Combating financial crime

Finance Minister John Dalli addresses Monday’s seminar organised by the Financial Intelligence Unit on ‘The role and responsibilities of financial intelligence units in combating money laundering’. Dalli highlights the multilateral steps taken by the government to fight financial crime and in halting the financing of international terrorism

The commitment of my Government to combating money laundering is not something that has come along with the recent setting up of the Financial Intelligence Analysis Unit. When the Government first legislated for Malta to become an international business centre in 1988, the law at the time already laid down a number of anti-money laundering provisions. The extensive review of the financial legislation in 1994, however, acknowledged the need for specific anti-money laundering legislation to safeguard the integrity of the system. Complemented by other legislation, such as the Insider Dealing Act and the Professional Secrecy Act, the Prevention of Money Laundering Act and the subsequent Prevention of Money Laundering Regulations created the platform to ensure the credibility of Malta as a financial centre.

Since then we have made huge steps forward. The Central Bank, the MFSA, the Attorney General’s Office and the Malta Police have coordinated their hard work to put in place the necessary structures and to device the procedures to ensure the effective and efficient implementation of the legislation. While the financial sector institutions have set up the necessary internal procedures to train their staff identify suspicious transactions and report accordingly, the Authorities have set up their procedures to analyse and investigate suspicious transactions.

Indeed, the legislation has been periodically reviewed to ensure that the statutory framework contains the necessary legal basis and provides the necessary support for the authorities to implement current international standards in combating money laundering. This is important if we want to preserve the perception on our reputation as a credible financial centre.

The effort to strengthen the legal framework has continued unabated with recent extensive amendments to the criminal laws introducing a number of new criminal offences which will reinforce the present list of predicate offences of the money laundering offence and for the first time introducing into our legal system direct corporate criminal liability for a number of criminal offences including the offence of money laundering. This will in turn enable the confiscation of illicit assets of legal persons and in this way deprive them of any unlawful benefit that they may have derived from criminal activity.

We have also made another major step forward and set up the Financial Intelligence Analysis Unit. I know that in the course of this seminar you will be hearing a lot about the Unit and I therefore leave it up to the speakers to talk about this.

My Government’s commitment to fight money laundering is not only limited to the financial sector and the domestic markets. We have already extended the Prevention of Money Laundering Regulations to Casinos through the Gamings Act Regulations. The Government intends to extend these obligations to other areas and professions that can be used by money launderers as a vehicle to launder money.

I know that the FIAU is currently preparing proposals for the Government to extend the Regulations to the legal profession, estate agents, accountants and auditors and other sectors. Of course, the extension of anti-money laundering regulations to these areas will respect the professional ethics in the respective professions.

Another measure which I have already announced and the legal basis for which will soon be in place is that which will require the declaration at the border of any cross-border import or export of cash or other valuables. This will enable the authorities to keep better track of such movements and to build a more complete picture of what is happening in the country which could have a bearing on any potential money laundering activities.

The Government has also been very active on the international scene. As I am sure you all agree, the fight against money laundering and, with the September 11 events, the combating of the financing of terrorism, can only be effectively and efficiently done on a global front.

A number of international conventions on anti-money laundering and the combating of terrorism have been signed and ratified by the Government of Malta. These enable the authorities to assist and exchange information with other countries. Indeed, following the September 11th events, the Government of Malta co-operated fully with the foreign authorities in tracing funds that could have been possibly channelled through the local system to finance such a terrorist act.

I again thank the Central Bank and the MFSA for the extensive work done with the financial institutions, whom I also thank, for their co-operation, in examining past records to trace terrorist funds. The results have confirmed the resilience and soundness of the integrity of our financial system. The fact that no funds tainted with terrorism have in fact been traced does not diminish the value of the tremendous effort that was made and continues to be made so that no avenue is left unexplored to ensure that our financial system does not serve as a refuge for terrorist financing.

The assessment or evaluation of the extent to which countries comply with international standards designed to create the global network in the fight against money laundering and the combating of the financing of terrorism has recently acquired increased importance. It is indeed considered as the passport for the ability of a country’s financial system to unquestionably continue to operate in the international markets.

In this regard, Malta participates very actively in the Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures, better known as Moneyval or PC-R-EV. The main terms of reference of the Committee are indeed to mutually evaluate member states on their anti money laundering regimes in compliance with international standards.

I congratulate Dr Silvio Camilleri for being unanimously re-elected for a second term as Chairman of the Committee. I know that the Malta Delegation is very active in this Committee and that members of the Delegation have individually participated in about 14 mutual evaluations of other member states. This confirms the commitment and expertise that Malta has and can produce. It also shows unequivocally that Malta albeit being a small country can experience a relevant role in the development and monitoring of international regulation.

Malta itself has been evaluated twice by this Committee – once in 1998 and again in 2002. The first Report was positive with certain recommendations such as the setting-up of the FIU. I understand the 2002 Report is due to be discussed by the Committee this year. I can confirm that the Maltese authorities, including myself, keenly await the reports of the Committee since the observations and recommendations made in these reports provide invaluable insights into the workings of the anti-money laundering system as a whole and on the measures required to counter any weaknesses that might be identified.

Apart from these evaluations and other self-assessments, Malta has also been evaluated by other international organisations on its anti-money laundering regime. These include the FATF in its non-co-operative countries (NCCT) exercise, the IMF and the World Bank under the new methodology in terms of the current FSAP assessment, and the United Nations. I am glad to state that in all instances Malta had positive reports.

With the setting up of the Financial Intelligence Analysis Unit, Malta will participate and contribute further in the global fight against money laundering and the combating of the financing of terrorism. I know that the Financial Intelligence Analysis Unit has already applied for membership in the Egmont Group of Financial Intelligence Units. I understand that Malta’s application has already been accepted in principle and will be officially endorsed in the forthcoming meeting of the Egmont Group in July this year.

In conclusion I reiterate my Government’s continued commitment to the fight against money laundering and the combating of the financing of terrorism. This commitment carries with it my Government’s full support to all of you who are involved in ensuring the integrity and the credibility of the country in developing itself as a financial centre of excellent repute.