Editorial | Convincing the FATF

Good governance and the rule of law are essential ingredients for business to thrive in a healthy environment that encourages enterprise, innovation, new investment and competition


When Malta passed the Moneyval test last month, this leader welcomed the development but cautioned that this did not mean it was the end of the road.

The final decision as to whether Malta will be placed on the grey list rests with the Financial Action Task Force and the verdict is due later this month.

Malta appears to have been given a hard time when the Moneyval report was discussed at the FATF earlier this week.

Not everyone seems convinced that the changes Malta has enacted over the past 18 months are enough. The probability is that at FATF level, it is not just about legislative changes and action but also political will to fight financial crime with no ifs and buts.

There is a reality of big brother politics at stake with much larger countries that carry clout at the FATF finding it much easier to play tough with a small country.

But that can only explain part of the story and is no consolation if Malta ends up on the grey list. The damage from grey-listing is much harder to fix than the frustration caused by bullying politics.

If Malta is placed on the grey list, the jurisdiction’s risk level will increase, making it harder and more laborious to attract quality investment. Businesses will have an additional burden to deal with in their linkages with foreign counterparts.

Malta must show that the laissez affaire attitude towards financial crime displayed under the Muscat administration is a thing of the past.

The lack of action against former minister Konrad Mizzi and Joseph Muscat’s chief of staff Keith Schembri when their names cropped up in the Panama Papers, the serious allegations of corruption and impropriety linked to major public projects, the assassination of journalist Daphne Caruana Galizia, the murky links between big business and politics being exposed in court proceedings linked to the murder, created serious repercussions domestically and abroad.

Robert Abela’s administration has shown its willingness to address some of these serious failings and the Moneyval report is in its own right is a testament to his government’s resolve to change things.

There has been significant progress on the Caruana Galizia murder case with several prosecutions. Although it is now high time that these move on to the next stage and go to trial.

Parallel investigations triggered by information derived from the Caruana Galizia investigation must now come to fruition.

Police resources must be boosted and personnel within the force and the office of the Attorney General must receive quality training on financial crime.

But this is only one aspect in the multi-faceted approach to satisfy FATF demands. Apart from ensuring that regulatory authorities such as the MFSA and FIAU continue to perform fearlessly, the government has to deal with other ‘political’ realties.

One of these is the pressure being applied on Malta to give up its resistance at EU level to sign the Macolin Convention on match fixing and online betting.

Malta’s interpretation is that the definition of illegal behaviour in the convention goes beyond the scope of the actual convention to weed out match fixing and allows for market interference by individual signatories.

While Malta may have good justification for its stand, it has to weigh this against the wider repercussions of being seen as a disrupting force in the online gambling sector.

Malta must choose its international battles wisely, especially at a time when it weakened its own hand by the apparent impunity on financial crimes in the recent past.

Good governance and the rule of law are essential ingredients for business to thrive in a healthy environment that encourages enterprise, innovation, new investment and competition.

FATF can be convinced but Abela’s government must persist in its drive to ensure the rule of law prevails and the highest ethical standards are demanded of those in power at all times.

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