Malta seems to have done enough, at least for the time being, to avoid the daunting prospect of being grey listed for not having the required checks and balances in place to combat money laundering. This sentiment emerged following the vote taken by the Council of Europe’s anti-money laundering expert committee, known as Moneyval, to approve a final report on Malta.   

Though the contents of this report will only be published by Moneyval in summer, reports indicated that the final document gave a favourable assessment on Malta’s efforts to address major shortcomings in its fight against financial crime. Consequently, the prospect of grey listing by the Financial Action Task Force seems to be unlikely.

However, it would be a grave mistake thinking that things will go back to normal anytime soon. Malta’s reputation will take years to be restored. In recent years there have been too many instances of corruption and kickbacks involving rogue politicians, business cronies and elements within the country’s top institutions, to expect that the island will be given the benefit of the doubt. The police force, the Malta Financial Services Authority and the Malta Gaming Authority were all implicated at one time or another. When the watchdog itself is embroiled in scandals, it dents the State’s credibility and moral authority to crackdown on abuses. From the Panama Papers Revelations in 2016, the corrupt power station contract, the hospitals deal, and most recently the €247 million Saint Vincent De Paul contract, Malta’s reputation took a plunge after the other. This race to the bottom was accelerated by the brutal assassination of Daphne Caruana Galizia in 2017 and the subsequent revelations linking politicians to her murder.

While some might take solace from the fact that in recent months it seems that the fight against money laundering and financial crime has been stepped up, as evidenced by the string of high-profile arraignments, it will take years to win back the confidence of international investors. In this respect, we are still light years behind in terms of political accountability. More often than not, there seems to be double standards when politicians are involved as evidenced by the fact that resignations are very hard to come even in cases of false declarations or misuse of public funds. On the contrary, if a worker commits such offences, it immediately results in their sacking.  

However, the real backlash of Malta’s flirting with financial crime is arguably being felt by the man in the street especially in the banking sector. It seems that as time goes clients are more than ever being treated as if they were involved in wrongdoing by default. Such approach is manifesting itself in an exaggerated increase in red tape by banks, who are requesting all sort of documentation from lawyers, accountants and regulators even for routine operations such as opening a new bank accounts by clients who had never a brush with the law. Account holders are also being asked to give an explanation when withdrawing ‘large’ sums of money from their own account, which, however, pale in comparison to the millions which changed hands elsewhere, to which the authorities turned a blind eye for many years. The same applies for non-governmental organisations which are being burdened with a raft of obligations and red tape whose ends results risks being the eradication of the voluntary sector.

Unfortunately, this is yet another case whereby the ones bearing the brunt and paying the biggest price are not the big fish but innocent law-abiding citizens.