FIAU chief’s resignation casts shadow on Malta’s EU presidency, MEPs warn

The resignation of the director of the Financial Information Analysis Unit has raised eyebrows in Brussels, with MEPs questioning Malta’s ability to push through anti-graft legislation in its upcoming EU council presidency.

Portuguese MEP Ana Gomes said that she will propose that Malta be placed high on the agenda of a European Parliament committee that will investigate the Panama Papers, of which she is vice-chair.

“Malta is definitely a case for particular attention, not just because of allegations against the prime minister’s chief of staff and the minister, and this latest development with the Financial Intelligence Analysis Unit chief resigning, apparently because his recommendations were not followed, but also because Malta is already on our radar,” she told Politico.

“Malta is one of the jurisdictions in the EU that has a very lax system of incorporation where it is very easy for anyone who wants to fool the anti money-laundering authorities, they can set up a company like a Russian doll and can make ultimate beneficial owners hidden.”

The FIAU was run by Manfred Galdes together with the Attorney General and the police force’s Economic Crimes Unit, and serves as the prime response point for understanding money laundering patterns and other ways of terrorist financing.

The government didn’t announce Galdes’ resignation as head of the FIAU. When the news broke, the Office of the Prime Minister said that Galdes had not resigned so as to take up a post as a lawyer in the private sector. However, the Opposition has questioned whether his resignation was linked to the FIAU’s investigation into the Panama Papers, the leaks that revealed that Prime Minister Joseph Muscat’s chief of staff Keith Schembri and his minister Konrad Mizzi had opened secret offshore companies in Panama and had sought to open a Panamanian bank account.

Opposition leader Simon Busuttil has asked whether the investigations were passed on to the police and whether Michael Cassar resigned as police commissioner two days later.

Sven Giegold, a German MEP for the Green Party, told Politico that the issue will be raised in the EP’s Panama Papers committee.

“This is all very embarrassing…Malta has to get serious. It has to tidy up in order for the whole European financial infrastructure to gain credibility.”

Meanwhile, the director of the EU’s office of Transparency International – a global anti-corruption NGO – has raised doubts about Malta’s willingness to steer through an updated version of the union’s anti-money laundering directive.

The updated directive, prompted in part by the Panama Papers, aims to give greater powers to national financial intelligence units such as the FIAU, and force companies and trusts to disclose who are their ultimate beneficial owners.

Slovakia, which holds the EU presidency until the end of the year, will start off the negotiations but Malta, which will take the helm for the first time in January, looks set to be in charge during the final stages.

“The prospect of Malta steering legislation that aims to eradicate corporate secrecy in the EU once again highlights that the Council has no formal procedures for dealing with any conflicts of interest that might arise,” Transparency International director Carl Dolan said.

However, a spokesperson for Joseph Muscat told Politico that he wasn’t concerned about any potential conflicts of interest and that Malta has always complied with EU regulations on anti-money laundering.

A spokesperson for Malta’s permanent representative to the EU Marlene Bonnici said that the Mizzi and Schembri case has “absolutely no bearing, connection or impact whatsoever on Malta’s EU presidency or its role in steering through anti-money laundering proposals and legislation.”

“Malta will continue to show commitment in combatting illicit practices through the anti-money laundering directives and other related directives,” the spokesperson said.