A changing FIAU for changing times

The FIAU had always been one of the more ‘secretive’ government units in that it rarely commented on its work or investigations. It has, however, been opening up lately. Why has there been a need to become more visible?

We’re still secretive – that’s very important and we never showcase any case-specific information. Incidentally, there is currently a worldwide drive to strengthen relations between Financial Intelligence Units and the media. This is also being discussed within Egmont, the international group of FIUs where we meet with all our international counterparts.

But here in Malta, we identified that there was a need to open up way back in 2017, mainly because of several circumstances that had taken place that year, and also by the many misconceptions at the time about the FIAU’s roles and responsibilities. For example, some people thought that we have criminal investigative and prosecutorial powers. So we had to reach out and provide information for the sake of clarity.

This led us to build a relationship with media houses and other stakeholders by showcasing statistics and releasing more information in terms of what we are doing, our achievements and our plans.

How has the FIAU responded to the sensational developments in Malta, which have thrust its work into the limelight and catalysed a good deal of international scrutiny from Moneyval, the European Banking Authority, the Financial Action Task Force and the European Commission for example? Where does Malta now stand in this respect?

They provided us with a yardstick, however, we haven’t stuck solely to those recommendations. The FIAU itself triggered several improvement actions across all areas within FIAU, many of which were brought forward by the FIAU’s recently set up Strategy, Policy and Quality Assurance Section.  This led to adoption of an internal action plan for the years 2021 - 2023 to further excel the FIAU’s AML/CFT operations. We were catalysts of change and we are proud that our team managed over the last four years to implement a vast amount of recommendations and action points.

Today we are in a position where these same supranational authorities are inviting our technical staff to participate in the reviews of other jurisdictions, an important achievement for us. We have also been invited by other jurisdictions to take them through our systems, such as CASPAR, and to explain how they contribute to an effective risk-based AML/CFT supervisory framework. We’ve, in fact, met several on a one-to-one basis as they too are in the process of enhancing their systems and were keen to learn from us and take some ideas.

The FIAU had for years been seen as being toothless, with its investigations not having been acted upon in a number of well known cases.  It had suffered from a lack of resources and little political direction. This situation appears to have taken a turn for the better.  How and why?

I tend to disagree with the term ‘toothless’. We have always done our work to the best of our knowledge and ability, and in all circumstances.  This was also acknowledged in the Moneyval report issued in 2019, when it found the FIAU had performed its duties independently and fairly in all cases.

With the recent increase in our resources, we can now do better. We can reach out more and invest in human and IT resources, which has resulted in more quality and efficiency in our work.

That was important because we have adopted a new methodology for reviewing subject persons on a cycle basis, coupled with the fact that, from an intelligence analysis perspective, we are experiencing a significant increase in suspicious transaction reports. These are coming not only from subject persons but from other sources as well, and we needed the resources to be able to process that amount of intelligence.

Notwithstanding that, we have also invested internally to instil a culture change. Our teams have been provided with the necessary skills in terms of leadership and authenticity. We have empowered our people, who are key to the success of the FIAU and often contribute to the ongoing process to fine-tune its operations.

Tangibly speaking, how have capacity and resources been increased over the last couple years, and what was the prime driver of this change?

The main drivers of change were the recommendations from the international bodies, which, as a unit, we have taken very seriously.  We also received a significant increase in our budgetary allocation, so, even from a political perspective, we have been backed with all the resources necessary to perform our tasks effectively.

The increase in STRs, the increased compliance levels and even the change in the compliance culture are not only the result of the FIAU’s efforts, but it is also because these considerations are being embraced more and more by all the stakeholders.

The subject persons themselves are investing heavily and are beefing up their resources and compliance systems. They are ensuring they are performing all the checks required, which is also triggering an increase in STRs. The more checks being carried out by the subject persons, the more suspicious reports are submitted, and this has been seen across all sectors.

From the perspectives of the authorities concerned – such as us at the FIAU, the Malta Financial Services Authority, the Malta Gaming Authority, the Police, Attorney General’s office, and the Sanctions Monitoring Board – are conducting their duties thoroughly and are taking action.

Coupled with that, there has been increased attention, at an international level, on the topic of money laundering and financing of terrorism. Everyone is taking the topic more seriously, as it is becoming increasingly clear how widespread and global the money laundering phenomenon is.

We are seeing that people are more aware of the implications of money laundering and of the FIAU’s work.  If you were to have asked about awareness of the FIAU six years ago, a lot of people would not have known anything about the Unit. But today, this is no longer the case and there’s a lot more awareness of who we are and what we do.

The FIAU had over the years received quite a lot of criticism of inaction, particularly in the wake of the Panama Papers. In your opinion, has some of this been unfair?

We received an array of comments from different sources and different authorities.  Some – such as those from institutions such as Moneyval, the EBA, the European Commission – were fair and we actioned those recommendations.

We are not perfect, and we are still not perfect today, but the changes we made in the past few years are now visible and those in the field can really appreciate that the FIAU of 2021 is not the FIAU of 2015.

Then there were other comments, especially when the FIAU became part of the political agenda.

This is not the forum we should be in - we are independent, we work on the cases that we have received and there is a completely fair and impartial process.

There were unfair comments and I do hope people understand that today the FIAU always performs its duties impartially and with responsibility, and it acts wherever there is any suspicion of money laundering.

Such ‘action’ on the suspicion of money laundering means that we send a report to the Police for further investigation, and now we are seeing results from the Police and the Attorney General’s Office.

It is a chain which is working now, and thanks to an increased level of collaboration and coordination, we are seeing the results.

We are now being effective on the ground. Money laundering cannot be dealt with by one authority – tackling it requires all the authorities to coordinate and cooperate to the fullest extent and taking action where deemed necessary.

And we are now conducting our work in a more effective way than ever before.