Financial Crime World

Malta Slammed onto Grey List by Global Watchdog Over Financial Crimes and Corruption Concerns

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Malta, a small European Union member state, has been added to the grey list of the Financial Action Task Force (FATF), an intergovernmental body that fights money laundering and terror financing. This move marks the first time a European Union member state has been labelled a jurisdiction of concern.

The Reason Behind the Move

Malta’s inclusion on the grey list is attributed to its lack of will to fight tax evasion, with tax evaders often getting off with small fines or no punishment at all. The police have only recently started tackling tax evasion as a crime and using it as a link to money laundering.

The Consequences for Malta

The FATF’s decision is likely to have far-reeaching consequences for Malta’s economy and reputation. The inclusion on the grey list makes it harder for the country to attract international banking and investment.

  • Prior to the vote, Malta lobbied hard with FATF members to avoid its fate, but ultimately failed to convince them of its efforts to curb financial crime.
  • The government has been accused of ignoring the problem, with some describing a “sense of panic” among top officials since the FATF evaluators failed to give Malta a clean bill of health.

Malta’s Reputation in Jeopardy

Malta has long been criticized for its lax approach to tax evasion and corruption. The country’s low tax rates for foreign companies have made it a popular destination for money laundering and other financial crimes.

  • In 2016, the International Consortium of Investigative Journalists (ICIJ) exposed Malta’s role in the Panama Papers scandal, which revealed widespread illicit financial flows and launched tax probes and criminal investigations worldwide.
  • The government has been accused of ignoring the problem, with some describing a “long-standing joke” where tax evasion was tolerated.

What’s Next for Malta?

Malta’s inclusion on the grey list is expected to prompt significant changes in the country’s approach to financial crime. ICIJ spoke with Maltese journalist Jacob Borg, who described the country’s situation as “a long-standing joke” where tax evasion was tolerated.

  • “It’s been a long time coming and now we need to roll up our sleeves,” said Borg.
  • “I think the positive impact will be that the government gets its act together and finally starts taking financial crime seriously.”

Conclusion

Malta’s inclusion on the grey list by FATF is a significant blow to its reputation. The country needs to take immediate action to address tax evasion and corruption concerns. With the grey list, Malta’s economy and reputation will face significant challenges, but it can still turn things around by implementing effective measures to prevent financial crimes.