After the debacle caused by lack of oversight which caused Malta to be placed on the FATF grey list a lot of backpedalling has had to take place.
It is apparent that in the last six months, after having managed to persuade the members of the FATF that our laws have begun to be applied, we have seen several banks and financial services companies being fined for breaches of money laundering regulations. Gaming or gambling companies used by the mafia and other crooks to function as launderettes for dirty money have had their licences revoked.
This is undoubtedly good since the reputation of a handful of serious financial advisers had been tainted by most corporations set up in Malta during the last 30 years. These had been simply using Malta as a tax haven and a place to launder illicit gains or undeclared income like the blood diamonds of Angola or the Azerbaijanis and Maltese well-known politicians, including one whose name was so revered that he could not be mentioned in an email but had to be identified through a Skype call.
Moreover, when evidence was unearthed in a safe in a room which had no eavesdropping camera at a now-defunct bank, other papers were whisked away at night on a private plane leaving Malta without passengers towards Azerbaijan. The person who found it has been hunted away and the person who told us about it has been killed. A magistrate was asked to show that the evidence was not properly signed, which he did. He was whisked away to higher levels being made a judge.
This was Malta before the grey list. It was obvious to the outside world, whose assets we were helping to hide away and cause to vanish, that this was the policy of our own governments of both political colours over many years. The FIAU was made to be a toothless tiger and the MFSA was instructing its regulators to not only to look away but to advise how to avoid or bypass the regulations. Crooks, both foreign and local, soon understood that this tax haven within the EU could not be blacklisted by the EU itself because the European Council of heads of state and prime ministers had a blood pact among themselves of not criticising each other. This brotherhood of back patters and cowards would only act when one of their peers went too far.
Poland and Hungary are two examples and Malta in its money laundering was another, thus the grey listing.
The actual money laundering itself is not done by the persons wanting to hide illegal or tax avoidance cash. It is done by several local technicians. In a washing machine the housewife or the laundry employee do not do the washing and cleaning themselves. They bring the dirty clothes, place them in the washing machine, add the soap suds and softener and then press the start button. The engine inside the machine and the chips in the keyboard of the machine do the rest.
Similarly, our money laundering run by the “Financial Services Sector” is the invisible motor in the washing machine. The chips are the lead lawyers, tax consultants, auditors and bankers who perform the tasks of setting up letter box companies in boxes within boxes so that it would be difficult to discover who are the real owners of the money.
The actual machine with all the nuts and bolts is the clerks, secretaries, and young innocent graduates who man these businesses. The top-notch owners and managers get very rich because the cleaner who washes clothes inserts washing powder, being the fees of these offices on which VAT is paid and which are declared as lawful income of an essential export service. The softener added by the money launderer are the bribes, back hand payments whether in brown envelopes or through investments in the political election districts of ministers who help by prodding the hierarchy of the FIAU and MFSA to close their eyes or to look elsewhere.
Foreign finance ministries and journalists had been investigating Malta for quite some time before grey listing and then they struck. Once in the grey zone we had to save the goose that had been laying many golden eggs in the wrong pockets. Hence the increased fines.
What bothers me, but for which I have not yet an answer, is why once a financial firm, bank, gambling company, or wealth management firm is fined for money laundering there is obviously a money laundering act or similar acts. One act can be considered a mistake and deserves a reprimand. A second or third failure calls for a yellow card from the FIAU but a continued failure or a conscious activity of money laundering over time calls for a fine.
So now that we have quite hefty fines there must have been many money laundering actions in Malta.
So, physical persons brought the clothes and placed them in the laundry baskets. They paid their fees when inserting the soap suds and bribed the politicians and officials when they added the softener and pressed the start.
Several chips running local law firms set up the corporate net for the launderer to work through. Accountants and tax advisers provided the scheme and the geography best suited for the benefit of the launderer and many cogs in the machinery who sent the money east- and west-wards to hide it in the boxes set up by the lawyers as advised by the tax consultants and wealth management experts.
Yet we have never seen any names of these people. No one has been sued, found guilty and put in jail. They are never mentioned as though the mafia in Calabria or Sicily alone, without any local support and help, could pass over 4 billion euro through our rotten system. Everyone is as white as snow in their multimillion villas in Sicily or in Iklin, Wardija, Portomaso, or Tigné Point and Gżira Seafront, or in their yachts in Malta or Ragusa.
If these are allowed to continue to enjoy the culture of impunity established by Muscat and continued by Abela it will only be a matter of time before we fall back into another grey zone.