MALTA: AMERICA'S BIGGEST EUROPEAN MONEY LAUNDERING FOREIGN POLICY FAILURE

The Face of the Enemy

As the second year of the Biden Administration comes to an end, the world's compliance officers, who are charged with anti-money laundering responsibilities, continue to wonder what happened to the administration's promises to focus on suppressing transnational money laundering. With respect to the Republic of Malta, arguably the biggest money laundering Member of the European Union, other than two individuals losing the ability to enter the U.S, there has not been anyhow enforcement action taken by the Department of Justice against Maltese organized crime money laundering since January 20, 2021.

For all intents and purposes, Malta operates as a racketeering enterprise, controlled by the ruling Labour Party, in power since 2013, in coordination with Malta's own homegrown version of the Mafia. An offshore tax haven jurisdiction, complete with opaque corporate structures and a dodgy online gaming industry, the country is tightly controlled by its leaders. The Rule of Law is only applied by a corrupt judiciary when it favours those in power, who rule with impunity, unrestrained by the weak efforts of the European Union, European Commission, and European Central Bank.

Official corruption, and money laundering, reign supreme, notwithstanding that a substantial portion of it is in US dollars. American justice refrained from taking any significant action during the Trump Administration, although there were significant violations of the Foreign Corrupt Practices Act (FCPA), inn the healthcare and energy sectors, by U.S. citizens, because they are believed to have been allies and campaign contributors to the Trump Administration, and any investigation opened was feared would be swiftly closed by political appointees at the highest level. 

Additionally, the fact that there was a private meeting, between then-Prime Minister Joseph Muscat, and then-Congressman Devin Nunes, a close associate of Donald Trump, in Malta, supports the belief that there was an unofficial understanding regarding a mutually beneficial arrangement between the two national leaders.

After Trump left office, it was widely assumed that enforcement of violations od American money laundering laws, especially in cases involving millions of dollars of criminal proceeds from Venezuela, was well as Russian "flight-capital," Iranian oil sanctions evasion profits being repatriated, but notwithstanding general belief that causes would be filed in there United States, no such activity occurred. Some observers have theorized that the massive amount of new cases, in the aftermath of the January 6 attack on the US Capitol, may have overloaded the DOJ, but sufficient time has elapsed since then to rule out that as a reason for inaction.

The consensus of opinion amongst compliance officers now is that, for purely political reasons, the United States Department of State, having decided that charging present or former leaders of a Member state of the European Union would send the wrong message to the international community, has most likely signaled DOJ, through senior leadership in the Executive Branch, to back off. Additionally, the American intelligence community sees Malta as a resource, especially due to its Citizenship by Investment program, inasmuch as Russians and nationals from the Middle East are CBI passport and users of Malta-based financial services.

We doubt that the the situation will change in the short term, meaning that Malta will, since meaningful reform is doubtful, continue to be a center for money laundering, to the detriment of the global financial community, which is now subject to increasing governmental and regulatory scrutiny, civil penalties, with even more serious potential threats on the horizon. Malta's massive money laundering is a clear and present danger to the world's banks, including those in the United States, but it appears that America has its head in the sand.