If you were wondering why our last article Malta's former Prime Minister and his Free Zone Money Laundering Scheme is timely, given that Joseph Miscat's statements about his efforts to set up a Free Zone in Malta are several months old, think again. The New Year has brought about a major change in the laws regulating the Fine Art industry in the United Kingdom, and Mr .Muscat and his crew appear to be seeking to profit handsomely by the perceived misfortunes of certain individuals who do not want British authorities to know what museum-quality art hangs on the walls of their London mansions. By that we mean the tax man, the enforcers of the Unexplained Wealth laws, and anti-corruption investigators.
On January 10, 2020 all "participants" who do business in the UK art market become regulated. They will be required to institute the same Due Diligence and compliance checks as banks and other regulated professions. They will be reporting cash transactions that exceed £10,000. Violators face criminal charges and could be sentenced to a term of imprisonment or be required to pay fines. The art firms must even appoint an MLRO*, to supervise the program, who will be responsible for compliance with the law.
Imagine that you are an art dealer who sells Old Masters to dodgy Russian Oligarchs and reputed organized crime kingpins living in London. You will want to assist your client to move their art laundering instruments, their million dollar paintings, to a safe haven. Imagine also that you may be both in the UK and Malta art scene; there are a few such individuals, and they are all involved in the Free Zone project.
That is where Joseph Muscat, Chris Cardona and their Merry Band of Men come in. They set up the Malta Airport Free Zone, pass laws that exempt inbound art destined for the Free Zone warehouse from the requirements of the Cultural Heritage Act, and accept the lucrative business resulting therefrom. Art whose provenance is questionable, will flow into the new Free Zone, where it will remain sealed and safe from the prying eyes of international law enforcement investigators.
Did we mention that Malta stands alone as an EU state that is NOT a signatory to the 1970 UNESCO Convention on the illicit Import, Export and Transfer of Ownership of Cultural Property. This means that there is no EU barrier to the operation of a Free Zone in Malta. We note that the world's Free Zones of note are located outside the EU, in Switzerland, all over Asia, and the UAE.
Watch these developments in 2021:
(1) Malta's Parliament enacting a Free Zone law, complete with the creation of exceptions to both the Cultural Heritage Act and Customs law for the art being imported from abroad.
(2) Some sort of consulting relationship with known figures in the Free Zone industry.
(3) A lead role for Joseph Muscat and Chris Cardona in the Malta Free Zone.
Question: does Malta really want to become known as the depository of the world's fugitive art assets ? This will eventually attract creditors' lawyers seeking to test the validity of Malta's laws, and foreign prosecutors with seizure and forfeiture claims. Wake up, Malta, before Muscat sells your Parliament a bill of goods and walks away with a fortune in fees, leaving Malta with the resulting problems.
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* MLRO: Money Laundering Reporting Officer.
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