EU tells Malta to up its AML game

News outlet Malta Today reports that the EU has informed Malta’s government that it needs stronger anti-money laundering enforcement at the rate of growth of its services economy.

The Commission, in its recommendations to member states for the use of EU funds, said that the size of Malta’s financial and gaming sector, and the efforts to attract crypto-currency operators required an effective anti-money laundering enforcement.

The EU Commission document said: “The recent increase in the human and budgetary resources of the Financial Intelligence Analysis Unit as well as the enhancement of its procedures and processes are positive steps.

Governance shortcomings, particularly in the fight against corruption, may also adversely affect the business environment and weigh negatively on investment. In particular, there is a risk of conflict of interest at various levels of government.

Furthermore, the police’s Economic Crimes Unit is currently understaffed. In this context, it is important to couple a strengthened legislative framework with timely and thorough implementation.”

It has also asked Malta to look at its tax system, which it said may facilitate aggressive tax planning, which is bureaucrat speak for tax avoidance. The Commission said, “Malta has taken measures against aggressive tax planning, but the high level of royalty and dividend payments as a percentage of GDP suggests that Malta’s tax rules are used by companies that engage in aggressive tax planning.” It added, “The absence of withholding taxes on outbound, that is from EU residents to third country residents, dividends, interest and royalty payments made by Malta-based companies may lead to those payments avoiding tax altogether, if they are also not subject to tax in the recipient country.”

It went on to comment on Malta’s sale of citizenship through the Individual Investor Programme and Malta Residence and Visa Programme, claiming, “They may facilitate aggressive tax planning practices and have been listed by the OECD as having a potentially high risk for being misused to circumvent the automatic exchange of financial accounts.”

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