Malta`s Efforts to exit the FATF’s ‘Grey List`– the role of professionals.
Getting Malta out of the ‘Grey List` has been one of the priorities of the Malta Institute of Accountants (MIA) for the past months. In fact, the MIA (the “Institute”) had put forward recommendations, challenged viewpoints, and taken leadership in the development of new legislation and regulation on the subject, including on the enhancement of regulation of the profession, insisting on quality and accountability.
During a physical conference held on 7th December 2021, the Institute called for a timely exit from the ‘Grey List` of the Financial Action Task Force (FATF) but noted that this should not be at the cost of stifling business with “over-regulation and excessive bureaucracy”. In fact, the Institute has been listening to its members, whilst also working with different authorities and stakeholders. The MIA`s Anti-Money Laundering (AML) Committee has worked with the Financial Intelligence Analysis Unit (FIAU) on various aspects, including the drafting of the sector-specific Implementing Procedures Part II which are still to be released. Such guidance will provide sector-specific guidance to accountants and auditors in the field of anti-money laundering. Various training and discussion events have been organised together with the FIAU and the Malta Business Registry (MBR) to help support practitioners in relation to anti-money laundering obligations. The growth and success of the Maltese jurisdiction was the result of the collective effort of all stakeholders, with the Institute insisting that now again it is time for everyone to take the necessary, decisive action required from the respective ends.
During the Conference, presentations and panel discussions centred around beneficial ownership and tax evasion, these being the two key areas on which the FATF has pushed Malta for further action.
Key stakeholders involved in implementing the action plan agreed with the FATF noted that a change in mentality is already evident in the efforts demonstrated over the past few months. Nevertheless, focusing on their respective areas of concern, speakers emphasised the need for increased effectiveness.
The FATF has pushed Malta towards a more effective analysis of intelligence being gathered and the enhancement of investigative, supervisory and enforcement structures by competent authorities, together with the application of proportional sanctions.
While authorities noted satisfactorily the cooperation being shown by professionals and that certain tax advisors and accountants are reluctant to service certain clients, an emphasis was made on the need for professionals to be vigilant and provide the necessary information, including submission of high-quality Suspicious Transaction Reports. Professionals do not have to be convinced beyond reasonable doubt to submit reports - a reasonable suspicion is enough.Practitioners need to have the right knowledge and right definitions so that they carry out what is expected of them without going overboard. Professionals emphasised that all staff must be provided with the necessary training on what to look out for in terms of ‘red flags’ on money laundering. There should be tailor-made training on what is to be expected and what raises concerns.
Speakers noted that we must not only focus on cases where the predicate offence of tax evasion happens in Malta. Professionals need to undertake proper due diligence to determine whether money laundering is happening. One must move away from a tick-the-box approach and really understand the due diligence. Accountants and auditors do not need to be investigators, but they need to raise concerns. Industry professionals, as subject persons, have a responsibility towards society as gatekeepers.
Practitioners need also to be alert for any changes. Compliance is not a form filling exercise but an ongoing process. The business risk assessment must be updated on a frequent basis, while also making sure to follow the risk appetite of a business. It was acknowledged that if the risk does not justify the fees, then one should not accept the client. Practitioners must have clear communication and centralisation of the AML process. If there is inconsistency between information available and the customer profile, accountants and auditors must ask the right questions and obtain supporting documentation. If something remains too complex, illogical or unreasonable even after all the questions asked, then one must consider raising this further. Care must be taken and issues must be raised both at onboarding and at termination stage. Accountants themselves emphasised the need to adopt and foster a culture of ethics, integrity and professional scepticism. Business must be carried out with a duty of care, not for the money or the client, but for the accountancy profession and our country.
Experience shows that grey listing results in actions, domestic cooperation and increased awareness, while creating knowledge and experience. This MIA Conference confirmed that this is also being experienced in Malta.
This event was supported by Lexco Compliance Solutions, InScope and Konnekt, and brought together almost 200 professionals.