Grey list woes – FATF assessors won’t only be looking at bank transfers and box ticking

Are you one of the many Maltese people finding that any international money transfer, unless it’s to your own account, could be blocked for weeks while the various banks involved investigate you, your recipient and the reasons for passing cash on to a third party, either to Malta or from Malta?

Whether it’s a commercial transaction or a personal bill, or even just a gift or a donation, hundreds of Maltese people trying to go about their everyday financial business are coming up against the type of obstructions and delays they’ve never before experienced in their lives. This is just one aspect of the Financial Action Task Force’s decision to put Malta on its so-called grey list in June last year, though it’s one that directly affects every single one of us.

The many other disruptions caused by greylisting, including the exodus of companies that provide employment, the destruction of the island’s reputation, the impact on banks and any other financial institutions seeking to find international partners to work with…all of this has been playing out over the past 10 months, with increasingly worrying repercussions.

Getting off the grey list should be a key priority for our newly-reelected government, and Prime Minister Robert Abela and his finance minister, Clyde Caruana, will be spending the next few days desperately trying to prove Malta deserves to be given a break.

According to reports, assessors from the FATF are currently in Malta to gauge whether the government has done enough about implementing the reforms that were required. The issues that led to the island’s greylisting were numerous and involved issues that had long been being called out by international institutions, journalists – led by assassinated journalist Daphne Caruana Galizia – and local politicians and business people.

Have any of them been satisfactorily addressed yet?

Corruption – Few of the corruption cases exposed by journalists and politicians over the past nine years have even been investigated by the police yet, let alone taken to court or achieved justice, not even those flagged as suspicious by the Auditor General and/or the FIAU.

These include the Electrogas power plant, the Vitals Global Healthcare hospitals deal, the American ‘university’ deal, the St Vincent de Paule contracts, among many others that have been reported by the press, criticised by watchdogs, yet allowed to stand by the government as the police stand by doing nothing.

Money laundering – Malta has become known as one of the major conduits for money laundering on an international scale. While institutions such as the now-shuttered Pilatus Bank have received some attention, the actions the Maltese state has taken have seemed reluctant and piecemeal. Bank of Valletta has not yet been investigated for its potential involvement either.

In the meantime, the Panama Papers protagonists, Konrad Mizzi, Keith Schembri and the so-far unconfirmed Egrant owner, have been allowed to slink away quietly. The police refuse to say anything about any possible investigation, the courts drag on forever, and the government itself has done nothing to press for a conclusion on any of the three cases.

Prosecutions – The police have charged a number of the conspirators involved in the plot to assassinate Caruana Galizia for the express purpose of silencing her exposure of corruption, money laundering and criminality. This case should act as a weather vane for the FATF assessors: without a comprehensive investigation that roots out every single participant in the plot, the government of Malta is clearly signalling that it has no intention of changing its ways.

In other cases, such as the Allied Newspapers fraud and money laundering case against Schembri and others, prosecutions move so slowly that entire months go by with no progress. In one particularly scurrilous case, that of the prosecution of those involved in the 2013 oil scandal, the proceedings have been so slow that one of the accused has died in the meantime. Again, this lack of urgency smacks of deliberateness and intention.

Financial institutions oversight – Regulators are coming down hard on the small business owner, individuals and their personal financial affairs. But big business and politicians known to have been involved in shady deals, to have lifestyles that clash with their official incomes, or that have accumulated large amounts of unexplained wealth are simply allowed to continue their lives, undisturbed by probes or demands for explanations.

Beneficial owners’ information – The first and most crucial ‘owner’ on that list is the person who commissioned Nexia BT’s Brian Tonna to set up Egrant. A magisterial inquiry failed to uncover the true owner. While the beneficial owners of all trusts and funds set up in Malta must, of course, be recorded as required by the FATF, it’s impossible to trust anything that happens unless and until the Egrant mystery is cleared up definitively and finally.

Passport sales – The continued determination of the Maltese government to sell passports to the highest bidders, and help them find ways to outwit the safeguards and regulations put in place by the very same government is, without doubt, one of the clearest signs that the government has no intention of playing by the rules, now or at any time in the future.

The EU Commission has now demanded, in an official ‘reasoned opinion’ that the scheme is abolished or Malta will have to face the EU Court. The FATF should also take careful note of Prime Minister Abela’s response to this very real threat. Individuals from Russia, China, Saudi Arabia and others have purchased Maltese passports in order to be able to move freely around the European Union. Several of them have been exposed as being international criminals or connected to mafia organisations in their countries of origin.

Some observers are suggesting that Malta has done enough in terms of improved record keeping, information sharing and the cracking down on tax evasion to stand a chance of being voted off the grey list at the next plenary meeting of the FATF in June. But with a prime minister who has himself failed to adequately explain his wealth, and who’s come under pressure over a dodgy deal around a house purchase, including potential wrongdoing involving tax issues, it’s hard to see how any objective observer could conclude that Malta’s on the right track.