With a crucial MoneyVal test looming, which could see Malta become a blacklisted country, the nation has just received another damning indictment of its commitment to fight financial crime.
A lack of action on implementing recommendations has seen the Organisation for Economic Co-operation and Development (OECD) downgrade Malta as “partially compliant” on tax transparency.
Back in 2013, Malta’s government was warned that it did not have the legal and regulatory framework in place to ensure access to information on the legal ownership, accounting, and banking of the relevant entities.
Yet seven years later, Malta still “has not taken sufficient measures to appropriately and fully address” the issue.
“The annual filing rates of companies and partnerships and the tax filing rates of taxpayers in Malta are very low, and no sufficient enforcement measures have been taken by the Maltese authorities to address those issues,” the OECD.
This issue plagues a wealth of companies, both big and small, in the country. Malta’s political parties also fail to fall in line, with the media arms of both the PN and Labour Party last filing accounts more than a decade ago.
Another critical issue is a large number of inactive companies on Malta’s Business Registry. There are over 12,000 inactive companies registered with the tax authorities, which the OECD says raises concerns over the lack of information.
What’s clear is that Maltese authorities tried to bury their head in the sand over the concerns. The report clearly states that the authorities involved, namely the MFSA, failed to respond to requests in a timely manner and failed to provide a regular update to whether it was implementing recommendations.
The report is a warning sign for Malta, which has been on the receiving end of global criticism over its commitment to fight money laundering and major financial crime.
Malta failed its first MoneyVal test last year. And while COVID-19 pushed back a potentially devastating second test to next year, there are few guarantees that Malta won’t be blacklisted and face economic ruin.
At a time when major corruption allegations in the highest levels of government gather steam, Malta is expected to prove the world it is finally committed to tackling the ever-present issue.
Changes to the Economic Crimes Unit have been implemented, but more is needed to show whether the nation means business… major arrests could be the place to start.
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