The National Coordinating Committee on Combating Money Laundering is racing against time to remedy the Moneyval findings and, hopefully, Malta will be able to show it has taken things seriously and largely cured itself by the last quarter of this year, top bank executive Marcel Cassar said.

He noted that the surrounding environment, particularly pre-COVID-19, had long been one that was making financial crime prevention a priority at international political level. The European Central Bank’s Single Supervisory Board again made it one of its main priorities for 2020 while one of the European Banking Authority’s main strategic priorities for 2020 is “to make AML a real priority for the EU.

Mr Cassar, CEO of APS Bank plc, acknowledged that a lot of action was taken over the past months, even in Malta and listed some of the measures taken.

The restructuring reforms carried out by Malta Financial Services Authority, including stepping up prudential supervision and financial crime compliance as priorities for 2020, are positive. The Regulator’s AML/CTF Strategy Document issued last summer signified its articulated commitment to fulfil its supervisory obligations towards combating money laundering and terrorism financing risks within the context of the key initiatives of the National AML/CTF Strategy.

The Financial Intelligence Analysis Unit also worked hard to implement reforms addressing the Moneyval recommendations, improving its analysis and monitoring of suspicious transaction reports and strengthening its resources.

“More, however, needs to be done in the areas of investigation, prosecution, confiscation and conviction and Moneyval laid out the priorities to be addressed,” he insisted when asked about the threat of Malta being grey listed if it failed to meet the recommendations made by Moneyval.

Mr Cassar explained that the grey list would feature countries subject to increased monitoring, actively working with the Financial Action task Force to address strategic deficiencies in their anti-money laundering and counter terrorism financing regimes. That means, he added, a country has committed to resolve swiftly the identified strategic deficiencies within agreed timeframes and, in the meantime, is subject to increased monitoring.

What led to last year’s Moneyval report, he continued, is a history of weaknesses and escalation of risk that grew over time. Since 1994, Maltese legislation set out a comprehensive anti-money laundering and counter terrorism financing framework and significant effort was made over the years to promote the country as a reputable jurisdiction that understands the need for its financial services industry to be safe from certain risks.

However, Mr Cassar pointed out, not enough was being done in the areas of enforcement, investigation and prosecution of offences while the authorities lacked the resources to conduct supervision adequately. Also, the financial sector’s appreciation of money laundering and terrorism financing risk varied across different segments of subject persons. All this, he noted, was happening as Malta targeted increasingly high-risk economic activities, international financial services outgrew the size of the domestic market while cash remained in widespread local use.

Mr Cassar said a certain element of ‘wait-and-see’ is evident among the usual quarters, such as business analysts, investors, foreign banks and international insurers, adding there are evident signs of premia increasing, although the reason would not be solely ‘Malta’.

This is an extract of a feature first carried in the July edition of The Malta Business Observer.