Issue link: https://maltatoday.uberflip.com/i/1376560
maltatoday | SUNDAY • 23 MAY 2021 13 FIAU A SPECIAL REPORT STRs are the lifeblood of any financial intelligence unit, and there is a higher, more noble purpose to reporting that suspicion. Since the Panama Papers, 'money laun- dering' has entered the common ver- nacular. How have you seen awareness rise amongst the people out there and amongst subject persons out there who you are targeting with your activities? The Panama Papers is just one of many international money laundering scandals but this particular scandal per- haps brought the more abstract con- cept of money laundering to life among the general public, not just in Mal- ta but around the world. The topic of anti-money laundering has rapidly be- come a point of interest internationally, and is being given much more priority at a policy level among international or- ganisations. I think the allegations of local involve- ment within the Panama Papers defi- nitely sparked an interest in Malta, and we suddenly started seeing the topic of money laundering in the local news. For the entities that we regulate, the Panama Papers may have hit closer to home, as it became more evident that Malta is not as immune to money laun- dering as may have been thought. The regulations aren't new, however, and subject persons have long been re- quired to comply with AML/CFT pro- cedures and experience FIAU supervi- sion, and have long been aware of their obligations and risks. This is not the re- sult of international scandals. We have observed a remarkable improvement in awareness - there has been a culture shift as we moved towards a culture of compliance, and this is attributed to several factors, one of them being the increase in the resources dedicated to more comprehensive risk-based super- vision, guidance, and outreach, more dissuasive penalties, and more visibility of the FIAU's enforcement actions. In Malta, much is said about the fight against money laundering but how af- fected are we by the spectre of terrorism financing? The risk of terrorism financing is dis- tinct from the risk of the terror attacks themselves. Every country is at risk of terrorism financing in one way or an- other and no country is immune. While generally speaking there may not be a high risk of terror activities taking place, it doesn't mean that we are not at risk of having our financial ser- vices sector and our voluntary organi- sations misused to move funds. Malta is considered to be a small international financial centre because of the size of its financial services industry. Typical- ly, with financial centres around the world the risk is more about having the financial system misused to move and conceal funds intended to support ter- ror organizations, rather than that of having entities raising funds in Malta or conducting attacks on the country's soil. Understanding these risks and how they manifest themselves when pro- viding a given service is crucial to pre- venting misuse for terror financing pur- poses. To enhance knowledge on the funding of terrorism as distinct from money laundering, the FIAU published a comprehensive Guidance Document on the Funding of Terrorism, indicating the types of risks that one may be ex- posed to in Malta, the risk assessments conducted on a national level, and also on the different typologies explaining how terror financing can take place, by providing examples of local and inter- national cases of terrorism financing. This helps drive the message that ter- ror financing is a concern that entities need to be ale to detect. Through this guidance document and the training we subsequently provided, we sought to ensure that obliged entities are in a much better position to detect the nuances of terrorism financing as opposed to those of money laundering. There has been a 200% increase in STRs according to the FIAU's last annual re- port. What has this been attributable to? The increase in STRs is a trend that has been positively noted each year for quite a number of years. Part of this is a result of more targeted guidance and outreach activities, because by provid- ing sector specific risk factors, red flags and cases studies, entities become bet- ter at detecting the type of activity that needs to be reported. However, there are certainly other factors that have contributed. One, for instance, is the increase in resources dedicated to supervision, where we are looking at entities' ongoing monitoring processes and their transaction screen- ing systems. Another is the increase in enforcement actions and the publica- tion of penalties. All of this has served to drive home the message that compliance is critical, that activity needs to be monitored and scrutinized, and that reports must be submitted in cases of suspicion. These results clearly show that Malta has become better at preventing and detecting suspicions of money launder- ing and our goal is to ensure that both the quantity and quality of reports con- tinue to improve year in year out.