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Shore On The Horizon: Five Changes Which Helped Malta Pass Its Crucial Moneyval Test 

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It’s been a looming threat for the past two years but it seems the end is finally near. Malta has passed its Moneyval test, grey-listing (while still possible) now seems more distant, and we can finally look towards a post-pandemic future with more hope than trepidation.

But make no mistake about it – passing the test required more than diplomacy and political horse-trading. Malta had to introduce some substantial changes to its anti-money-laundering regime, the effects of which could change our culture in a big way.

1. A financial crimes police unit with teeth

It wasn’t long ago that only a single qualified accountant was employed at the police’s Economic Crimes Unit and its head Ian Abdilla admitted in court that police couldn’t investigate the Panama Papers because of a sheer lack of resources.

Things have improved significantly since then. A new Financial Crimes Investigation Department has been set up, based at Santa Venera instead of the Floriana depot, and Abdilla has been replaced by Alessandra Mamo.

Mamo has said that human resources have increased threefold to 95 people, including specialised experts in fields like cryptocurrency crime.

Resources at the MFSA and the FIAU have also improved.

Assistant Commissioner Alessandra Mamo

Assistant Commissioner Alessandra Mamo

2. New powers for the Attorney General

The Office of the Attorney General, one of the most powerful legal roles in the country, has been split up into two – an AG focused on prosecutions and a State Advocate focused on giving the government legal advice. This tackles a long-existing conflict of interest in cases whereby the AG will be faced with the prosecution of the very people he’s advising.

Moreover, the AG has also been empowered with the prosecution of major crimes such as money laundering, a task that was recently entrusted to the police.

This is intended to free up police time and resources, allowing them to focus solely on their investigations, with the AG focusing on the court aspects.

3. A massive new Asset Recovery Bureau

Moneyval had specifically flagged Malta’s Asset Recovery Bureau as problematic in its initial review, and the Justice Ministry responded by launching a massive new ‘secure haven’ in Ħal Far to store movable assets recovered from suspects criminals.

However, it’s been left without a CEO for months and there have been a few rumblings of discontent.

The planned Asset Recovery Bureau

The planned Asset Recovery Bureau

4. A €10,000 cash limit on valuable goods

Clamping down on money laundering comes hand in hand with the authorities having as much visibility on money flows as possible, and in this context cash’s lack of a digital footprint lends it a perception of being risky.

Cash transactions worth €10,000 or more in deals involving property and other valuable items are now banned, with those guilty liable to a fine of not less than 40% of the sum of money they paid, received or transacted in cash.

Malta has a strong cash culture and if this law is properly enforced, it is expected to send ripples throughout society.

5. New rules for corporate service providers

Corporate service providers, such as lawyers, accountants, auditors and warranted professionals, have been given a lot more commitments in terms of monitoring their clients and operations and submitting information to the financial authorities.

This new law aims to instill a compliance culture across the board within corporate service providers, thereby preventing money laundering-related problems from erupting in the first place.

However, in practice it means a lot of extra red tape, a significant burden for small operators who never had any intention of laundering money.

A Moneyval plenary

A Moneyval plenary

So what’s next?

After Moneyval’s seal of approval, Malta will now be scrutinised by the Financial Action Task Force (FATF) in May-June. An international anti-money laundering organisation of which Moneyval is an associate member, the FATF is expected to analyse whether Malta’s reforms are working in practice.

Malta certainly has a lot to ‘show off’ to the FATF in this regard. Under Alessandra Mamo’s watch, the police have adopted a ‘tigers and flies’ approach to money laundering, sending to the courts the big fish – such as Keith Schembri, Brian Tonna and Allied Newspapers’ Michel Rizzo – to the small fry – such as a hairdresser and her driving instructor partner.

Police have also started interpreting tax evasion as a ‘predicate offence’, meaning people can be charged with money laundering if the only other crime committed with that money was evading tax.  

Certainly, a lot has changed on the ground, although whether this will be enough to satisfy the FATF remains to be seen.

However, if all of this rapid change in the island’s anti-money-laundering regime is sustained, it will mean nothing less than a huge shift in Maltese mentality, one which will remain us for a long time after Moneyval’s threat becomes a distant memory.

Cover photo: Left: Keith Schembri, Right: Alessandra Mamo

Are you pleased with Malta’s reforms to clamp down on money laundering?

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Tim is interested in the rapid evolution of human society brought about by technological advances. He’s passionate about justice, human rights and cutting-edge political debates. You can follow him on Twitter at @timdiacono or reach out to him at [email protected]

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