13 Apr 2020
Failure to tackle “significant” deficiencies in Malta’s anti-money laundering regime could potentially threaten financial stability, the International Monetary Fund (IMF) has warned.
In its annual assessment of Malta’s economic wellbeing, the IMF charted how a failure to make a dent on shortcomings identified by Moneyval, the Council of Europe’s anti-money laundering body, could have a serious economic impact if the country ends up being grey listed.
The IMF flagged this problem as Malta’s main medium-term challenge, saying the focus should be on improving and demonstrating the effectiveness of its anti-money laundering and terrorism financing regime.
To this end, the IMF noted how the Financial Intelligence Analysis Unit, in coordination with the financial regulator, had developed a risk-based automated tool to identify risk areas and had also introduced a new supervisory strategy and methodology to enhance the frequency and depth of compliance review.
More ‘intrusive’ bank inspections needed
The IMF said the authorities should increase the frequency and intrusiveness of supervisory inspections of banks, as well as strengthen the monitoring of higher risk sectors like virtual currencies.
While “commendable progress” had been made at the MFSA, the authority remains under strain due to the large number of financial institutions under supervision, the evolving regulatory environment, and challenges associated with new and complex products, the IMF said.
It highlighted how authorities should prioritise carrying out money laundering investigations, prosecutions and related confiscations in line with Malta’s risk profile, including for investigations of high-level and complex money laundering cases.
The MFSA said in a statement reacting to the report that the authority remained on track in addressing the strategic recommendations of the IMF and other international institutions.
Payment difficulties ‘cannot be ruled out’
The IMF advised that authorities should closely monitor ongoing pressure on correspondent bank relationships.
While no macroeconomic effects have been identified yet, difficulties in making and receiving international payments cannot be ruled out in the future, the international body said.
By Jacob Borg, Times of Malta, 11 April 2020
Read more at Times of Malta
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