Commission requests #Malta #MoneyLaundering watchdog to step up supervision of banks

| November 12, 2018

The European Commission has adopted an opinion requiring the Maltese anti-money laundering supervisor (Financial Intelligence Analysis Unit) to continue taking additional measures to fully comply with its obligations under the fourth Anti-Money Laundering Directive.

Following the Commission’s request, the European Banking Authority (EBA) investigated and concluded that Malta’s Financial Intelligence Analysis Unit (FIAU) was breaching Union law and issued a Recommendation on 11 July 2018. It considered that Malta failed to correctly supervise financial institutions and ensure their compliance with anti-money laundering rules.

Building on the recommendation of European Banking Authority and acknowledging the measures adopted by Malta to address the identified shortcomings in the meantime, the European Commission has adopted a formal opinion on the basis of the EBA regulation. The opinion requires the Maltese anti-money laundering supervisor (Financial Intelligence Analysis Unit) to take additional measures to fully comply with its obligation under the fourth Anti-Money Laundering Directive to effectively supervise financial institutions on its territory, including by having an effective sanctioning regime.

First Vice President Frans Timmermans said: “To protect the security of Europeans and ensure a safe, reliable financial system, every authority in every member state must uphold EU money-laundering rules in full. We remain vigilant and ready to act so that any breach is swiftly remedied and that better supervisory practice ensures it does not happen again.”

Financial Stability, Financial Services and Capital Markets Union Commission Vice President Valdis Dombrovskis said: “We need to ensure that money laundering and terrorist financing risks in the financial sector are properly assessed and mitigated by our supervisory authorities. The European Banking Authority contributes to a harmonized application of anti-money laundering supervisory rules. Our September proposal will equip the EBA with the additional instruments and resources needed to ensure effective co-operation and convergence of supervisory standards. I count on the European Parliament and Council’s co-operation to turn this proposal into legislation rapidly.”

Justice, Gender Equality and Consumers Commmissioner Vera Jourová added: “Europe has the strongest anti-money laundering rules in the world. But they need to be enforced with the same high standards across the EU to avoid creating any weak link. Malta and other countries must have well equipped authorities and fully implemented rules in place. The Commission will use all its powers, including infringement procedures, to close any loopholes in the fight against money laundering.”

More concretely, the European Commission calls upon Malta’s Financial Intelligence Analysis Unit to take a number of measures, which include:

  •          Improving its methodology to assess money laundering and terrorist financing risks;
  •          enhancing its monitoring and supervisory strategy by aligning resources with the risk of money laundering posed by certain institutions;
  •          ensuring that the authority is able to react in an appropriate time when a weakness is identified, including by revising its sanctioning procedures;
  •          ensuring that its decision-making is properly reasoned and documented, and;
  •         adopting systematic and detailed record-keeping processes for offsite inspections.

Improving implementation of EU anti-money laundering rules across the EU

The fight against money-laundering and terrorist financing is a priority for the Juncker Commission. The Commission is using all tools at its disposal to make sure that the high European standards are applied in practice across the EU.

In this case, the Commission used for the first time its power to request the European Banking Authority to investigate potential breaches of Union law by an authority of a member state. The Commission has since also requested the European Banking Authority to conduct an enquiry on the competent authorities in Latvia, Denmark and Estonia, where recent cases have raised concerns about the effective enforcement of the anti-money laundering rules by national authorities. The European Banking Authority plays an important role in promoting convergence of supervisory practices to ensure a harmonized application of anti-money laundering supervision rules.

In order to address the remaining gaps in the current legal framework at European level, the Commission adopted on 12 September 2018 a Communication and a proposal to further strengthen the EBA’s mandate to better address money laundering risks and to improve the cooperation and sharing of information between the supervisory authorities. This proposal needs to be adopted by the co-legislators as a priority.

The adoption of the fourth and the fifth Anti-Money Laundering Directives has considerably strengthened the EU regulatory framework, including rules on cooperation between anti-money laundering and prudential supervisors. The Commission is closely following the correct implementation of the 4th Anti-Money Laundering Directive including through infringement procedures where necessary. The Commission has opened, so far, infringement procedures for non-communication of transposition measures on the 4th Anti-Money Laundering Directive against 21 member states: three are currently at the stage of court referrals (Romania, Ireland and Luxembourg), with one on hold  (Greece), nine at the stage of Reasoned Opinions, and eight at the stage of Letters of Formal Notice.

Next steps

Malta’s Financial Intelligence Analysis Unit has ten working days upon receipt of the opinion to inform the Commission and the European Banking Authority of the measures it intends to take to comply with their obligations. This process under the EBA Regulation is separate from and without prejudice to the Commission’s prerogative of launching an infringement procedure against Malta.


The EBA Regulation (article 17 (4)) gives the European Commission the power to issue a formal opinion requiring the national authority, in charge of implementing anti-money laundering rules in the financial sector, to take action to fully comply with Union law, where it has failed to do so. The Commission’s formal opinion takes into account the EBA’s recommendation.

Under this procedure, the Commission had sent a letter to the European Banking Authority in October 2017, asking it to ensure that institutions responsible for supervision of the anti-money laundering framework established in Malta, satisfied the requirements of the EU Anti-Money Laundering legislation. The European Banking Authority carried out a preliminary investigation, including an onsite visit at the relevant Maltese institutions. On 11 July 2018, the EBA decided that the Maltese authority (FIAU) was indeed in breach of Union law and adopted a formal recommendation to the authority. It is the first time that the EBA issued a breach of Union law recommendation in the area of money-laundering.

More information 

Commission opinion addressed to the Financial Intelligence Analysis Unit of Malta

Anti-money laundering and counter terrorist financing

EBA Recommendation

Infringements against Member States on the implementation of the 4th Anti-Money Laundering Directive


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Category: A Frontpage, Crime, EU, Malta, Money laundering, Money-laundering

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