An analytical review of the EU's legislation on money laundering activities and their relevance to Malta

Abstract

Money laundering activities often take the form of financial transactions, intended to obscure the identity of the parties concerned as well as the origin of payments and the ultimate destination of funds, in order to facilitate a wider and complex circle of illegal practices that may take on numerous forms. Money laundering is a central feature of the unofficial economy. In a globalised world, money launderers find refuge in the configuration and performance of the international financial system. Thus, the growing intricacy of financial crime dominates political, economic and legal discussion worldwide. In turn, collective efforts at combating money laundering have given rise to the enactment of comprehensive regimes and cross-border networking at the pan-European level and the world at large. The establishment of the European Single Market, and the removal of cross-country barriers across the European Union (EU), provided increased prospects for money laundering and financial crime. Against this background, European legislation is an essential tool for protecting the EU's financial system, vulnerable professions and business activities from possible exploitation. Ongoing amendments to EU Directives are necessary in order to keep pace with the innovative methodologies used in diverting money roots and the funding of terrorism. The Internal Market Directorate General supervises the European Commission's delegation to the world Financial Action Task Force on Money Laundering. The harmonization of Maltese and Community law with regard to the prevention and detection of money laundering is indeed a commendable step as it helps to build a common front in combating money laundering activities and terrorist funding in Malta and in the other EU Member States. A determined collective effort by regulated sectors, the Law Enforcement Agency, the supervisory authorities and the Financial Intelligence Analysis Unit is indispensable in order to boost the effectiveness of the legislation.