Financial Crime World

Malta Cracks Down on Financial Crimes with Sweeping Reforms

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The Maltese government has announced a series of significant reforms aimed at combating financial crimes, including money laundering, to strengthen its reputation as a financial hub.

Boosting Resources for Regulators and Law Enforcement Agencies

The new measures, unveiled by Finance Minister Edward Scicluna, are designed to boost the resources available to regulators and law enforcement agencies, speeding up case closures and increasing the power authorities have to freeze assets of illicit entities.

Key Reforms

  • Complex Money Laundering Cases: A new Financial Organized Crime Agency will be created to investigate and prosecute the most serious cases of money laundering and financial crime.
  • Speeded-up Case Closures: The Police Prosecution Unit will accelerate the prosecution of serious cases, while the Asset Recovery Bureau will have enhanced powers to freeze assets of illicit entities.

Response to European Authorities’ Concerns

The measures are a response to growing pressure from European authorities over Malta’s anti-money laundering (AML) compliance defenses, lax oversight, and enforcement by regulators and prosecutors. In November, the European Commission took rare and drastic steps to increase legal pressure on Luxembourg and Malta for not adequately implementing bloc-wide financial crime compliance regulations.

Addressing Outstanding Gaps

The new reforms aim to address these outstanding gaps by improving AML oversight, analysis, and processes. The measures include:

  • Enhancing the Financial Intelligence Analysis Unit’s (FIAU) methodology to assess money laundering and terrorist financing risks.
  • Revising its sanctioning procedures.
  • Ensuring that decision-making is properly reasoned and documented.

Decoupling Police Investigators and Prosecutors

Malta has a relatively small public administration with limited resources, which has forced public institutions to take on multiple roles. The reforms aim to decouple police investigators and prosecutors, allowing for more specialized financial crime investigations.

International Scrutiny

Malta has been deemed a “Monitored” Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR), with reviewers expressing some critical concerns over money laundering investigations related to drug trafficking and tax fraud. However, Malta’s financial services and gaming authorities have taken steps to increase oversight and ensure that the country’s online gaming industry does not become a conduit for money laundering activities.

Joined-up Approach

Malta’s Finance Minister, Edward Scicluna, has emphasized the need for a joined-up approach between countries to combat organized financial crime, which is an international scourge. The government is determined to play its part in eradicating this problem and has committed to throwing more resources at the issue, enacting legal and regulatory reforms to transform the fighting capabilities of its institutions and regulators.