Cash restrictions : effectiveness on combatting money laundering and terrorism finance in Malta

Abstract

This dissertation evaluates the effectiveness of Malta’s Use of Cash (Restriction) Regulations (Subsidiary Legislation 373.04) in addressing money laundering and terrorism financing. It examines the enforcement mechanisms and regulatory challenges associated with the legislation. Additionally, it considers the effects of the new European Union Regulation (EU) 2024/1624. Through qualitative analysis and stakeholder insights, the research identifies key deficiencies and proposes recommendations to enhance compliance and enforcement, contributing to ongoing policy discussions on anti-money laundering and counter-terrorism financing. The research includes a comparative analysis of Malta’s regulations with both international and EU frameworks, highlighting strengths, weaknesses, and areas for improvement. Semi-structured interviews with key stakeholders explore compliance practices, enforcement challenges, and the unintended consequences of cash restrictions. Findings reveal that while Subsidiary Legislation 373.04 provides a foundation for restricting illicit cash transactions; its effectiveness is limited by enforcement issues, regulatory gaps, and public misconceptions. To ensure the research credibility, a methodology was used that incorporated multiple strategies. A semi-structured interview framework, based on anti-money laundering and counter-terrorism financing literature, guided data collection, and pilot testing refined the interview schedule for clarity. A reflexive approach, incorporating memoing and peer debriefing, minimised bias and enhanced objectivity. Thematic analysis, facilitated by coding frameworks and software tools such as NVivo, enhanced transparency. Ethical considerations, including informed consent, confidentiality, and GDPR compliance, were followed. The research also evaluates Malta’s alignment with the EU-wide cash transaction limit under Regulation (EU) 2024/1624, noting that Malta’s experience can aid in adapting to the harmonised framework. However, the findings suggest that a one-size-fits-all EU regulation could be undermined if national-level enforcement mechanisms remain weak, particularly in member states lacking adequate training, digital infrastructure, or inter-agency coordination. The research proposes reforms in Maltese legislation, including enhanced data collection, specialised task forces, public education, improved inter-agency collaboration, stricter enforcement mechanisms, clearer guidelines on exemptions, and revisions to penalty structures to strengthen cash restriction implementation and ensure compliance with EU regulations.