Malta has been slammed with the UK’s red-listing and the FATF’s grey-listing because the government has failed to take action against corruption and money laundering in its own former members, Secretary General of the EPP Group in the European Parliament and former opposition leader Simon Busuttil said in a tweet this morning.
Industry practitioner, lawyer Michael Zammit Maempel, echoed Busuttil’s words in a stark warning on Twitter that the implications of the red-listing must not be underestimated and could lead to foreign companies abandoning business dealings with Malta because the risk and associated administrative burdens are too high.
Financial services companies, lawyers and their clients are going to be hit hard by the UK’s decision to relegate Malta to its red list for money laundering and terrorist financing, Zammit Maempel wrote. “And why? Because the criminals who caused this still roam free.”
Let me explain what this means in real terms for those who, like me, work with and depend on cross-border trade. https://t.co/keHb0AwiIS
— Michael Zammit Maempel (@Zemploid) July 22, 2021
The UK’s move isn’t surprising; it’s the natural consequence of Malta’s having been dumped onto the FATF’s grey list. Similar moves have been, or will soon be, almost inevitably implemented across the globe.
Being branded untrustworthy, a haven for criminals, a threat to legitimate efforts of other countries to clamp down on financial crime, which is what the greylisting does, means no other country, bar the mavericks, is going to risk allowing its enterprises to do business here without being put on high alert that doing so could cost them dearly.
While many local politicians splutter about injustice or make ludicrous promises to get Malta off the grey list in 90 days, local industry practitioners are bracing themselves for the reality they know is coming.
The UK’s decision to classify Malta among countries like North Korea, Nicaragua, Pakistan and Iran, even if expected post-greylisting, means every single Maltese business or service provider will be regarded with the same amount of suspicion as those from the rest of the countries on the list.
“What this new law in England means is that ALL Maltese companies now start off as being “preassumed” (so to speak) of being fishy,” Zammit Maempel wrote. They will now have to “double their efforts to convince British trading partners that they’re all kosher”.
This means, he said, that anyone who works in cross-border trade is going to be subjected to much more onerous and often prohibitive due diligence checks that are likely to discourage foreign companies from trading with their Maltese counterparts.
Every time one of his clients begins a trade relationship with a foreign company, Zammit Maempel wrote, they receive a “basic questionnaire” about their business and are asked to provide things like the list of directors, the latest audited accounts and their anti-money laundering policies.
“This takes a significant amount of time to compile, and the deal can often be called off because the foreign company might remain unconvinced on the reliability of a Maltese entity,” he said.
But being placed on the UK’s red list means all of that is going to be double as hard, Zammit Maemple warned. “This means that life is about to get (a) hellish for lawyers like me who need to do this work because Britain remains a key trading partner”
The process will become “more expensive for my clients, who are now going to have to shell out more money to pay for this additional compliance process,” he said.
And it’s going to be “dangerous for the country and its economy because the number of trade deals that are going to evaporate before they’re completed is going to multiply as more foreign companies think ‘fuck it’.”
Prime Minister Robert Abela and his ministers “know that to get Malta off these lists, they must stop blocking the prosecution of Joseph Muscat and Konrad Mizzi for corruption and money laundering,” Busuttil wrote on Twitter. “They know this very well. But they are too weak to do it.”