* European Parliament to vote on rule of law in Malta
* Malta is home to big financial and gambling industries
* Malta records low number of dubious transactions
* Sanctioned companies are rarely exposed publicly
By Francesco Guarascio
BRUSSELS, Nov 14 (Reuters) - The European Union has called
very publicly for Malta to bring to justice the killers of a
journalist who accused the Mediterranean island's leaders of
profiting from global corruption.
But it has for years been much less vocal -- and had little
success -- in ensuring Malta act to prevent money laundering,
according to sources familiar with the work of the Maltese
authorities and a Reuters review of EU and Maltese data.
The data show the smallest EU state has been slow to apply
international guidelines on naming firms that do not take action
against dubious practices, and the number of convictions and
sanctions for money laundering has been low.
Malta has also consistently registered fewer reports of
"suspect transactions" from banks, casinos and other financial
operators than any other EU state, according to the data,
despite having a disproportionately large financial sector.
The European Parliament on Tuesday debated the rule of law
in Malta, and will vote on Wednesday on a resolution that says
"several serious allegations of corruption and breach of
anti-money laundering" obligations were not investigated by the
But criticism of Malta on money laundering -- in low-key
reports by international supervisory bodies and by
anti-corruption campaigner Daphne Caruana Galizia, killed by a
car bomb on Oct. 16 -- appears so far to have had little impact.
"Malta has sold its sovereignty to dirty money. The European
Commission should take a more active role in investigating the
condition of rule of law in Malta," Sven Giegold, a member of
European Parliament from Germany's Greens party who campaigns
against financial crime, told Reuters.
He said an international investigator was needed to counter
a "culture of impunity and fiddling between political and
economic elites" in Malta.
Prime Minister Joseph Muscat told Reuters last month Malta's
financial services sector was "as transparent, solid and
compliant as any other European jurisdiction".
European Commission Vice President Frans Timmermans told
lawmakers on Tuesday the EU executive had "no general concerns"
about Malta's compliance with anti-money laundering laws though
"improvements could be made on various levels."
Despite having a population of only 420,000, Malta, a former
British naval stronghold south of Sicily, has a financial sector
that dwarfs many EU countries. It is also the European leader in
In 2016, assets of banks and financial institutions in Malta
were more than 20 times its gross domestic product, about five
times the equivalent figure for Germany and nearly four times
the euro zone average, European Central Bank figures show.
Yet in a report on the EU's anti-money laundering efforts
that was released without fanfare in September, Europol said
Malta reported fewer suspect transactions than other EU states
between 2008, when it adopted the euro, and 2014.
Europol also raised concerns that Malta and Cyprus may be
failing to report as many cases as they should.
The supervisory authorities "receive very few reports given
the size of their banking sectors and the significance of these
jurisdictions in offshore financial services," Europol said.
Malta's Financial Intelligence Analysis Unit (FIAU), the
country's anti-money laundering agency, received 202 reports of
suspect transactions in 2014, the last year for which Europol
data are available.
Lithuania recorded the next fewest -- over 50 percent more
than Malta in a financial sector one sixth the size. By
contrast, the Netherlands, a much bigger economy, reported
277,532 dubious movements in 2014, the highest number in the
FIAU's deputy director, Alfred Zammit, told Reuters it was
impossible to conduct a "meaningful comparison" among EU
countries based on available statistics because of different
structures and reporting regimes in member states.
"It is indeed arguable that given the size of the financial
sector in Malta, one would expect to see more suspicious
transaction reports submitted to the FIAU," Zammit said. But he
said Malta was tackling the problem by increasing awareness of
the obligation to report by organising training sessions.
The annual number of reports in Malta more than doubled
from 2014 to 2017 although the proportion of those that were
passed to the police fell to 11 percent last year from 24
percent in 2013, FIAU data show.
The Maltese police and the FIAU did not respond to questions
from Reuters on how many of these cases were investigated or led
to successful prosecutions.
Malta's court handed down four money laundering criminal
convictions last year but disclosed none in the financial
The results of a European Parliament inquiry released this
month said the number of convictions was "extremely low" and the
institutions implementing and enforcing rules on money
laundering were "highly politicized".
Banks not complying with money-laundering rules have
received small fines which in few cases were made public,
contrary to guidelines recommending exposure to deter
Zammit said the public disclosure of a higher number of
sanctioned institutions would have been "disproportionate when
compared to the nature of the breach".
Moneyval, the anti-money laundering watchdog of the Council
of Europe, Europe's leading human rights organisation, has also
raised concerns. It said in a 2012 report that Malta's reporting
of suspicious transactions was low for the size of its market.
In a subsequent report in 2015, Moneyval found the country
"largely compliant". A Moneyval spokesman told Reuters the
latest report was however not based on a full assessment of the
Maltese legal framework.
(Editing by Alastair Macdonald and Timothy Heritage)
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