Rather than taking action when its arm is twisted due to international obligations, Senior University Lecturer George Vital Zammit insists that Malta should foster a culture that is able to self-regulate, without the need for carrots or sticks to correct its path.

“This short-sighted mind set needs to change,” Dr Vital Zammit said when speaking about the threat of Malta being grey listed by the Financial Action task Force if it fails the Moneyval test.

In his opinion, there are several reasons why Malta has reached this stage, though, mainly, they are of a structural and political nature.

“By structural, I refer to our (limited) organisational capacity to combat financial crime. It has recently transpired that our Economic Crimes Unit within the police was barely functional with very limited manpower. According to the Fifth Round Evaluation report of September 2019, ‘limited resources, both human and financial, allocated to the investigation and prosecution of money laundering weighs negatively on Malta’s capability to effectively fight money laundering’.

“Why has this unit never been beefed up? Why have the police never been able to recruit experts to be able to investigate and prosecute?

“We also need to shoulder political responsibility for this national predicament. The ruthless and brazen approach to politics where ends justify the means, and where electoral support sanctions the ‘rule of law’ is not only mistaken but immoral. A political class that shows a wanton disregard to the ethical parameters of behaviour becomes the enabler of a dysfunctional system, one that might take generations to fix,” the Senior Lecturer at the University of Malta’s Department of Public Policy said.

He insisted that Malta must continue spearheading reforms that restore its credibility. It needs to implement measures that not only redress and rectify the prevailing situation but also adopt proactive measures, such as the non-conviction based asset forfeiture, a procedure providing for the seizure and forfeiture of stolen assets without the need for a criminal conviction.

Grey listing, Dr Vital Zammit warned, would mean a gradual erosion of trust in Malta as a hub for key industries like financial services, gaming, and investment banking, which have developed exponentially in the last two decades. The multiplier effect of these industries brought unprecedented prosperity that saw Malta enjoying an annual 5-6 per cent GDP growth, he noted.

Grey listing would send a signal to companies to close or downscale their Malta operation, and the shrinking effect on Malta’s economy would be devastating, he pointed out, adding that, until Malta’s reputation is restored, it might mean that local skills and talent would have to migrate to find work

If Malta were to be grey listed, it would need to restart, rebuild and renew. He explained what he had in mind:

“We need a stronger regulatory sector that is truly autonomous from the Government. Appointments and high positions in these entities are still a prerogative of the Government. It is very unfortunate that people heading such organisations are still chosen on trust and loyalty, rather than integrity and competence.

“We need a political class that is not ingratiated by lobbies and interest groups, where decisions are taken (or not) according to mileage gained.

“We need autonomous institutions such as the police, the judiciary, that can regain the trust of people as truly independent. It is inconceivable how only one person has ever been found to be criminally liable on corruption charges in this country.

“If we are grey listed, we need to heed the lesson to prevent it from happening again.”

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