Issue link: https://maltatoday.uberflip.com/i/713415
5 maltatoday, WEDNESDAY, 10 AUGUST 2016 News 'Malta has to get serious' MEPs warn CONTINUES FROM PAGE 1 Until last week, and since 2008, Galdes served as FIAU director, after having previously held senior positions within the MFSA and with a professional firm, where he focused primarily on compli- ance and regulatory affairs. Minister Scicluna stated yes- terday that he had no knowl- edge as to whether the FIAU had completed its investigation of the Panama Papers leaks and in- sisted he had no remit to ask the unit who was being investigated or at what stage the investiga- tions were. But unconfirmed rumours have been circulating to the ef- fect that Galdes had handed his confidential report into the mat- ter to police commissioner Mi- chael Cassar in April. Maltese law stipulates that the police commissioner has the fi- nal say as to whether or not to prosecute in cases relating to money laundering, and to take action on reports by the FIAU. Cassar himself resigned his post soon after he is said to have received the report, and no po- lice action has as yet been an- nounced relating to the Panama Papers leaks. Speaking to MaltaToday at the weekend, opposition leader Si- mon Busuttil said, "Did Galdes resign while the investigation was ongoing? If the investigation is ongoing, what were its conclu- sions? Is it true that an investiga- tion report had been handed to the police for further action, but just two days [later], the police commissioner resigned?" And this is where this whole Maltese saga has attracted the attention of the European Un- ion. The popular European news and commentary website, polit- ico.eu, on Monday reported that the alleged burying of the FIAU's report "has set alarm bells ring- ing among EU lawmakers wor- ried about Malta's ability to steer through new EU anti-money laundering legislation when it holds the rotating presidency of the EU's Council of Ministers in the first half of next year." Politico quoted German MEP Sven Giegold as saying this whole saga was "embarrass- ing" and that "we will raise this whole mess in the European Par- liament's special Panama Papers committee." "Malta has to get serious. It has to tidy up in order for the whole European financial infrastruc- ture to gain credibility," Giegold said. The EU parliament's commit- tee is likely to summon Schem- bri and Mizzi when it reconvenes after the summer break. Politico recounted how both men were named in April in the Panama Papers leaks of more than 11 million documents from the Panama-based law firm Mossack Fonseca. "According to the documents, only days after the Labour Party won the 2013 Maltese elections, the two men instructed law- yers to set up offshore trusts in New Zealand and companies in Panama. They then tried to set up accounts with eight different banks in tax havens across the world." After the EU parliament's summer break, it will start de- bating updates to the EU Anti- Money Laundering Directive. The negotiations will be started by Slovakia, which holds the EU presidency until the end of the year, but Malta will probably be at the helm in the final stages of the negotiations. A European Commission spokesperson told Politico that the idea behind the new rules was to improve transparen- cy. "We aim for a rapid adop- tion of the revision in order to strengthen transparency rules further and to close any poten- tial loopholes." It aims to do that by giving greater powers to national fi- nancial intelligence units such as the one formerly headed by Galdes, which look into tax avoidance and evasion, and force companies and trusts to disclose who are their ultimate "beneficial owners." The Maltese govern- ment would have to sign off on any new proposals made dur- ing the discussions with the European Parliament and Com- mission, but there were growing concerns about the country's reputation as a financial services hub, Politico reported. The chief executive of De- loitte in Malta, Malcolm Booker, told Politico that "any kind of disrup- tion in the sector for whatever reason is always an issue. [The financial ser- vices sector] wants a quiet, peaceful day, with business as usual. The more transparency, the more regulation, the bet- ter." Ana Gomes, a Portuguese MEP and vice-chair of the EU par- liament's Panama Papers com- mittee, told Politico: "Malta is definitely a case for particular atten- tion, not just because of a l l e g a t i o n s against the prime min- ister's chief of staff and the min- ister, and this latest d e v e l o p - ment with the Financial I n t e l l i g e n c e A na lysis Unit chief resigning, apparently because his recommendations were not followed, but also be- cause Malta is already on our radar. "Malta is one of the jurisdic- tions in the EU that has a very lax system of incorporation where it is very easy for anyone who wants to fool the anti mon- ey-laundering authorities, can set up a company like a Russian doll and can make ultimate ben- eficial owners hidden," said the Socialist MEP. Gomes said she would be pro- posing that Malta be high on the committee's agenda, "even more so with these developments". Alfred Zammit, the FIAU's acting director, confirmed to MaltaToday that the unit could not comment on its activities or any possible investigations it could be undertaking. Questions sent to the police force seeking confirmation as to whether the police commis- sioner had received a report from the FIAU on the Pana- ma Papers leaks, remained unanswered by the time this article went to print. What is the Financial Intelligence and Analysis Unit? THE FIAU is an agency falling under the ministry of finance, that was set up in October 2012 by virtue of the Legal Notice 297 of 2002, which brought into force comprehensive amendments to the Prevention of Money Laundering Act. The FIAU serves as Malta's FIU and is the entity designat- ed to fulfill the responsibilities of an FIU set out in the Eu- ropean Union's Third Money Laundering Directive (Direc- tive 2005/60/EC) and the FATF 40 Recommendations. The unit serves three main functions: financial analysis, compliance monitoring and le- gal and international relations. It is the unit's Compliance Monitoring Section that is tasked with the oversight and monitoring of compliance by subject persons (including fi- nancial institutions and desig- nated non-financial businesses and professions), based on the evolving internal procedures for on-site examinations and off-site monitoring. On-site as- sessments are either conduct- ed by the compliance officers or by the supervisory authori- ties concerned, who act on the FIAU's behalf. In either case the Unit retains responsibil- ity for preparing the relevant compliance reports, which in- clude a list of any remedial ac- tion deemed necessary. According to Article 16 of the act, the FIAU will "receive reports of transactions or ac- tivities suspected to involve money laundering or funding of terrorism or property that may have derived directly or indirectly from, or constitutes the proceeds of, criminal ac- tivity made by any subject per- son in pursuance of any regula- tion made under article 12, to supplement such reports with such additional information as may be available to it or as it may demand, to analyse the report together with such addi- tional information and to draw up an analytical report on the result of such analysis." The FIAU has unlimited ac- cess to personal and corporate data of any subjects under in- vestigation, and can call on other authorities and entities to ensure that its requests are carried out. It does not, however, have any authority to prosecute the sub- jects it investigates and must pass on its reports to the police commissioner for further ac- tion. The law states, in fact, that the unit must "report to the Commissioner of Police any activity which it suspects in- volves money laundering or the underlying criminal activ- ity, or funding of terrorism and of which it may become aware in the course of the discharge of any of its functions." German MEP Sven Giegold Portugese MEP Ana Gomes Manfred Galdes