Malta unlikely to pass Moneyval test, US embassy official warns

Malta is unlikely to pass the Moneyval test come October “unless something happens very quickly”, a US embassy official has warned.

The stark statement was made earlier this month by Richard Daynes, a legal advisor with the US embassy in Malta, during a webinar hosted by ACAMS Malta chapter.

Failing the Moneyval test would mean that Malta is placed on the grey list of countries that pose a high risk of financial crime.

According to moneylaundering.com, Daynes told attendees of the webinar that Malta still had a lot to accomplish.

“Unless something happens very quickly, the likelihood is [grey-listing] is going to happen, and it could really be disastrous for Malta’s financial market… Even with those additional months, there’s a lot—a lot—that needs to be accomplished here,” Daynes said.

Moneyval is the European regulator of the Financial Action Task Force, set up to combat money laundering and the finance of terrorism.

In its concluding report released in September last year, Moneyval had identified almost 60 areas for improvement, which all need to be implemented by October.

The deadline for implementation was extended to October because of the COVID-19 pandemic.

The red flags included a lack of standalone prosecutions for money laundering and not a single conviction against a shell company or other legal entity involved in illicit finance. It also highlighted the inadequate supervision of the financial services sector.

Malta has courted some high-risk business over the years, including online gaming, cryptocurrency firms and offshore banking services.

“The threshold to avoid grey-listing is really quite high but it’s clear and it’s considered… on a purely technical basis, so there’s nothing that we can do to sway the opinion of those in the 39 members [countries] of FATF who will make that decision,” Daynes said.

Over the past months’ Malta has beefed up the resources and regulatory systems employed by the Malta Financial Services Authority and the Financial Intelligence Analysis Unit.

Last month, the police’s financial crime unit was boosted by 18 more officers for a complement of 79 officers.

Incoming Police Commissioner Angelo Gafà has emphasised that tackling financial crime will be a priority for the force.

His first major decision was to replace the head of the economic crimes unit with assistant commissioner Alexandra Mamo to give a signal that things will change.

This will unlikely be enough on its own to help Malta avoid the grey list but Gafà said it was his intention to see that the police carry out investigations that lead to prosecutions. 

Whether this is enough, has to be seen but many in the financial services industry are bracing themselves for a rocky ride ahead.