Malta’s greylisting experience : an analysis of the impact on the financial services industry

Abstract

Purpose: This study examines the effects of greylisting on Malta's financial services industry, focusing specifically on the effects on regulators and financial service providers. This study investigates the impact of the 2019 MONEYVAL report, which was critical of Malta's AML/CFT framework, as well as Malta's greylisting and post greylisting phases, to provide a comprehensive assessment of the consequences of greylisting on the financial services sector. Design: A mixed-methods approach was used to collect data for the study, involving surveys and semi-structured interviews with professionals in the field of AML/CFT from various subsectors of the financial services industry, which included banks, financial institutions, company service providers, investment service providers, and legal service providers. The data gathered using these methods is both qualitative and quantitative, creating a solid foundation for the study's findings. Findings: The study concludes that greylisting had substantial and far-reaching effects on Malta's financial services industry. Greylisting caused a shift in regulators' and financial service providers' culture and sensitivity towards AML/CFT compliance, resulting in a chain of subsequent reactions, which include the expansion of compliance departments, modifications to policies and procedures, and investments in technology. In addition, international firms were especially affected by Malta's greylisting, as it hindered their ability to promote the country as a major financial services centre. Conclusion: This study's findings cast light on the significant consequences of greylisting and shed light on the reality of this experience. Value: Considering the fact that the Malta’s greylisting experience was very recent, this dissertation is a pioneer in analyzing the impact of the greylisting on the financial services industry. The findings of this study provide a foundation for future research and insights for policymakers, financial institutions, and regulators seeking to comprehend and address the challenges of greylisting in Malta. Lessons can be learned from the study's findings, which can be applied to other countries that have been or may be greylisted in the future.