Among the most pervasive threats to the international economy over the past century, money laundering – or the act by which criminals seek to clean illegally-made gains – has rapidly risen among the concerns of governments and citizens alike.
The reasons for this uptick in concern are twofold, namely a larger realisation of the wide extent of this phenomenon – with the United Nations suggesting that up to two trillion dollars are being laundered each year – and to the severe impact this crime has on wider society. While citizens are generally aware that money laundering is a crime that needs to be dealt with, often it is seen as merely a criminal activity having little impact on the rest of us.
Rather, money laundering means more drugs, violence and crime on our streets. Money launderers generally use illegal businesses to clean their funds and in doing so they have no concern about under-pricing their operations, giving the business an unfair competitive advantage.
Numerous studies show that financial crime slows down economic growth, diverting tax proceeds from investments that impinge on our wellbeing such as education and health, meaning that eventually we all lose out.
As part of the international community, Malta is not immune to these challenges and it is against such a background that the country has significantly stepped up its efforts and invested heavily in the fight against financial crime and safeguarding Malta’s reputation.
These efforts included an unprecedented legislative and regulatory reform intended to strengthen the technical compliance framework and support the fight against money laundering while sending a clear message that no deficiencies in AML compliance will be tolerated.
Such changes included the establishment of a Central Bank Account Register for Malta, the introduction of restrictions on cash-based transactions related to high-value and luxury goods, amendments to improve the practice of AML by subject persons, a significant reduction in the period within which suspicious transaction reports ought to be reported, as well as the right for the Financial Intelligence Analysis Unit (FIAU) to impose penalties which are effective, proportionate, and dissuasive.
Implementation of this framework sees a number of stakeholders working together in this process. The FIAU, Malta’s anti-money laundering agency, is responsible to supervise the markets, in observance with the applicable laws, regulations and implementing procedures. When necessary, it takes remedial action, through enforcement and sanctioning. The Malta Financial Services Authority and the Malta Gaming Authority are important agents in this regard.
When reasonable suspicion of money-laundering is identified, the FIAU forwards this information to the Police which is then responsible to undertake the necessary investigations and criminal action if necessary. At all levels, institutions have significantly increased their operational capacity, both in terms of human resources and technological prowess. Such investment has immediately delivered tangible progress.
Last year alone, the FIAU submitted over 70 analytical reports to the police indicating a reasonable suspicion of ML/FT and over 100 other disseminations consisting in additional intelligence reports.
Over the past two years, the FIAU has also overhauled its AML Supervisory Strategy to ensure more effective compliance of subject persons. This has resulted in more meaningful enforcement, heftier sanctions and numerous remediation directives. But a strong AML strategy is not solely about imposing fines but, more importantly, about providing regular and qualitative support.
Malta’s success in upping its game against financial crime is also a reflection of a stronger recognition of the importance of such efforts by businesses themselves, and the past years have seen significant investment by the private sector, leading to a higher level of compliance, so much so that last year, over 5,000 suspicious reports were filed by subject persons in Malta, proving their role as an importance first line of defence.
This tangible progress is testament to the fact that progress in preventing and fighting financial crime is by combining the efforts of both public and private sector, efforts which will help shore-up Malta’s reputation and strengthen its position as a European jurisdiction of repute.
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