Malta has recently been given a positive result by Moneyval. Following this development, many believed that this would translate into an all clear away from grey listing. It has transpired however, that Malta could still be facing the prospect of grey listing by the Financial Action Task Force (FATF), even though having obtained better compliance ratings than other European Union member countries. This will be decided in the upcoming plenary session of the FATF.
A grey listing context
In the context of a negative outcome, Malta will become the first country in the European Union to be placed on the grey list. This will put the amount of financial transactions in and out of Malta under scrutiny. It has to be said that experts assisting the Maltese government emphasise that the country is one of the best performers in terms of technical ratings in compliance.
Similar to other European Union member states, Malta has zero “non-compliant” or “partially compliant” ratings issued in its report. The ratings are split in four including “non-compliant”, “partially compliant”, “largely compliant” and “compliant”. Representatives of Malta state that there are other countries within Europe that achieved worse results and still avoided the grey list in recent years.
There are reports that countries such as the United States, United Kingdom and Germany are pushing to have Malta placed on the grey list, although Moneyval results were positive. This is a major concern for the current Labour administration. The position of these countries is quite surprising especially when considering that the United States has four “non-compliant” and another four “partially compliant” ratings.
A number of countries within the European Union achieved significantly worse ratings yet have avoided grey listing altogether. Examples include Slovakia which has sixteen “partially compliant” ratings, the Czech Republic which has eleven, Slovenia which has ten and Finland having nine. Malta also compares better in the higher ratings, surpassing Slovenia, Czech Republic, Finland, Slovenia, Hungary, Denmark, Latvia and Lithuania.
The worst scenario
If Malta is grey listed, this would mean that the FATF is adopting a higher standard without warning and on a subjective basis. This would also mean that many will expect other states to be grey listed, considering that their ratings compare less favourably. If this is not the case, there would be a valid argument that Malta is being treated differently.
Although there are some states that are pushing for Malta’s grey listing, there are also those backing the country. Key members of the FATF have assured Maltese representatives that the process is a technical one, with outside influence having no impact on the end result. With that said, the integrity of the process is also being doubted by the Labour party should grey listing be the course chosen.
It is argued that if Malta is grey listed, this would mean that the result is not based on technical outcomes but other political influence, especially as the country excelled in its compliance standards in a short space of time.