Malta placed on FATF rogue list following litany of AML discrepancies

Malta has been placed on a greylist of the Financial Action Task Force (FATF) – the global AML and anti terrorist financing unit of the G7. 

The EU member state has previously faced international criticism regarding issues such as the Panama Papers scandal, which saw Maltese government figures implicated in establishing offshore companies encountered little legal action, as well as controversy surrounding the sale of national passports.

Malta joins 19 other countries considered financially untrustworthy and classed as having ‘strategic deficiencies’ by the anti-money laundering and terrorist financing organisation including Albania, Myanmar, Syria and Zimbabwe.

Speaking at a press conference, President of Malta, Robert Abela, commented on the FATF’s decision: “While I consider this decision unjust, we will continue the reform process because we are acting with conviction and believe in good governance.

“We remain committed to making whatever reforms are needed while preserving the national interest. We will never be uncooperative or obstructive but will intensify our resolve to fight money laundering and the financing of international terrorism.”

Abela – who previously attempted to boost Malta’s monetary security by strengthening the country’s anti-financial crime unit, the Financial Intelligence and Analysis Unit – has been joined in his criticism of the FATF’s decision by opposition leader Bernard Grech, who described the move as a ‘national punishment’.

Additionally, both the government and the Malta Gaming Authority (MGA) have consistently defended the island’s financial security policies and infrastructure, arguing that Maltese authorities are capable of countering illegal betting in cooperation with sporting bodies and law enforcement.

Maltese authorities have good reason to be concerned by the FATF’s ruling, as both the gambling sector and financial services play a key role in the country’s economy, and so a decision deeming the island’s infrastructure to be monetarily unsound could have severe impacts. 

Gambling, in particular, plays a key role in the country’s economic structure, supporting over 9,000 jobs both directly and indirectly, generating €700 million annually and accounting for 12% of national GDP.

The announcement closely follows last week’s revelation that Malta could have to withdraw its veto of the signing of the Macolin Convention, a Council of Europe sports safeguarding and anti-corruption initiative, in order to pass the FATF’s financial safety Moneyval test.

If fully ratified, the convention would prevent licenced gaming operators in Malta from extending commercial operations overseas unless following the laws of the other member states, as part of a wider international restriction of the betting industry.

As well as facing oversight from the FATF, the Italian ADM and police anti-corruption task force was heavily critical of Malta’s regulatory oversight in 2019, after its ‘Glassia Investigation’ uncovered that several white-label igaming operators in the country had laundered millions of euros for Calabrian organised crime groups.

During 2019, the MGA revised its licensing conditions to align with new high-risk industry compliance standards established by EU’s Fourth Anti-Money Laundering Directive.

Implementing changes, the MGA would establish its new AML Unit, tasked with undertaking due diligence of new licensees and providing tougher monitoring of licensed operators AML and compliance duties servicing diverse European online gambling jurisdictions. 

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