29 June - 5 July 2000

Malta listed as weak in fighting money laundering

by Franco Aloisio

Although Malta does not feature on the OECD's list of "tax haven" financial centres, the island is still singled out for its weak efforts in combating money laundering. Malta has now appeared on a list of 14 countries or territories that have been cited by the Financial Action Task Force (FATF), an organisation within the OECD, for their weak efforts in combating money laundering.

The other 13 countries are Gibraltar, Monaco, Antigua and Barbuda, Belize, Bermudas, the British Virgin Islands, Cyprus, Guernsey, Isle of Man, Jersey, Mauritius, Samoa and St Lucia.

The FATF, which specialises in combating money laundering and is associated with the OECD, consists of 26 developed countries. Last week, the organisation added Argentina, Brazil and Mexico as full-fledged members along with the European Commission and the Gulf Cooperation Council.

Contacted by The Malta Business Weekly, the chairman of Malta Financial Services Centre (MFSC) Prof. Joe Bannister said on the whole, Malta's anti-money laundering systems are in place.

Prof. Bannister quoted a section of the money laundering report on Malta: "In an otherwise comprehensive anti-money laundering system, the review raised only one major source of concern.

"This relates to the Maltese system of nominee companies which is an obstacle for the identification of the beneficial owners in offshore and onshore companies although the nominee companies are licensed and regulated by the Malta Financial Services Centre. The FATF urges Malta to accelerate the phasing-out of the nominee company system."

Meanwhile, another 15 nations that have not cooperated in the fight against money laundering, namely Panama, Russia, Israel, Lebanon, Philippines and Liechtenstein, five Caribbean Islands (Bahamas, Dominique, the Caimans, St Kitts and the Grenadines) plus four Pacific islands (Marshall, Cook, Nauru and Niue) could face penalties if they do not alter their stance, according to the FATF, which published its "black list" for the first time.

The listing marks the first time that the FATF, which has its secretariat at the OECD in Paris, has charged this group of nations with failing to cooperate in the fight against money laundering. The categorisation is based on 25 criteria relating to loopholes in financial regulations, including bank secrecy and obstacles to international cooperation.

The FATF urged financial institutions to "pay special attention" to the business relations and transactions with people, companies and financial institution from these black-listed countries.

The institution is prepared to help these nations change, but if they persist in their behaviours, they would be liable to counter-measures, namely, sanctions.