The FIAU's primary mission is to protect Malta’s economy and jurisdiction from threats related to money laundering and associated financial crimes. This mission is rooted in international recommendations, notably from the Financial Action Task Force (FATF) and is also mandated by European Union law.
“Money laundering is the process of making illicitly obtained funds appear legitimate. It is a critical tool for organised crime, enabling criminals to integrate money obtained from all sorts of illegal activity, into the legitimate financial system. Activities such as drug trafficking, human trafficking, and other forms of organised crime generate substantial illicit funds that need to be laundered to appear clean,” Alfred Zammit, Director at Malta's Financial Intelligence Analysis Unit (FIAU) explains.
Mr Zammit has a wealth of experience when it comes to combating money laundering and safeguarding the economic integrity of Malta. Having practiced in the private sector, Zammit joined the FIAU in 2010 as an analyst. Over the past 14 years, he has ascended through the ranks in the public agency, up to the driving seat, contributing to the significant growth and enhanced responsibilities of the FIAU.
“The role of the FIAU is rather vast, in its mission to prevent as well as combat money laundering,” Mr Zammit explains. “Our efforts can be generally split in two - preventative and disruptive measures, with preventative aimed at stopping money laundering before it takes place, and disruptive focussing on halting ongoing activities. Service providers, including banks and merchants, play a crucial role in this process. Financial institutions, real estate agents, and other ‘subject persons’ are on the front lines of both preventing and detecting money laundering activities,” Mr Zammit continues, as he explains how the FIAU sets the regulatory framework and provides guidance to all parties involved to ensure they remain vigilant against money laundering activities.
Prevention is always the better idea, and the FIAU knows this all too well. In fact, in enacts a host of initiatives to create an environment which is conducive to lawful behaviour.
“To prevent money laundering, the FIAU supervises and monitors subject persons to ensure compliance with AML regulations. This includes scrutinising transactions, building customer profiles, and adhering to cash restrictions such as the €10,000 limit. It is worth noting that in this realm, subject persons are obliged to report any suspicious activities to the FIAU. We are pleased to note that in 2023 alone, the FIAU received over 9,000 reports which were all studied and in the case of ill-practice, passed on to the relevant authorities. This was a significant increase from just under 3,000 reports in 2019,” Mr Zammit remarks.
The FIAU, proceeds to act as an intermediary between reporting parties and investigative bodies. “Upon receiving suspicious transaction reports, the FIAU conducts in-depth analyses and decides whether to escalate the case to the police, tax authorities, or other supervisory bodies. In the past year, the FIAU forwarded 1,400 reports to relevant authorities. Additionally, intelligence gathered from other reports is valuable for international collaboration, with an 81% dissemination rate to global entities,” Mr Zammit notes.
The FIAU’s mission is not limited to the Maltese shores, as it acts and forms part of an international network, aimed at combatting money laundering.
“Money laundering is a global issue, and international cooperation is essential to ensure that the actions of the ill-intentioned are stopped in their tracks as efficiently as possible. In fact, Malta’s FIAU is part of the Egmont Group, an international network of Financial Intelligence Units (FIUs) that facilitates cooperation and information sharing. In the same spirit, the FIAU also responds to requests from overseas, demonstrating Malta’s commitment to international standards and collaboration,” Mr Zammit continues.
The FIAU’s efforts in the field are rendered even more stark, when seen against the backdrop of the FATF greylisting, which was announced in 2021, and gave a cold shower to the entire system.
“Naturally the greylisting indicated deficiencies in Malta’s AML framework, based on the 2019 Moneyval report, which assessed the country's effectiveness to prevent and combat money laundering over the previous five years. Needless to say, it was not a pleasant experience, but we managed to make the best out of it and take all the learning moments we possibly could from it. It was an opportunity to work towards a common goal and address the deficiencies in a frank and open manner. In fact, it is safe to say that despite the challenges, Malta responded swiftly and effectively. We had already addressed most recommendations from the 2019 Moneyval Report prior to the greylisting, but the remaining unaddressed matters were enough to get us greylisted. That gave us the right impetus to address all remaining issues, coming out stronger the other end! Remarkably, Malta was delisted in just one year, which is the absolute minimum time frame in which it could have happened. This was certainly testament to the collective efforts of the FIAU and all other stakeholders,” Mr Zammit observes.
Malta is expected to undergo another evaluation on the same subject in 2027, and though there will always be challenges that will need addressing, the outlook is looking more positive this time round. “We continued to work hard against money laundering, as we continue to collaborate with all our stakeholders. Money laundering is something we need to remain vigilant against constantly and slip-ups are not an option. The National Coordinating Committee for the Prevention of Money Laundering and Funding of Terrorism (NCC), which has been established to coordinate the nation-wide effort on the subject, works across multiple fronts, as it enhances the country’s AML infrastructure. Enforcement remains a critical challenge, with ongoing efforts to drive compliance through administrative enforcement,” Mr Zammit concludes.
