Issue link: https://maltatoday.uberflip.com/i/1006805
16 maltatoday | SUNDAY • 22 JULY 2018 INTERVIEW In an article on Friday, you wrote that international crime "can be effectively fought by discouraging the conduit of the financial proceeds of crime through financial institutions." Yet the EBA's report concluded, inter alia, that this is precisely what did not happen with regard to Pilatus Bank. Doesn't this also mean that Malta is not effectively fighting money- laundering? First of all, the fight against money-laundering came into its own in the late 1980s/early 1990s [...] and the intention was that you can fight international crime by suffocating the conduit; [cut- ting off] the oxygen to these very successful criminal companies, if you could call them that. [...] So yes that was the purpose. If you manage to interrupt the financial transactions, you will manage to fight international crime. AML is important because it is there to deter real crime... But the EBA concluded that we are in breach of the Money Laundering Directive for failing to do all that.... For me, you're rushing a bit. [...] We need to put this into context. [...] In 2013, the FIAU was a very small unit [which] had six or sev- en people; it had a small budget of 330,000. That's how serious we were with the FIAU until 2013. Today there are 42 people, and counting; and from a budget of 330, is being raised to just un- der 4 million. Its resources must have been increased for a reason. In other words, the demands on the FIAU: the exchange of in- formation with other countries; requests from the FBI, German police, and so on... were there. They had a plan, they were mov- ing... until this Pilatus thing came and turned political... It turned political for a reason... ... so my point of departure is that I am very familiar with these institutions, and even with the people: some of whom I trained myself at University. I know they are upright, hard-working people... at the MFSA, at the Central Bank, and the FIAU. So when you start attacking the FIAU... that's why I'm defending the FIAU, for this reason. I don't want to get involved with indi- vidual cases which are (being in- vestigated by] magistrates; but to picture the FIAU in those dismal and unfortunate colours: as cor- rupt, or turning [a blind eye], or being influenced by myself or the prime minister... it's outrageous. You say it's outrageous, but it is the EBA that painted the FIAU in those colours. Yet your response, to date, has been that European institutions are all being influenced by one MEP – David Casa. Isn't that a bit unrealistic? In my position – I have worked with EU institutions; I was an MEP, and am now on the Coun- cil... I am very familiar with these institutions. I have great respect for them; including the EBA. It was set up when I was an MEP, in 2009 [...] It doesn't have the powers that the European Bank- ing Union has; but it's there, and I respect it. I know the chairman; I've dined with him... so it's not as though I have an axe to grind with them... You make it sound like they have an axe to grind with us... What I mean is, I am experi- enced enough to know that there is such a thing as European poli- tics; and sometimes, it favours small countries; sometimes in doesn't. The fact that I could speak in the EP coming from such a small country... that is the advantage. I am around the ECOFIN table today, and I take up one seat; just like my German neighbour. That's an advantage. However, we know that, with influence and pressures, they ar- range things, and so on. There are such things as 'pressures'... So you're suggesting that the whole EBA report was solely motivated by a political agenda against your government? It's not inside information; it's all public. [...] Perhaps what we are not aware of is that money laundering, so far, remains a matter of competence for the member states. [...] Recently – especially after Panama, there have been more concerns on AML, so they are pushing – just like they are pushing for tax har- monisation – for any of the ex- isting institutions to take respon- sibility for it. And there aren't any institutions [which can take responsibility]... so they started with the [Single Supervisory Mechanism]. They summoned [chairperson Daniele] Nouy to appear before the ECON com- mittee, and asked: 'why are you not doing anything about anti- money laundering'? They tried to embarrass her, by saying that the only two cases we can talk about came from the USA. They mentioned Latvia, in which case the intelligence apparently came from the US; and they also threw in Malta, which had nothing to do with Latvia at all, in terms of the nature of AML. So far, we haven't got a case of AML which compares to Latvia; what we have is about procedure... But it could be argued that we haven't had a case, precisely because the FIAU did not do its job properly... But I have to continue the sto- ry. If you want to edit it, edit it. They said to Nouy, 'look: you're not doing your job'. So she tried; she got some consultants to carry out an assessment of AML. Then the Germans and others said: 'Whoah. Buzz off. This is not your remit; your remit is banking supervision, which is important enough. Give AML to any other institution, but not the Single Supervisor'. [...] Then, they put pressure on the Commission by sending for Commissioner Jourova, and telling her: 'you're not doing enough with Malta'... and this and that... and all the stories that were published in the local papers were presented to her, and she didn't have, how can I put it, a credible answer. So she promised that she would come to Malta; which indeed she did... and also that, because of that grilling, that she would write to the EBA to at least do some- thing, by visiting Malta. That's the story. Not really; that's just the background. Your story doesn't address the findings of the EBA. Now: the EBA... how well-re- sourced is it to look into AML? The answer is: almost zero. Po- litico reported that they have just two people... So you're contesting their findings? No, I'm just saying that this is the reality: the EBA was not set up for AML. They are being pressed by the Commission to do something in the AML field, and they have – according to Po- litico – only two persons to cope with 28 member states. At the same time, I'm not saying that the FIAU were perfect... But it seems they were very Facing resignation calls after the European Banking Authority found serious shortcomings in Malta's anti-money laundering setup, Finance Minister EDWARD SCICLUNA insists that these f laws were 'created in Malta' and 'exported' to European institutions 'We need to put this into context' Raphael Vassallo rvassallo@mediatoday.com.mt To picture the FIAU in those dismal and unfortunate colours: as corrupt, or turning [a blind eye], or being inf luenced by myself or the prime minister... it's outrageous