The government of Malta has published its action plan to drastically improve AML safeguards and financial compliance duties that have plagued the country’s status as a financial services hub. 

The action-plan has been required by the Financial Action Task Force (FATF) of the G7, which this summer placed Malta on its ‘grey-list’ of untrustworthy financial jurisdictions.

An FATF evaluation of Malta’s financial compliance frameworks ranked Malta in the bottom tier of nations managing oversight of corporate tax evasion, terrorist financing and the monitoring of cross border cash payments.   

The dire evaluation further pin-pointed multiple AML and compliance flaws by Maltese regulatory authorities lambasted for their poor accountability of registered businesses and auditing of data, impeding international authorities from undertaking money laundering investigations.

Compounding the embarrassment to its reputation, Malta would register as the first EU member state to be placed on the FATF grey-list, joining the low ranks of South Sudan, Haiti, Panama and Zimbabwe.

The action plan drafted by Alfred Camilleri, Malta’s permanent Finance Secretary, outlines the necessary commitments Malta will undertake to strengthen its compliance frameworks.

The changes have been marked as a priority by Prime Minister Robert Abela, who has vowed that Malta will be removed from the FAFT grey-list by 2023 – Yet the government did not present a timeline to implement actions.

Key directives cite that registered companies must showcase transparent ownership of business and assets. Companies or management that do not comply with orders will be sanctioned.

The action plan has called for an overhaul of Malta’s Financial Intelligence Analysis Unit (FIAU) which should be transformed to support authorities investigating money laundering and tax evasion breaches. 

Malta’s Labour Party has vowed to give police and tax authorities greater powers to inspect foreign-owned companies

Despite the government’s intentions to strengthen compliance frameworks, critics state that any meaningful change will be limited unless the government is prepared to change Malta’s existing business laws and taxation policies through Parliamentary order.

Questions arise whether any Maltese government holds the nerve to revise, year-on-yea of approved tax incentives, relief schemes and corporate loopholes that have seen a surge in international businesses register in Malta to the benefit of its economy.

In a statement to Malta’s igaming community, Carl Brincat Chief Executive of Malta Gaming Authority (MGA) stated that work had begun to implement necessary changes that will be to relayed to licensed igaming businesses.  

“We understand that the greylisting of Malta as a jurisdiction may trigger a re-assessment of the risk posed by Malta-based entities by several stakeholders, such as international banks, and therefore our licensees may be faced with additional queries and requests for information by international partners.” Brincat remarked.

“We are in fact prioritising outreach to the most relevant stakeholders in order to explain, through ever-increasing transparency, that the shortcomings identified in Malta’s regard do not relate to the gaming sector in any way and should therefore, in practice, not alter the manner in which these international stakeholders perceive and relate to our licensees.”