High-risk entities to be audited by FIAU every 18 months
20 Sep 2019

Financial intermediaries and other entities classified as “high-risk” are going to have to undergo a rigorous examination by the Financial Intelligence Analysis Unit every 18 months.

A new automated system will classify entities according to their risk profile, a compliance manager with the FIAU said during a media briefing in response to the dire results of an audit into Malta’s anti-money laundering regime.

The expert report carried out by Moneyval found there was a “distinct lack of sanctioning” by the FIAU for anti-money laundering and terrorism financing failings against the “gatekeepers” in the financial sector.

According to the report, the authorities appear unable to quickly pursue high-level and complex money laundering involving bribery and corruption cases.

The FIAU has vowed to both step up monetary fines against offenders as well as ensure that remedial action is taken by the entity.

Since December 2017, €4.6 million in fines imposed by the FIAU have been appealed.

Fines under appeal do not show up on the FIAU website.

FIAU director Kenneth Farrugia said the FIAU would be proposing a revision to the system, ensuring that fines under appeal will become public knowledge.

Another FIAU official said one of the points picked up by Moneyval was the level of details reports sent to the police went into.

The official said steps were going to be taken to shorten the process that led to intelligence being transmitted to the police.

In 2018, the FIAU sent 45 reports to the police, but none of these reports led to a prosecution.

Asked about the low rate of prosecutions, FIAU director Kenneth Farrugia said the unit would be focusing on improving its own processes.

He said Moneyval had commended the FIAU’s independence and confirmed that no internal draft reports had been covered up.

The leaked report in question had found how according to an e-mail sent by their financial advisors,  the Prime Minister’s chief of staff Keith Schembri and Tourism Minister Konrad Mizzi had planned to receive up to $2 million in deposits from 17 Black, a company later revealed to be owned by power station investor Yorgen Fenech.

Mr Farrugia said the FIAU analytical section, which transmits intelligence to the police, would soon be staffed by 19 people, up from just 5 in 2017.

According to a restructuring plan agreed with the government, the FIAU’s staff complement will more than double from current levels.

The FIAU has said that 90% of Moneyval’s recommendations aimed at bolstering its supervision had already been fully implemented as part of an action plan drawn up with the European Banking Authority (EBA).

Last year, the EBA concluded that the FIAU had breached EU law in 2016 during its oversight of the now-defunct Pilatus Bank.

By Jacob Borg, The Times of Malta, 14 September 2019

Read more at The Times of Malta

Photo: Frank Vincentz [CC BY-SA 3.0], via Wikimedia Commons

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