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Brussels gives Malta two-month ultimatum on money-laundering rules

Warns that the island could face court action

Activist group Resistenza Malta put up a posted on the ministry door called for Scicluna's resignation on Thursday night. Photo: Reuters

Activist group Resistenza Malta put up a posted on the ministry door called for Scicluna's resignation on Thursday night. Photo: Reuters

Updated with activists' protest

Brussels stepped up legal action against Malta over the implementation of anti-money laundering rules and warned it could face court action unless it put its house in order within two months.

The European Commission on Thursday issued an additional reasoned opinion against Malta.

This follows the decision by the European Banking Authority last week which found that the Financial Intelligence Analysis Unit breached EU anti-money laundering laws when it failed to conduct proper supervision of Pilatus Bank.

The reasoned opinion is the second in a three-tier infringement process before the issue is referred to the European Court of Justice.

The decision, endorsed by the college of commissioners, was made after the Commission raised further concerns that Malta had not yet fully implemented the fourth anti-money laundering directive, Brussels said.

Describing the island’s implementation of EU anti-money laundering rules as “incomplete”, the Commission said that “if Malta fails to bring its national legislation into line with EU law within the next two months, the Commission may decide to refer the case to the EU’s Court of Justice”.

When approached by the Times of Malta, a Commission spokesman declined to comment on claims made by Finance Minister Edward Scicluna that Brussels had piled “pressure” on the European banking watchdog to make an example of Malta.

Read: Brussels 'pressured EBA to make example of FIAU', minister charges

The spokesman said the Commission welcomed the action taken by the EBA against Malta because “it is crucial not to only have strong anti-money laundering rules in place in Europe but also to make sure they are properly applied and enforced in member states.

“The decision confirms the important role of the banking authority to ensure that national supervisors comply with European Union rules requiring action against money laundering.”

The spokesman dismissed Prof. Scicluna’s comment that the EBA’s decision was “rushed”.

“Let me remind you that the Commission sent a letter to the EBA in October 2017, asking them to ensure that institutions responsible for supervision of the anti-money laundering framework established in Malta satisfy the requirements laid down in EU anti-money laundering and counter terrorism legislation.

“This request was mainly prompted following events surrounding the Pilatus Bank. The European Banking Authority carried out a preliminary investigation, including an on-site visit at the relevant Maltese institutions.

“On June 6, the authority decided to open a formal investigation into potential breaches of Union law by the Maltese Financial Intelligence Analysis Unit and [it was] only on July 11 [that] the EBA decided that the Maltese authority (FIAU) is indeed in breach of Union law and adopted a formal recommendation to the authority,” the spokesman added.

Reacting to the latest decision by Brussels, the Finance Ministry said it would collaborate with the Commission, adding that “Maltese legal officials will engage in technical discussions with the Commission’s legal team to explain the reasons and justifications of our legislation and make any corrections which might be required”.

Prof. Scicluna has brushed off calls by the Opposition to step down insisting he never intervened in the work of the supervisory authorities.

Watch: Minister fails to condemn police ‘inaction’ over FIAU reports

Attorney General Peter Grech, who chairs the FIAU, would not comment when asked whether he should assume responsibility for the infringements carried under his watch.

'We are appalled' - pressure group

Activist group Reżistenza Malta issued a statement on Friday saying it was appalled by the current situation.

"The most alarming and revealing fact in this scenario is that Minister Scicluna is trying to make us forget the shameful result obtained by FIAU by attempting to discredit the European Banking Authority.

"Minister Scicluna’s job is not to try to suppress the truth but to defend the honest citizen of this country without fear or favour."

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