Moneyval
SHADES OF GREY: MALTA MONEYVAL UPDATE
Author: Dominic Fisher
GREY IS A COLOUR OFTEN ASSOCIATED WITH ACCOUNTANTS, BUT NOT OFTEN CONNECTED WITH MALTA, UNTIL NOW. SINCE THE RESULTS OF THE MONEYVAL INSPECTION OF MALTA WERE PUBLISHED IN JULY 2019, THE PROSPECT OF ‘GREY-LISTING’ HAS BEEN HANGING OVER MALTA. IN THIS ARTICLE, DOMINIC FISHER OF ARQ GROUP WILL EXAMINE WHAT GREY-LISTING COULD MEAN FOR MALTA AND ITS ACCOUNTANCY PROFESSION. About Moneyval and the Malta Report Moneyval is a monitoring body which evaluates European countries regarding measures taken to combat money laundering and financing of terrorism. A key feature of the current round of inspections is the focus on effectiveness. Simply having a sound legal framework is not enough. The Moneyval report on Malta, which was published in July 2019, was generally negative. In fact, Malta was rated as ‘low’ or ‘moderate’ in nine of eleven areas under review with supervision, prosecution and confiscation being areas of particular weaknesses. These findings meant that fundamental or major improvements were required across the board. In terms of the accountancy profession, Moneyval also concluded that Maltese accountants were not confident in their understanding of money laundering and were unable to articulate clearly how it could occur in their sector. The FIAU’s latest annual report shows that suspicious transaction reports by external
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accountants and auditors has been rising, albeit from a very low base. The corporate service provider (CSP) sector, which also employs many accountants, also came under criticism. Given that CSPs are involved with most Maltese company incorporations, they are critical gatekeepers to the Maltese financial system. It’s no coincidence that in October 2019 the MFSA opened a consultation to ‘raise the bar’ for this sector. Grey-Listing Malta has until October of this year to show progress or find itself ‘grey-listed’. Damage has already been done to Malta’s reputation by this prospect. For example, the latest Basel AML Governance Index had Malta falling from 13th to 89th in the world. In this Index we are sandwiched between Serbia and Russia in the rankings and now lag behind every other EU state. Institutions which serve international clients or depend on overseas counterparties have also been negatively
