Finance Minister Clyde Caruana has steadily ramped up a sweeping media campaign, including on social media, in favour of Malta and its efforts to comply with recommendations set by Moneyval ahead of Wednesday’s final vote by the Financial Action Task Force (FATF).
Last month, Malta received the official green light by the Council of Europe’s Moneyval committee after the Government introduced sweeping reforms to improve its anti-money laundering efforts. Malta had failed an assessment by Moneyval in 2019 which led to a series of recommendations being made.
On its part, the FATF, a global committee against money laundering and the financing of terrorism, and is a parent organisation to Moneyval, has a final say as to whether Malta becomes ‘greylisted’ – meaning it is placed among a world-wide list of countries not deemed serious in its set-up against money laundering.
In a preliminary meeting last week, FATF evaluators were divided on whether Malta should receive a clean bill of health, in a surprising development after Malta entered the assessment with three ‘low level of effectiveness’ points and zero non-compliance points. A final vote will take place on Wednesday and will involve delegates from some 200 jurisdictions.
On his part, Finance Minister Clyde Caruana who is normally quiet across his social media accounts, not averaging more than one post per day under more usual circumstances, has posted eight times in the past 24 hours about Malta’s efforts to comply with international money laundering standards.
On Sunday morning the Minister began the day by writing:
“Malta did everything it could to pass this test, and the results achieved so far are much better than many other countries. This is very clear.”
Later in the morning following a television interview appearance, he wrote:
“The message I would like to send, perhaps even abroad, is that Malta was very loyal to what it had been asked to do in the past months.
“We’ve delivered in full, and we’ve done what was asked out of conviction. We’ve done this because we need to change things for the better and we are committed to continue working on this whatever the outcome on Wednesday.”
A few posts later, Minster Caruana later on Sunday wrote:
“The work we’ve undertaken continues in the coming weeks and months, and I continue to be open for dialogue, because I believe this country deserves better.”
Just an hour later, he wrote:
“Based on the reforms implemented, we ought to receive the appropriate recognition for the massive effort undertaken not just by the Government, but also by the private sector.”
Minister Caruana spent the past days in Germany, which sits on the FATF plenary, to hold intensive talks ahead of Wednesday’s crucial vote.
What can we expect if Malta does become greylisted?
Malta’s inclusion in a world-wide money laundering offenders list has the potential to seriously harm the country’s economy through changes to foreign direct investment, money transactions and banking activities.
While informed commentators do not believe that the impact of being greylisted will take place overnight, de-risking exercises by the international banking community could further harm Malta’s already fragile correspondent banking position, while it is widely believed that international money transfers in and out of the country would be hampered through increased scrutiny.
One major area commentators believe to be an area of concern is the opportunity cost of foregone foreign investment. It is believed that investors choosing which jurisdiction to set up shop in would likely overlook Malta if there is a chance of increased scrutiny, compliance costs and added regulatory burdens.
Malta would be the first EU country to make the FATF’s grey list, however, this is not likely to be permanent. In the case of Iceland, which was greylisted in 2019, by 2020 the FATF had announced it was removing the country from this list after it had introduced a number of reforms.
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