Editorial | Vigilance is good lest we slide back into complacency

These may seem to be minor issues but unless companies and other subject persons take their jobs seriously – and the FIAU is there to ensure they do – Malta gradually risks sliding back into complacency


The Financial Intelligence Analysis Unit issued more than €3 million in fines to companies and individuals last year because of breaches of money laundering rules.

The bulk of this sum – €2.75 million – was fines levied on just 30 companies or individuals, with the rest being administrative penalties for non-compliance with FIAU requests or directives.

These numbers suggest the FIAU has maintained strong vigilance on the financial sector and other key stakeholders at risk of being willing or unwilling participants in money laundering crimes.

Some in the business community may flinch at the fines being levied by the FIAU and the onerous obligations imposed on them by international rules to combat money laundering and the finance of terrorism.

However, it would be awfully short-sighted to argue against the use of fines and penalties. The time for pussyfooting when it comes to money laundering and other financial crimes is over.

Malta hopefully learnt its biggest lesson when it was placed on the greylist of questionable jurisdictions by the Financial Action Task Force in 2021. It was only through the hard work of various institutions and political commitment to get our act together that the country managed to exit the greylist after just a year.

As time passes, the temptation to relax regulations and close half an eye, or moderate fines and penalties may increase. Going down this road will be a recipe for disaster.

Malta must never go back to a situation where financial crimes are treated lightly or ignored. Contrary to popular belief, financial crime is not victimless and Malta knows that more than anywhere else.

Daphne Caruana Galizia was a victim of financial crime when she uncovered the murky dealings of powerful people in the worlds of business and politics.

But financial crime also hurts ordinary citizens and the most vulnerable because it denies the State the money to invest in services and projects that benefit the public good.

On the business front, financial crime creates an uneven playing field that gives perpetrators an unfair advantage over their competitors.

Combatting financial crime requires constant vigilance and adherence to high standards, which is why institutions like the FIAU and the Malta Financial Services Authority require all the resources and political backing to be able to do their job well.

The rules that companies have to adhere to may be onerous and expensive to implement but without them, even operators with the best of intentions can end up being unwilling participants in financial crimes.

In most of the cases, the FIAU found that the companies' business risk assessment was not comprehensive and did not provide the criteria used to identify specific scenarios. These companies often did not clarify the way that the risk assessment was implemented and how each risk factor and risk criteria within each factor was considered.

Customer Risk Assessments (CRA) were also missing in many cases, or the companies had not provided any policies or procedures which explained the methodology and risk factors that should be taken into consideration when carrying out such assessments.

Furthermore, compliance review of a number of companies identified several instances where the obligation of customer due diligence was not adhered to.

These may seem to be minor issues but unless companies and other subject persons take their jobs seriously – and the FIAU is there to ensure they do – Malta gradually risks sliding back into complacency.

It would be a pity and a mistake if this were to happen. It is not in the business community’s interest to end up in the greylist once again.

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