The country made changes to its approach to corporate governance. That’s why it received the FATF vote for Malta, taking it out of the grey list after one whole year in it. The country fixed deficiencies in the battle against tax evasion and how beneficiary owners were listed. Consequently, Malta was praised for its progress in tackling money laundering.
The way in which Malta is now combating tax evasion by collecting information on ultimate beneficial ownership, and sharing this with regulators, are just some of the areas that have been improved over the last year. All in all, there has been excellent progress in addressing the strategic anti-money laundering and counter-terrorist financing issues.
The FATF Grey List – Malta Excluded in 2022
The FATF holds three yearly meetings, discussing whether the member countries are tackling financial crime effectively. The FATF states the jurisdictions with faulty measures through two documents issued at the end of the meetings. The worst designation is the blacklist, which includes countries with serious deficiencies. Therefore, the FATF encourages not to do business with these countries, which now include North Korea and Iran.
The other public document is called Improving Global Anti Money Laundering Compliance: On-Going Process, also known as the greylist. This list includes jurisdictions with weaknesses when fighting money laundering and terrorism financing. However, they have committed to fixing them. Countries on the FATF greylist include Myanmar, Pakistan, Haiti, Jamaica, South Sudan, Panama, and Syria, among others.
As we said, the FATF grey list excluded Malta in June 2022 due to the country’s improvements in the aforementioned areas. The fact that one year earlier, it was included in the list was a topic of controversy since Malta was the first EU Member State to be grey-listed. Also, the country is subject to harsh EU anti-money laundering and financing of terrorism laws and regulations.
FATF Vote for Malta
The FATF vote for Malta or any other country in the black and grey lists is secret. To be included on the grey list, the country was put under scrutiny by international assessors and bodies. The decision to remove Malta from the list came after the jurisdiction completed reforms and addressed the flaws identified.
Malta had to execute a lot of changes. These included improving the way in which the country combated tax evasion, collected information on ultimate beneficial owners, and how it shared information with authorities. Those issues had to be rectified to remove Malta from the grey list by the FATF.
When the FATF Malta vote was favourable, Prime Minister Robert Abela said that he would respect FATF confidentiality requirements and talk about the results only when the plenary meeting of the inter-governmental body was concluded. He affirmed that Malta would commit to the reforms. This way, the country will continue being a reliable financial jurisdiction.
It said that Malta’s reputation shouldn’t have been harmed by the Financial Action Task Force’s grey list. Mistaken government decisions are to blame, according to the political opposition in the country. The financial action task force for Malta was scrutinised among 37 jurisdictions, the European Commission, and the Gulf Cooperation Council.
Further Details
The FATF Malta issue came from instances where companies’ beneficial ownership information was not accurately recorded by gatekeepers. As a result, they were not appropriately filed at the Malta Business Registry. This was a subject of concern because difficulties in identifying beneficial ownership are indicators of possible terrorist financing and/or money laundering.
Companies are required to provide information regarding the beneficial ownership to the Malta Business Registry (MBR) in obedience to the Companies Act (Register of Beneficial Owners) Regulations. Failure to do this will mean being fined and suffering other possible penalties. The MBR has introduced a section on its website where users can access beneficial ownership information on active companies for a small fee.
Two institutions have entered into a Memorandum of Understanding (MoU) on cooperation and exchange of information. These are the Malta Business Registry (MBR) and the Malta Gambling Authority (MGA). The main aim of MoU is to ease communications between the two authorities and to support the effective sharing of information on matters of mutual interest.
In 2021, the MBR and the Financial Intelligence Analysis Unit (FIAU) conducted intensive inspections at gatekeepers that focused on the accuracy and validity of beneficial ownership information that was submitted to the MBR. The FIAU issued the results of such inspections in a publication, which were quite positive. The aforementioned aspects have contributed towards addressing the deficiencies that were identified.
As a result, the removal from the FATF grey list for Malta occurred. The FATF felt that money laundering cases were not prioritised. Thus, more law enforcement was needed to increase the number of convictions and tackle money laundering cases. A lot of changes were made to combat this issue, like top officials being replaced in the Malta Police Force and in the MGA.
The FIAU increased the number of inspections on people, banks, gaming companies, corporate service providers, notaries, and real estate agents. Throughout 2021, the FIAU penalised a multitude of individuals, with a total amount of 11 million euros. On the other hand, the FATF felt that Malta was not doing enough to tackle tax evasion cases.
During the course of 2021 and 2022, several Maltese authorities have worked towards improving the tax evasion tackling methodology. A clear national policy has been developed, one that is shared between the Malta Police Force, the FIAU, and the Office of the Commissioner for Revenue. The methodology covers how to tackle tax evasion in a coherent, effective, and proportionate way.
Maltese Benefits Compared to Other Countries
Have a look at the several advantages that Maltese companies have in comparison to other countries. After the FATF vote against Malta, making it appear on the grey list, these benefits have increased. We consider having a look at these advantages beneficial; that is why we have created the table below:
| 📈 Beneficial Corporate Rates | Having the lowest corporate taxes in the EU, Malta is remarkably beneficial for companies in this aspect. |
| 💸 Political and Economic Stability | Malta enjoys a stable economy and a strong two-party political system. |
| 👅 English Language | English is the official language of the country, along with Maltese. This is a huge international ease. |
| 💪 Competitive Jurisdiction | The expense to set up a business in Malta is way lower than doing it in other renowned financial centres in Europe. |
| 📉 Low Costs | The Malta Business Registry’s fees and the minimum share capital are remarkably competitive. Fees of service providers are also more attractive than other EU Financial Services centres. |
| 🧾 Double Taxation | Since Malta holds double taxation treaties with over 70 countries, this benefit promotes investments and ensures that tax payments occur in just one country. |
The appearance in the FATF grey list for Malta is no longer a problem for Maltese companies, who have the aforementioned benefits over other jurisdictions. These companies also include the best online casino sites in Malta, which offer plenty of varied games, interesting bonuses, cool designs, and many other perks.
Conclusion
In June 2022, the FATF vote for Malta was favourable, removing it from the grey list. Consequently, it concluded that the country had made significant progress in addressing the concerns that were identified one year earlier. Nevertheless, Malta should not relax and keep working on the measures that, for the moment, are being carried out effectively.
Frequently Asked Questions
This article about FATF Malta has now come to an end. However, we have created a frequently asked questions section for you to solve any doubts you may have. The answers to the questions will jump to the paragraph of your interest. We hope that you find them helpful, see them below:
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