EU Com­mis­sioner never in­formed or con­tacted min­istries about de­ci­sion to pub­lish for­mal opin­ion on FIAU

● Mal­tese state au­thor­i­ties found out about de­ci­sion through me­dia

The Malta Independent on Sunday - - FRONT PAGE - ■ Ju­lian Bon­nici

The Min­istry for Euro­pean Af­fairs and Min­istry for Fi­nance were never in­formed by the Euro­pean Com­mis­sion of its in­tent to pub­lish a for­mal opin­ion on ac­tions it be­lieves must be adopted by the FIAU, as in­di­cated by Jus­tice Com­mis­sioner Vera Jourova this week.

How­ever, min­istry rep­re­sen­ta­tives re­it­er­ated that at a tech­ni­cal level com­mu­ni­ca­tion is rou­tinely main­tained, stress­ing that the govern­ment is “al­ways open to dis­cuss and en­gage in con­struc­tive di­a­logue with the com­mis­sion”.

Jurova was quoted this week by The Fi­nan­cial Times (FT) as say­ing that the EU will “re­act be­cause of the EBA’s re­port since it has con­crete pro­pos­als for im­prov­ing the func­tions of [Malta’s] fi­nan­cial in­tel­li­gence unit; the sit­u­a­tion obliges us to give an opin­ion”.

The re­port refers to the Euro­pean Bank­ing Author­ity’s crit­i­cal re­port into the FIAU’s han­dling of Pi­la­tus Bank, which also flagged some ‘gen­eral short­com­ings’ in the unit pub­lished last July.

In what was de­scribed as an “out-of-the­blue sur­prise” by govern­ment sources, ques­tions as to why the Com­mis­sion has failed to in­form the state au­thor­i­ties of its in­ten­tion be­fore the me­dia, es­pe­cially given that the EU is an in­sti­tu­tion which val­ues an in­di­vid­ual state’s sovereignty.

Jurova’s com­ments seem even more puz­zling given that the FIAU had al­ready be­gun to im­ple­ment a re­vised and com­pre­hen­sive ac­tion plan fol­low­ing the EBA’s re­port. The same re­port is yet to re­ceive any re­ply or feed­back de­spite be­ing sub­mit­ted to the EBA al­most 10 weeks ago on 25 July.

This was echoed by Fi­nance Min­is­ter Ed­ward Sci­cluna, who told the FT that his govern­ment was al­ready work­ing on en­forc­ing new laws to ad­dress short­com­ings in the fight against il­licit fi­nanc­ing, adding that the coun­try had set up a co­or­di­nated com­mit­tee of na­tional bod­ies, in­clud­ing the cen­tral bank and the FIAU, to bet­ter com­bat money laun­der­ing.

The Com­mis­sion’s opin­ion will be for­mally bind­ing on the FIAU, with the EBA be­ing able to give di­rect or­ders to Mal­tese banks to bring them in line with EU reg­u­la­tions.

The Com­mis­sion has un­til mid-Novem­ber to for­mally is­sue the opin­ion, af­ter which the FIAU has 10 days to re­ply and set out what changes it in­tends to make.

Sources who also spoke to this news­pa­per de­scribed a sense of po­lit­i­cal pres­sure be­ing placed on Euro­pean in­sti­tu­tions to act strongly in view of the grow­ing scan­dals erupt­ing around the con­ti­nent, namely Den­mark’s Danske Bank, Dutch bank ING and Latvia’s ABLV, ahead of the cru­cial post-Brexit MEP elec­tions that will take place in May 2019.

“We are try­ing to see why they de­cided to pur­sue this av­enue with­out con­sult­ing the govern­ment,” sources said.

In a state­ment, the PN has since said that the EU has con­firmed Min­is­ter Sci­cluna’s abysmal record in pro­tect­ing Malta’s rep­u­ta­tion, given that the coun­try will be the first in the EU to be slapped with a for­mal opin­ion by the Euro­pean Com­mis­sion on money laun­der­ing.

Ques­tions sent to EBA re­mained unan­swered at the time of pub­li­ca­tion.

Lack of com­mu­ni­ca­tion ‘ex­tremely in­ap­pro­pri­ate’ FIAU –

The EU Com­mis­sion never in­formed the FIAU of its in­tent to pub­lish a for­mal opin­ion on ac­tions it be­lieves must be adopted by the unit, with the Mal­tese fi­nan­cial reg­u­la­tor only dis­cov­er­ing the news fol­low­ing the com­ments Vera Jourova, the EU’s jus­tice com­mis­sioner, gave to The Fi­nan­cial Times.

“The FIAU finds it ex­tremely in­ap­pro­pri­ate for the Com­mis­sion to re­lease in­for­ma­tion to the me­dia with­out hav­ing first com­mu­ni­cated with the Mal­tese au­thor­i­ties, and this is not the first time that this has hap­pened,” the unit told The Malta In­de­pen­dent daily edi­tion ear­lier this week

“The sit­u­a­tion obliges us to give an opin­ion”, some­thing which has “sur­prised” the FIAU given that it that it had al­ready be­gun to im­ple­ment a re­vised and com­pre­hen­sive ac­tion plan fol­low­ing the Euro­pean Bank­ing Author­ity’s damn­ing re­port into its han­dling of Pi­la­tus Bank, which also flagged some ‘gen­eral short­com­ings’ in the unit.

The unit also re­vealed that the re­port and ac­tion plan, which cov­ers a num­ber of ar­eas in­clud­ing its pro­ce­dures, poli­cies, pro­to­cols, su­per­vi­sory and en­force­ment pro­cesses, and re­sources, that was sub­mit­ted to the EBA on 25 July was yet to re­ceive any re­ply or feed­back al­most 10 weeks later.

“Nonethe­less, the FIAU is im­ple­ment­ing this ac­tion plan and in­tends to pro­vide reg­u­lar up­dates to the EBA on the sta­tus of its im­ple­men­ta­tion,” the unit said.

Asked why the com­mis­sion had de­cided to pur­sue this ac­tion de­spite the FIAU re­view­ing and ini­ti­at­ing ac­tion fol­low­ing the EBA’s rec­om­men­da­tions last July, the FIAU said that it was un­aware as to why the Com­mis­sion chose to take this ac­tion.

Vera Jourova

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