The private sector has a crucial role to play in protecting Malta’s reputation, FIAU Director, Kenneth Farrugia said, pointing to IO4 (Immediate Outcomes 4) under the Moneyval recommendations and noting that Monveyval had, indeed, met with approximately 40 private sector operators during its visit in 2018.

“Malta depends on our gatekeepers, which include banks, trustees, fiduciaries, financial institutions – these all have a very important role to play in, first of all, ensuring they are fully aware of the risks they are exposed to and also in ensuring they are adopting the adequate measures to mitigate the risks,” he said. “The authorities are not gods, not omnipresent, so private sector operators need to be careful of the type of clients they are onboarding.” 

Asked what precisely were the FIAU’s biggest points of concern when it came to the private sector, Mr Farrugia said it was “difficult to generalise” but specified that, while banks have “a very good understanding of their risks and obligations,” the non-financial sector – such as the real estate industry and company service providers – had less grasp. 

“As is very typical across the world, in the non-financial sector, there is a bit less understanding, so we tend to see different types of weaknesses, including the lack of having good business and customer risk assessments, and effective transaction monitoring,” Mr Farrugia explained.

Yet, the FIAU – as part of their remit – have launched several initiatives to increase the level of compliance in this regard, and to help private operators navigate the systems, with Mr Farrugia saying that the Unit has a team focused on guidance and outreach. “The aim is to try and help Subject Persons as much as possible, to try and help them understand what they need to do in practice. We want them to understand that compliance is not just a cost but a means to protect their business,” he explained.

Furthermore, the Unit is focusing considerable energy on ensuring the Moneyval recommendations directed towards the FIAU are implemented effectively. “From the FIAU’s end, we’re quite confident that the Unit is ready to meet its recommendations, since the actions which need to be carried out by the Unit are proceeding quite well. There’s still some work to be done but we’ve implemented massive changes and we’re on track,” the Unit’s Director asserted. 

Indeed, grey listing, in his view, was not inevitable. “There’s a process, and a system. A number of countries have managed to use their one-year period successfully. Latvia is a good and recent example. I don’t think it’s fair to say it’s [grey listing] inevitable, but what’s true is that there is a lot of work to be done, and it is quite challenging, for the FATF is going to be looking at the whole country. But we can say there’s a strong push, so things are not being taken lightly. The authorities are very well aware of the seriousness [of the situation] and are working hard to improve it,” he continued.