FIAU steps up action following greylisting
But law-abiding citizens still bearing the brunt of the reputational damage cause
In just four years Malta’s anti money-laundering watchdog has stepped up its enforcement action with the annual amount of imposed fines spiking from €37,050 to more than €3.5 million. Though no proper explanation has been given for this upward trend, events on the ground indicate that this was a kneejerk reaction following the FATF’s (Financial Action Task Force) decision to place Malta on the grey list in 2021.
In reality, this decision had been looming for months in the wake of a series of high-profile cases involving financial crime such as the Pilatus Bank whose licence was revoked by the European Central Bank in 2018. Moreover, the Maltese government had been facing intense criticism over the cash-for-passport scheme, and accusations of lax controls against money laundering and financial crimes. Consequently, the FATF had downgraded Malta as a country on the grey list which in practical terms means an untrustworthy financial jurisdiction. Though last June this decision was reversed as the FATF felt Malta had addressed various shortcomings, this had nonetheless resulted in huge reputational damaged which is still being felt.
Fines issued by the FIAU
*Includes a fine imposed in 2018
**Includes fines imposed in 2016 and fl-2018
As a matter of fact, ever since in 2019 speculation started going rife that Malta could be grey listed the government had scrambled in an attempt to avoid such fate. This could also explain the overnight approach in the FIAU’s enforcement action whereby the number of fines increased disproportionately. Figures tabled recently in parliament by Finance Minister Clyde Caruana in reply to a series of questions by PN MP Jerome Caruana Cilia show that fines rose from just 20 in2019 to 170 in 2020, with a parallel rise in the fines issued which spiked from €37,050 to €2,103,277 – a 56-fold increase in just 12-months! This was followed by 176 fines and €1,184,317 fines in 2021. Last year, fines reached a record level at €3,557,701, some of which were given prominence by the FIAU through a public statement. While this enforcement action against criminal financial activity was welcomed, it also raised eyebrows as it was perceived as an attempt to show the rest of the world that Malta had turned the page.
Unfortunately, the ones which bore the brunt of all this and were surely not impressed were law-abiding citizens who are increasingly facing an ordeal when it comes to financial and banking transactions. Nowadays, controls have been tightened up so much that account holders are being treated as if they were suspects, even those who had never had brush with the law. This is translating to disproportionate increase in red tape, paperwork and even restrictions on the amounts which can be drawn from one’s savings. In turn this has resulted in higher banking fees across the board with the blame being put on higher costs to implement the money laundering ‘reforms’.