FATF says Malta still has ‘serious weaknesses in areas that must be addressed’

The President of the Financial Action Task Force (FATF) Marcus Pleyer told a press conference on Friday that there are still “serious weaknesses that must be addressed” in Malta.

Four countries were on Friday officially added to the FATF’s grey list, these are Haiti, the Philippines, South Sudan and Malta. Last Wednesday, the news about Malta had been leaked. All four countries have agreed to action plans with the FATF and are actively working with the watchdog to address the strategic deficiencies which were identified in their systems, President Pleyer said

When the FATF places a jurisdiction under increased monitoring, it means the country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and is subject to increased monitoring. This list is often externally referred to as the “grey list”.

Pleyer said that Malta underwent a mutual evaluation in 2019 (referring to the MONEYVAL report). “That was the starting point. The final report outlined a large number of serious issues regarding risks in the country. These were significant strategic deficiencies. Since then, the FATF recognises that Malta has made good progress in a number of areas, however serious issues remain. This includes issues concerning tax crimes and related money laundering cases. Malta’s financial intelligence unit needs to support law enforcement authorities to pursue these kinds of cases and focus their analysis there.”

“The Maltese authorities also need to ensure beneficial ownership information is accurate and up-to-date,” he said. “This often relates to anonymous shell companies. If information regarding the true owners of companies is found to be inaccurate, then the authorities need to apply decisive sanctions. The FATF is clear that there remain serious weaknesses in areas that must be addressed. It is crucial for Malta to make sure that systems are in place that are strong enough to address money laundering and terrorist financing and serious organised crime. The authorities must not downplay the importance of these measures.”

“That is why Malta is going on FATF’s increased monitoring list, as a result of their remaining strategic deficiencies. The Maltese government has given a high level political commitment to continue to make the necessary changes. I urge them to do so.”

Regarding his statement warning the Maltese government not to downplay the measures and action plan, Pleyer was asked what gave the impression that the government is downplaying them. “Of course I have followed the news and I know that every country that is moved onto the grey list are not very happy about this. But in the end, the government of Malta gave its clear political commitment to work together with the FATF to address all the deficiencies and this is just a signal for cooperation. I am very thankful for this commitment by the Maltese government.” He said that in the long-term this will help the country to improve its anti-money laundering systems which will then ensure that the country has a strong rule of law, that it has sustainable and fair economic growth, and social cohesion.

Told that Malta passed its MONEYVAL technical evaluation, he was asked about the concrete reasons to place Malta on the grey list and when he expects Malta to satisfy the commitments made on the action plan.

He explained that the MONEYVAL evaluation “only looked at what we call the technical compliance. So they checked whether the FATF’s standards are implemented in the country’s legal system, whether they find the FATF standards in the law books. But the FATF looks at technical compliance and also beyond that - whether the FATF standards are also implemented effectively on the ground. So the effectiveness is what the FATF looked at, in contrast to only looking at the technical compliance aspect like MONEYVAL did. The deficiencies were in the area of beneficial ownership transparency and in the area of financial intelligence, especially when it comes to tax crimes. Each country that goes on the grey list gets an action plan with certain timelines and so Malta knows exactly when to address what efficiency.”

The Maltese government issued a statement following the official announcement. It held that Malta addressed all but 3 recommended actions “which were nonetheless recognized by the FATF plenary as being addressed, albeit to a partial extent.”

“Malta firmly believes that it does not deserve to be subject to increased monitoring considering the plethora of reforms implemented that led to tangible progress in Malta’s ability to prevent, detect and combat money laundering and the funding of terrorism effectively. Nevertheless, Malta has been and will remain fully committed to working with the FATF and other international partners to ensure that the partially addressed recommended actions are addressed within the shortest possible timeframes,” the government statement read.

“The Government wishes to thank all the authorities and stakeholders from within the public and private sectors alike that worked tirelessly throughout this process to ensure that our country has a robust AML/CFT framework in place. The Government of Malta would also like to show its appreciation to the numerous jurisdictions that supported Malta and put forward the view that Malta did indeed make sufficient and tangible progress.”