FATF Places Malta on the Greylist for AML Strategic Weaknesses

A global anti-money laundering (AML) regulator voted to include for the first time to its grey list a country member of the European Union.

First EU Member on the Greylist

Members of the Financial Action Task Force (FATF) decided shortly after 2.30 pm Wednesday to greylist Malta and put it in the same category as countries like Albania, Zimbabwe, as well as tax havens like Panama and the Cayman Islands and strife-torn Syria, Yemen, and Myanmar, in a decision that could have significant negative ramifications for the EU member and gambling hub.

Comprised of 37 member jurisdictions and 2 regional organizations, the European Commission and the Gulf Co-Operation Council, the FATF members gather 3 times a year to evaluate how to plug loopholes in the international financial system and uproot money laundering.

The global watchdog issues two public documents by the end of each plenary session to identify jurisdictions that currently have weak measures and need improvements.

Countries with serious deficiencies go straight into the blacklist and the regulatory body requires them to implement strict counter-measures and encourages heightened scrutiny for the rest of the financial world while doing business with them or not doing business at all. Currently, two countries sit on the blacklist: North Korea and Iran.

The second document, the greylist, envisages countries that have strategic weaknesses in terms of anti-money laundering and terror financing processes but have shown willingness to rectify the situation. Countries on the greylist are subjected to “enhanced monitoring” until the prescribed set of measures is implemented.

No Support from the US

Malta ended up on the grey list after it failed to receive the required support from FATF members during the vote, with the US among those influential countries not backing the island during the plenary session.

The FATF vote was held on a pre-drafted resolution, in which expert evaluators deemed Malta to have made insufficient progress in bolstering its framework to battle financial crime. Discussion of the resolution was in another meeting of the watchdog on June 15. During the discussion and the vote, Malta had no saying.

The FAFT is not expected to make an official announcement of its position prior to the final assessment document publishing by the end of the summer. A spokesman of the watchdog did not even confirm Malta was being reviewed when contacted prior to the plenary Wednesday, stating that the process is confidential.

The vote now needs approval by the broader members of FATF before it is confirmed, but it is generally considered that this process is simply rubber-stamping.