Malta, the Philippines, Haiti and South Sudan have been placed on the Financial Action Task Force’s anti-money laundering grey list and are now under increased monitoring as they work to address strategic deficiencies in their AML regimes.
The Cayman Islands had been added in February. Malta is the first European Union country on the list.
The FATF encourages its members to take into account the deficiencies of countries that are under increased monitoring, but the international standard setter does not require enhanced due diligences when dealing with individuals and entities from grey-listed countries.
Nevertheless, being named and shamed by the FATF is a reputational blow.
Malta will now have to demonstrate that accurate and up-to-date information on the true owners of companies and other entities is collected and that service providers that fail to maintain accurate records are adequately sanctioned.
The country will also have to make more use of its Financial Intelligence Unit to support law enforcement in detecting and investigating cases involving money laundering and tax evasion.
Officials in Malta cried foul over the listing, calling it politically motivated.
Prime Minister Robert Abela and his predecessor Robert Muscat said the greylisting was “unjust”.
The Times of Malta cited sources that were briefed on the greylisting discussion concluding that most member countries had supported Malta’s AML efforts as sufficient but that was “torpedoed by the US, UK and Germany”.
The newspaper quoted another anonymous source stating that, far from making a technical evaluation, the FATF had opted to “punish Malta for its past sins”.
In a statement, the Maltese government said that the initial 2019 evaluation had listed 58 recommended actions and that over the subsequent 18 months all but three of those had been addressed.
This echoed the sentiment in the Cayman Islands after its greylisting in February. Cayman had completed 60 of the 63 recommended actions by the Caribbean Financial Action Task Force.
As a result, Cayman is compliant or largely compliant with 39 out of 40 technical FATF criteria.
The remaining shortcomings are in the practical implementation, where Cayman’s action plan that addresses any shortcomings covers three out of a total of 11 criteria.
These are imposing stricter sanctions and fines, including for those who do not file accurate and up-to-date beneficial ownership information, as well as more prosecutions and convictions for all types of money laundering.
The AML regime of the Philippines was found wanting in the supervision of non-financial businesses, non-profit organisations and casinos. The FATF has further demanded that money-transfer businesses should be registered and better regulated. In addition, the Philippines should improve the access to and accuracy of beneficial ownership information and make better use of financial intelligence in AML investigations.
In addition, the Philippines must, under the agreed action plan, demonstrate a more effective system to counter terrorism financing and proliferation financing through financial sanctions and more investigations and convictions.