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 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