money laundering and combat the financing of terrorism. This strategy is will be implemented over the next three years.
The Strategic Action Plan has not only been made public but a principal initiative of the Strategy – that of setting up a National Co-ordinating Committee to coordinate the work being carried out by various organisations in the area of supervision and regulation of the sector – has been included in the law on Prevention of Money Laundering.
Measures recently implemented include the setting up of a National Coordinating Committee on Combating Money Laundering and Funding of Terrorism, composed of representatives from government and relevant national authorities; the adoption by Malta Financial Services Authority of guidance on politically exposed persons, and the setting up of an Asset Recovery Bureau. The Chairperson of the Bureau is a former Judge of the Constitutional Court.
In addition, a memorandum of understanding between the Malta Financial Services Authority and the Financial Intelligence Analysis Unit to better coordinate and integrate their efforts has been established.
Regarding the transposition of the Fourth Anti-Money Laundering Directive (AMLD IV), by the end of 2017, this was adopted in Parliament and five Legal Notices were published with respect to the transparency of Beneficial Ownership, including in foundations and associations. Provision was also made for cooperation with institutions in other jurisdictions, and for the setting up of the National Coordinating Committee on AML/CFT Strategy.
The National Coordinating Committee is heading the transposition of the Fifth Anti-Money Laundering Directive and work is already ongoing. The Government remains committed to transposing the Directive before the deadline of 10 January 2020.
It also is relevant that the number of Suspicious Transaction Reports filed with the FIAU has increased substantially every year and reached 1,679 in 2018 from 202 in 2014. The number of FIAU reports sent to the police for further investigation also increased from 27 in 2014 to 45 in 2018. This reflects the increased investment in the FIAU which has instilled an increased awareness of anti-money laundering obligations in the industry.
On financial supervision, we acknowledge that instances of misconduct by licenced entities have an impact on the integrity and stability of the financial market and on public trust. We continuously strive to improve efficiencies in the structure, processes and methodology to cater for the heightened demands and expectations emanating from the implementation and transposition of new EU legislation and to keep pace with innovative services and products that are being provided on the market and with the enhanced drive and initiatives to prevent financial crime. On Monday, I also addressed the issue of the Individual Investor Programme, investment migration and citizenship scheme, often used to paint a grim picture of Malta.
The Government of Malta is pleased to note that in its recent report on such programmes the European Commission recognises the economic benefits of investment migration, a sector that has significantly boosted employment across the EU and beyond. Government endorses some of the key outcomes of the highly awaited report from the Commission to the European Parliament, The Council, The European Economic and Social Committee and The Committee of the Regions entitled Investor Citizenship and Residence Schemes in the European Union.
The report also raises a number of concerns and arguments on the Residency and Citizenship by Investment (RCBI) industry’s impact on the Union, focusing on the 20 Member States that offer investor citizenship and residency schemes in the EU. Malta agrees and supports many of the report’s recommendations, while having reservations on a few issues raised.
The Maltese Government disagrees with the report’s statement that investor citizenship is granted under less stringent conditions than under ordinary naturalisation rights. Rather, in our case, it is the inverse.
Malta is one of the few jurisdictions where physical presence is mandatory and a residence status is required before an application is granted. Malta reiterates that a link to the country where naturalisation happens is an important element of the process. Moreover, other links with the community are established that attest the individual’s relationship with the
State, namely travelling to Malta, business connections, donations to philanthropic causes, memberships in local societies and other diverse activities.
In its commitment towards transparency, Malta is one of the few European countries that publishes the names of individuals who obtain citizenship. The nature of the due diligence checks is also public. Additionally, professional firms and practitioners who are subject persons under anti-money laundering legislation and who are members of professional bodies, and accredited to submit applications, contribute an additional layer of good governance. Malta is also the only country that has a Regulator (appointed following an agreement between the Government and the Opposition) as another dedicated institution that monitors the governance of the programmes and agencies, and publishes additional statistical information yearly. Malta also has a monitoring committee involving the Prime Minister, the Leader of the Opposition, the Minister for Citizenship and the regulator in order to discuss the findings of the regulator.
With regard to Money Laundering and Tax evasion, the Malta programme adheres closely to the EU’s Anti Money Laundering directives, also in place across other institutions as demanded via the local financial regulator. Checks on the source of wealth are an essential part of the investigative checks done on applicants, as are investigations of business and political connections, close associations and criminal court cases.
While reiterating that the Malta RCBI programmes do not offer any tax benefits, the main concern highlighted in the recent Commission study points towards risk of circumventing the Common Reporting Standard. Malta, as an EU member state, abides by the EU agreed directive on automatic mandatory disclosures.
Furthermore, Malta has not only cooperated in the discussion and compilation of information on such schemes, but has also made a number of commitments to mitigate further any potential risks. This shows Malta’s commitment to ensuring that the Malta Programmes are not used for the purpose of circumventing the CRS. Malta also welcomes any additional mandatory disclosure obligations to come into effect in 2020 in the same manner that it supports and complies with the exchange of information in other areas.
As a proud member of the EU, Malta holds Union law in high regard and always acts in the spirit of good faith and will continue doing so. Malta will support any action that strengthens the integrity of the industry, whilst look- ing forward to continue working very closely with the Commission with an open mind and with a spirit of sincere cooperation to further improve the standards in this industry. Addressing the EP’s TAX 3 committee about the Justice system, I immediately stated that reforms to improve the efficiency and the quality of the justice system are ongoing. Judicial reforms have been implemented in order to promote further specialisation of courts, and extend the use of mediation. A judicial reform to enhance the administrative autonomy of the courts is also in progress and a Bill on this will soon be presented to Parliament.
An improved e-justice portal is also in place as the main one-stop mobile accessible service for legal professionals and citizens. Training for judges and magistrates intensified in 2018 in various legal areas such as anti-money laundering, forensics, ethics and cybercrime.
Work is also under way on Constitutional reform particularly, but not only, in the light of the Venice Commission Opinion of last December, which, I underline, we asked for and we welcomed. Meetings between the Government and the Opposition are already going on under the aegis of the President of Malta and so far, the exercise has been very positive. Government alone cannot implement the proposals: most of them need the support of a twothirds majority in the House and the Opinion itself called for due analysis and discussion. Yet, we are confident that change will keep on happening and that our reformist agenda will keep gaining ground.
As regards Malta’s participation in EPPO, at the March 2018 JHA Council, Malta announced its wish to participate in the enhanced cooperation setting up EPPO and Malta is now also a full participant in this process. On Monday, I also addressed the false claim that Malta is a tax haven and stressed the fact that Malta is committed to tax transparency.
Contrary to what is unjustly being depicted, this Government is fully committed to better and enhance not only the sectors mentioned above, but also all sectors. It is a pity that some are immersed in their set partisan agenda and not seeing and portraying the picture as it really is.
Owen Bonnici is the Minister for Justice, Culture and Local Government