The head of the government’s financial intelligence agency yesterday questioned the lack of police prosecutions involving such crimes.
Addressing a conference titled ‘Combating financial crime: protecting Malta’s economy,’ Manfred Galdes, director of the Financial Intelligence Analysis Unit, said it was strange the police only seemed to prosecute domestic financial crime when there was a lot of international business flowing through the island.
He also noted that the police freezing of assets was “minimal” and the amounts usually low.
Dr Galdes noted that plans to set up an asset recovery bureau had remained on the statute books without being implemented. The office was meant to have the role of tracing, recovering and managing the proceeds of organised crime.
In view of a global shift to a risk-based approach, Malta risked lagging behind in this regard, he added. The jurisdiction had to move towards such a risk-based approach rather than just looking towards attracting more business to the island.
The government’s Individual Investor Programme and residency schemes served to raise Malta’s risk profile, he said. While acknowledging that such schemes were a good business opportunity for the country, Dr Galdes said they also raised risks and could attract politically exposed persons from high-risk jurisdictions.
The Times of Malta reported last week that Panama law firm Mossack Fonseca touted the IIP’s residency requirements as being one of the easiest to satisfy.
In his address, Dr Galdes also flagged the need for risk-management in the gaming sector, particularly when it came to perceptions of Malta abroad. The gaming sector was a diverse one with varying levels of customer due diligence, he noted.
Malta was now playing in the “Premier league” in the financial sector, meaning it had to abide by the same rules as other countries. He cautioned the industry not to endanger Malta’s reputation as a financial jurisdiction.
“It all boils down to a balancing act. No one wants to lose business but we need to protect what we have at the moment.”
He made it clear that financial intermediaries should not go overboard either because that would result in certain sectors being unbanked. “We do not want the gaming sector having to turn to foreign jurisdictions for banking,” he said.
Dr Galdes said banks and other financial intermediaries should allocate the necessary resources for due diligence processes when handling high-risk business.
“There is a link between economic growth and dealing with financial crime. The reality being faced is that the bar has been raised. The way we react is key to our success. We must avoid ending up on any grey list or black list. We need to maintain our reputation as a trustworthy financial sector,” he said.
Touching upon the Panama Papers and other recent leaks, Dr Galdes said such revelations demonstrated to a certain extent the darker side of corporate services. He said the leaks had an effect in that more emphasis was being placed on the sharing of beneficial ownership information of companies between countries.
Finance Minister Edward Scicluna was also scheduled to address the conference but instead he made a recorded message in which he said Malta cooperated with other jurisdictions and was far from being a safe-haven.
He said that when dealing with non-European countries with less stringent rules, only potential criminals should be discouraged while true investors had to be welcomed.
The conference was organised by the Malta Bankers’ Association.