Moneyval is coming next year

This past week has seen two statutory events held by the major banks in Malta, the Extraordinary General Meeting of Bank of Valletta (see pg 15) and the presentation of the HSBC figures (see pg 20).

Both have insisted that they, along with other banks, are busily restructuring themselves and tightening up procedures so as to have the capital base and Return on Equity that is now being required by the new disciplines being brought in by the European Central Bank and the Banking Supervision.

This exercise has been quite a painful task for the banks themselves and also for their clients. Non-performing loans have been attacked and brought down and banks have been quite rigid on the business where they are asked to support and the areas where they support business.

Maybe the banks themselves have not explained the situation to their clients well enough.

The amount of directives that are being hurriedly brought in by the EU to combat money laundering and crime/terrorism is indeed daunting. Banks today have one important rule which they enforce quite draconianly: Know your client. Hence the many questions clients are faced with whenever they approach their bank.

Now we know that Malta’s banks have come through the crisis with flying colours and that the Maltese banking system has been, and still is, one of the best in the EU. This is acknowledged by many EU authorities and bodies.

Nevertheless, the standards that are now being enforced, and which will be enforced even more in the future, mean that the financial institutions in Malta are being made to pull up their socks even more.

Hence the struggle to raise capital levels and the more general struggle to tighten up operations.

There is also one additional reason why the banks, especially the strategic ones, are putting in such an effort to get ship-shaped and to clean up areas of doubt and lower the Non-Performing Loans – next year Malta is due to get a fullscale inspection by Moneyval. This inspection is, we hasten to add, a periodic one and not caused by any recent event.

Moneyval, to quote Wikipedia, is the term by which, both commonly and officially, the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism is known. Moneyval a monitoring body of the Council of Europe.

In 1997, the Council of Europe established the Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures, carrying the official abbreviationof PC-R-EV, as a sub-committee of the European Committee on Crime Problems (CDPC, for Comité Européen pour les Problèmes Criminels).The functions of PC-R-EV were to be regulated by the general provisions of Resolution Res(2005)47 on committees and subordinate bodies.

In 2002, the name of the committee was changed to Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, with the abbreviation Moneyval, on the grounds that "the abbreviation 'PC-R-EV' does not express the aim of the committee’s activities sufficiently clearly."[

At their meeting of 13 October 2010, the Committee of Ministers adopted a resolution elevating Moneyval, from 1 January 2011, to an "independent monitoring mechanism within the Council of Europe, answerable directly to the Committee of Ministers".

The inspection by Moneyval will also be a welcome opportunity for Malta to show that its financial services system is above board and that Malta, contrary to the many allegations one reads in the international press, is no money laundering haven.

The main banks’ struggle to tighten up their operation is hard but also very important for Malta’s good name.