The Implications of Moneyval

Unless you have been living under a rock for the past couple of months, you have most likely heard about Moneyval and the role it plays in determining whether Malta is a reputable jurisdiction in fighting the war against money laundering and financial crime.

Recent news reports have not been too optimistic when it comes to Malta’s reputation. Following a number of scandals which have been uncovered over the past years, most of them linking prominent people in Malta with tax evasion and money laundering, the country has been put under the spotlight. This negative news culminated in the reports surrounding the assassination of Daphne Caruana Galizia.

Following a thorough investigation, the Moneyval report highlights findings of deficiencies in Malta’s supervision and the lack of enforcement. In its first report in September, Moneyval identified around sixty areas which require improvement. All of which need to be addressed by October!

In combination with the fact that our supervisory and enforcement processes require thorough changes, Malta has also attracted some high-risk businesses which have contributed to its economic growth. The most notable of mention would be the gaming industry and more recently, Malta has shifted its gaze towards cryptocurrency and blockchain businesses.

So, what happens if Malta is grey listed?

Should Malta face the prospect of grey-listing, a ripple effect of unpredictable and potentially damaging developments may ensue. The reason why Malta has managed to establish itself as a leading international financial centre is because of its reputation. Malta getting grey-listed means that several financial institutions of repute may consider their position and could seek to relocate to a new country, which is more credible in the eyes of Moneyval.

The very same can apply to companies operating in gaming. Operating in a grey-listed country may mean that processing of payments would be less accessible and far more difficult, since no reliable financial institution would want to execute transactions for dodgy countries. Having trouble processing payments is a major operational issue and may lead to such companies setting up shop somewhere else.

Where does this leave us?

Organisations leaving Malta means an inevitable spike in unemployment. This would then be coupled by a lack of competitiveness where people would settle for less paying jobs, which in turn impacts their standard of living.

The lack of business would also drive down the number of people visiting and living in Malta, which will undoubtedly impact rental revenues. Those who have bought a property solely for the purpose of letting it may need to contend with lesser income, or else the possibility of selling.

Come October, we do have some interesting developments to look forward to.

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