COE warns Malta to improve AML controls

16 September 2019

The Council of Europe (COE) has called on authorities in Malta to enhance their measures to combat money laundering and the financing of terrorism, after a new report highlighted a number of failings in the country’s current system.

Published by the COE’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, known as Moneyval, the report highlighted a lack of understanding or analysis on a number of key areas.

In particular, Moneyval noted, money laundering was largely investigated in tandem with other, linked offences. It said that the level of investigations and prosecutions were not in line with the country's risk level, and high-level and complex money laundering cases, related to financial, bribery and corruption offences, were not being effectively pursued due to limited human or financial resources

Fundamental improvements to the mechanisms for confiscating the proceeds of crime from money laundering and linked offences were also necessary, Moneyval added.

For the financing of terrorism, Moneyval said while Malta has a sound legal framework for such cases, only few investigations have been conducted so far and none have resulted in any prosecutions or convictions. It noted that while Malta has made progress in this area, as with money laundering, its activity level did not match the country’s level of exposure to possible terrorism financing risks. As such, it recommended that authorities could co-ordinate their activities with the implementation of targeted financial sanctions’ regimes to more effectively combat the risk of terrorist financing.

Risk-based controls were also found wanting. While the banking and gambling sectors were said to have a good understanding of risk and preventative measures, Moneyval raised concerns about low levels of suspicious transactions reporting in other industries in Malta. Furthermore, it added, punishment for non-compliance with the AML controls was not viewed as effective enough to deter criminals.

“Moneyval noted that supervisory authorities do not have adequate resources to conduct risk-based supervision, for the size, complexity and risk profile of the country’s private sector,” it explained. “Sanctions for non-compliance with anti-money laundering and countering the financing of terrorism requirements are not considered effective, proportionate and dissuasive.”

The report also said Malta failed to provide sufficient insight into how legal persons and legal arrangements could be exploited for money laundering and terrorist financing. Again, the punishments for non-compliance were not seen as effective or proportionate.

However, MoneyvalL did say that Malta has a comprehensive framework for international co-operation, which enables its authorities to provide assistance to other countries.

Malta will now be tasked with addressing the issues flagged in the Moneyval report, and has been invited to report back on any progress made in December 2020.