Malta was officially removed from the Financial Action Task Force’s (FATF) ‘grey list’ of countries subject to increased monitoring in respect of strategic deficiencies in their anti-money laundering and combatting the financing of terrorism (AML/CFT) regimes on 17 June.
Malta was on the grey list for only one year. When it was first listed in June 2021, the government made a high-level political commitment to work with the FATF and MONEYVAL – the Council of Europe’s permanent monitoring mechanism – to strengthen the effectiveness of its AML/CFT regimes. The decision to delist was taken via a vote at the FATF’s plenary meeting in Germany and followed an on-site visit to Malta by the FATF in April.
Welcoming Malta’s significant progress, an FATF statement said: “Malta has strengthened the effectiveness of its AML/CFT regime to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in June 2021, related to the detection of inaccurate company ownership information and sanctions on gatekeepers who fail to obtain accurate beneficial ownership information, as well as the pursuit of tax-based money laundering cases utilising financial intelligence. Malta is therefore no longer subject to the FATF’s increased monitoring process. Malta should continue to work with MONEYVAL to sustain its improvements in its AML/CFT system.”
“Given its central Mediterranean location, wide use of English language in business and favourable tax regime, Malta is a highly effective base for foreign direct investment into Europe,” said Sovereign Trust (Malta) Managing Director Stephen Griffiths.
“The FATF grey listing over the past 12 months has been a setback, but the work done to remedy the situation has only served to strengthen Malta’s regulatory regime and ensure that it remains an attractive jurisdiction for foreign direct investment and for business looking to establish or headquarter their business in Europe.”
Speaking after the plenary meeting, outgoing FATF President Dr. Marcus Pleyer said that following its grey listing, Malta had doubled the resources of the Business Registry, conducted a thorough risk assessment, and set out to inspect all companies that were registered.
“It has successfully identified companies that concealed their true owners, and as a result significantly more penalties were imposed in 2021 against companies,” said Pleyer. “So, you can clearly see that Malta is now applying effective and dissuasive penalties against gatekeepers – and by these, I mean lawyers, accountants, company service providers – professions that open the door to the financial sector.
“I already mentioned in my remarks that the country has taken dozens of enforcement actions related to beneficial ownership failings. Importantly, the majority of these breaches related to foreign-owned companies. That shows that Malta is now cracking down on a major money-laundering risk related to shell companies. Malta also enhanced the use of financial intelligence to combat money laundering linked to tax crimes,” he added.
Responding to the FATF announcement, Maltese Prime Minister Robert Abela said that Malta had “worked hard and tirelessly” to complete its action plan in record time and now stood “as an example to other jurisdictions”. He also promised that these efforts would not stop. “I will be clear, never again should our country end up on a list like this,” Abela said.
The Malta Chamber of Commerce said the past year had been challenging for many businesses exposed to international payments because of the grey listing and had seen AML compliance costs rise significantly for operators in the financial services sector.
“The target of being removed from the list has been achieved, but this is only the first step,” said the Chamber. “The next objectives need to be achieving a sustainable regulatory environment whereby AML obligations will be more risk-based, proportionate to the size of the business, and effective at rebuilding our reputation as a reliable and competitive jurisdiction. Striking this balance going forward will be key to restoring our position as a leading financial services provider and developing those segments of the industry where we can have a competitive edge.”