Most western governments and international regulators are increasingly focusing on the need to control money laundering practices like tax evasion, financing of terrorism, financial gains from organised crime as well as corruption by people who hold some sort of political or economic power. The political will to prevent money laundering has become a hallmark of the governance benchmarks of any country that expects to enjoy the trust of its own people and of the international community.

The European Commission set high standards of anti-money-laundering regulations in the Fourth Anti-Money Laundering Directive that member states were expected to enshrine in their legislation and implement by the end of this June. Malta was among a number of EU countries that have so far failed to implement the provisions of this directive. European Justice Commissioner Vera Jourova confirmed that Brussels is monitoring Malta as a result of its failure to meet the directive deadline.

The government’s inability to implement the provisions of the directive on time raises a number of questions. It is difficult to believe this was simply the result of bureaucratic delays that, in themselves, reflect poor governance. In the last few years, Malta’s anti-money laundering credentials were challenged by both international and local journalists and by agencies/institutions too.

Media reports have alleged that Italian criminal organisations were using Malta’s online gaming industry to launder the money of their criminal gains.

US financial institutions curtailed the correspondent banking services they give to Maltese banks that have offshore gaming companies, Malta-based payment gateway companies as their clients and companies that process payments for adult entertainment providers. The US banks argue that regulatory obligations make it difficult for them to monitor transactions that may be tainted with money laundering practices.

The Panama Papers saga opened another can of worms after it transpired that politically-exposed persons were using offshore financial centres of dubious reputation to deposit their money far from the scrutiny of regulators.

Here, the government’s anti-money laundering agency had a tumultuous phase that lasted several months, characterised with the resignation of its director and the sacking of two senior officials as recently as last June.

There appears to be little evidence that the fight against money laundering is leading to significant concrete results. Over the past four years, the value of ill-gotten criminal assets seized by the courts amounted to €191,700. Police sources who spoke to the Times of Malta were  justified to point out that this figure of seized assets “reflected the lack of prosecutions for money laundering”.

The aim of the EU’s money laundering directive aims to make it harder for criminals to get away with corrupt practices. It is meant to deal with companies that may be tempted to use Malta’s gaming and financial services industries to launder money more easily than they would be able to do in other jurisdictions. It also forces governments not to turn a blind eye to illegal practices on the pretext of encouraging economic growth.

The government urgently needs to show it has the political will to prevent financial crime as much as is humanly possible. The failure to implement the Fourth Anti-Money Laundering Directive is not a good omen for the reputation of Malta as a country that treasures good governance.

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