The Pilatus bank controversy was a lesson learnt for the Financial Intelligence Analysis Unit, its director Kenneth Farrugia said.
Speaking at the Finance Malta annual conference, Mr Farrugia said the FIAU did not appeal decisions by the European Banking Authority on the matter because it decided to adopt the recommendations.
The EBA had found the FIAU had breached the requirements of a directive on the prevention of money laundering and terrorist financing in the way it handled Pilatus Bank.
The Ta’ Xbiex based bank had been embroiled in controversy since its inception. Last year, the bank had its licence revoked by the European Central Bank, two years after being implicated in money-laundering breaches.
Mr Farrugia said the FIAU went on to implement most of the recommendations by the EBA.
He also pointed out that awareness of money-laundering and financial crime had increased. The FIAU had already received almost 1000 reports of suspicious transactions this year, he said.
Speaking on a panel on combatting financial crime, Police Economic Crimes Unit head Ian Abdilla said the police were also beefing up staff and were looking at raising the number of civilian financial crime experts on the team.
MEPs Roberta Metsola and Alfred Sant also joined the panel on the discussion of combatting financial crime.
Dr Metsola said “reputation was everything”, addingthat Malta needed to ensure that it held on to jurisdiction over its taxation system. To do this, it needed to show that the proper due diligence mechanism was in place.
Dr Sant, on the other hand, said Malta’s systems had had trouble “catching up” with the unprecedented economic growth. However, he said, financial crime was “subjective”. What was legal in the EU was not legal in the US, he said, adding aggressive tax planning would not have been considered that 30 years ago.
Much of the rhetoric on financial crime in the European Parliament had also been ideologically based, he added.
Malta seen as 'high risk'
The panel was preceded by an address by PwC partner and financial crime expert GianFranco Mautone, who warned that Malta is still seen as high risk for correspondent banks following scandals such as Pilatus bank.
Mr Mautone said the Pilatus bank case should not be seen in a negative light, but as a lesson for the country.
Mr Mautone recommended the country continues to assess risk on a regular basis.
Every country which has a significant number of banks cannot say it does not have money-laundering in its jurisdiction. The point is, what are you doing about it.- Edward Scicluna
Over time, there had been a greater global awareness of financial crime due to international investigations such as LuxLeaks and the Panama Papers, he said, adding that investigative journalists played a role in raising awareness on the issue.
Finance Minister Edward Scicluna said the financial watchdogs had started out with only a handful of experts.
Corruption allegations and money-laundering scandals happened in part because “we didn’t have an EU institution which looks after money-laundering”.
The FIAU had started with only a few people but now there were over 50, he said, adding the government had taken issues and concerns raised in its stride.
The government was also looking into having a larger institution to address money-laundering that would be detected by the FIAU and the MFSA, he said.
“Every country which has a significant number of banks cannot say it does not have money-laundering in its jurisdiction. The point is, what are you doing about it,” Prof. Scicluna said.