Monday, April 13, 2020


Malta's status as a low-risk, safe EU financial center may soon be a thing of the past; Pilatus Bank,  Satabank, the Panama Papers corruption, the conviction of Ali Sadr Hasheminejad in an American court, regulatory agency issues, the list goes on and on. Will Malta's banks lose all their US correspondent relationships, and will Malta be named on the "Grey List," which indicates a high-risk jurisdiction that does little or nothing to clean up its money laundering acts ?

Here are the issues:

(1) Malta is caught between the proverbial rock & a hard place; if it fails to be seen by regulatory agencies as having duly upgraded its AML/CFT regime, it will hit the dreaded Grey List of non-cooperative jurisdictions. That will certainly result in the loss of many, if not all, of its US bank correspondent relationships, which are necessary to compete in today's global financial structure. Expect Canadian and EU banks dealing with Malta's banks to also take a hard look at risk levels at that time.

(2) Representatives of the US Government, who reportedly have been in close contact with Maltese leaders, can offer valuable assistance in upgrading local programs, policies procedures and laws, to satisfy regulators BUT they are said to have required joint operations with Malta as the cost of such assistance.

(3) Should Malta, which not only benefits from its political distance from the United States, thereby attracting clients from jurisdictions opposed to American foreign policy, and even adversaries, be even perceived as being pro-US, it could lose much of its Russian and Chinese bank clients. Note also that its radical pro-Palestinian policies, which endear it to potential Middle Eastern clients, are in direct conflict with US foreign policy goals.

Therefore, if Malta gets in bed with the United States, and is deemed to be pro-West, it stands to lose substantial bank business from the East; if it fails to accept American offers of assistance (which come with strings attached), it could drop hard into the Grey List, and lose important US correspondent banking relationships. There is no easy solution to Malta's dilemma, and the outcome seems bleak. will Malta become a financial backwater, deemed a rogue offshore financial center ? Stay tuned.

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