Written by Zac Vella
Malta has been put on the grey list by the Financial Action Task Force, a.k.a the FATF. This recent event has been quite the topical conversation. However, do we really know what it means when a country is grey listed?
What IS the Grey List?
The grey list consists of jurisdictions which are deemed as non-compliant and require increased monitoring by the FATF in terms of financial crime. Various activities such as money laundering, terrorist financing and proliferation financing may lead to a country being grey listed. When a jurisdiction is placed on the grey list, the FATF will monitor and work with the jurisdiction to address certain deficiencies the FATF has identified. Moreover, when a country is on the grey list it is deemed as a high-risk country, which means foreign companies who do business with local companies may need to do more due diligence.
What about good ol’ Malta?
With regards to Malta, the FATF will aid Malta in introducing a national confiscation policy as well as passing a non-conviction-based confiscation law. This will raise sanctions available for the crime of Terrorist Financing and capability to investigate cross-border cash movements for potential terrorist financing activity. Terrorist financing refers to the funding of individual terrorists and/or groups. Increasing the outreach to report such crimes will improve communication and reporting time for a better and more effective way of identifying terrorist financing.
What can be done?
Malta will work to implement its FATF action plan by continuing to demonstrate that all necessary information is accurate and presented to legal subjects, so it can be used to prevent and identify terrorist financing as well as money laundering. Within this action plan, the FATF will also aid Malta in enhancing the work done by the Maltese Financial Intelligence Analysis Unit (FIAU). This includes the support of authorities pursuing criminal tax and related money laundering cases, by making clear the roles and responsibilities of the Commissioner for Revenue and the FIAU. As well as increasing the focus of the FIAU’s analysis on these types of offences. This is done to produce intelligence that helps Maltese law enforcement agencies detect and investigate cases associated with money laundering risks related to tax evasion.
How will the Grey List Affect Malta?
In theory a jurisdiction on the FATF’s increased monitoring list (grey list) may have an impact on the economy and the financial system. This occurs because a jurisdiction’s attractiveness may decline which in turn may deter potential investors, corporations and companies. This may have a substantial impact upon the economy. The recent news stating that the UK has listed us as high-risk for money laundering and terrorist financing is a potential effect of the grey list.
