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There is only one way to describe how undeclared Maltese liri are coming out in the open: spring cleaning. We do not dare call it “laundering of dirty money”, because we are holier than thou and laundering of dirty money does not exist in Malta. Yet the government has admitted that there is a surplus LM250 million in circulation and that such money has to be accounted for until we join the euro.
The government was aware of this and the EU had warned that unaccounted funds must be disposed for Malta to join the euro. But as usual, the government kept dragging its feet, and when LM130 million were forked out of the reserved funds to make up for the undeclared cash that was being exchanged into euros, the government panicked and decided to adopt the attitude of “laissez faire”. In other words, this moment in time has become the prime time to clean your money.
There are many ways to carry out this cleaning. Estate agents reported in one of the local newspapers yesterday week that people were putting in a LM2,000 reservation fee without even seeing the plans for properties, which range between LM60,000 and LM700,000. Another heard of people turning up with a briefcase packed with LM80, 000 in cash, and asking estate agents where best to invest it.
The government introduced a new registration scheme intended to re-inject millions of liri in cash from undeclared savings back into the economy. The purpose of the scheme, according to the government, is to give the green light to any amount of currency deposited with local banks in a special term deposit account for a period of one year… NO QUESTIONS ASKED. But government is saying that so long as the one-time fee of four or six per cent is paid, it does not matter if the money comes from drugs, from prostitution, from tax evasion, from tax avoidance, and all the ingredients that in our law are attributed to laundering of dirty money.
I cannot agree more with some experts who are stating that the new scheme, so-baptized the Currency and Bank Deposits Registration Scheme, is nothing more than a pardon for tax evaders and for those possibly dabbling in money laundering. And I cannot understand how on one side, we have laws that regulate the laundering of dirty money, we have regulations which outline what constitutes laundering of dirty money (which believe it or not, also includes the falsely declared amount of purchased property purchased: a regulation constantly ignored, not only by many notaries and parties to the contract, but also by the authorities… because, as Dr Silvio Camilleri explained last week in his letter, the authorities are there to sit at their desk and wait for reports to come in, before they can start investigating).
How unlucky that woman was about a month ago: jailed for money laundering, when all she had to do was wait until this new scheme was introduced, or go to the banks and deposit the dirty money in these so-called “Trust Deposit Accounts”… which are nothing more than the bearer accounts that we were used to in our younger days. People with undeclared cash can go to the banks, open these trust accounts and all they have to do is to sign a declaration that that money is not dirty money. As if to say that our regulations make any distinction between undeclared money that is obtained by hard honest work and undeclared money obtained from illegal activities: no, our regulations consider both instances as laundering of dirty money.
In all this confusion, one thing is certain: banks are having a field day. On one hand we have laws regulating the laundering of dirty money; on the other, the government announced a moratorium to these laws (without the authorisation of Parliament, as I suspect should be the case at law), and issued a statement that deposits under this new scheme are not subject to any questioning by the banks as to their origin.
Throughout all this, the Malta Financial Services Authority sits still and makes no comment whatsoever, confirming my impression that it is no authority at all, but a pet held on a leash by the government. Otherwise, can anyone explain to me how the MFSA could remain silent in all these amnesties? How it can allow the Trust Deposit account in the local banks to be opened on a simple declaration by the beneficiary that such money was not obtained by illegal means, when any money that is undeclared money amounts to laundering of dirty money in our laws?
I continue to be baffled and cannot understand which way we are headed: are we in favour or against laundering of dirty money? Is this a moratorium up to July 31? Is the public allowed for the time being to continue investing in property without declaring the origins of that cash? How much longer are we going to allow service providers to accept payment by an unlimited amount of money? I do not believe that the MFSA and the other body which is next to the Central Bank of Malta, and whose role is to investigate laundering of dirty money, really know what’s going on. They live in Malta as we do, they read the papers like we do… but surprisingly, they do not see anything that is not making sense in all this.
It is a shame that whilst we the Tax Compliance Unit does its bit to ensure that all income is declared, demanding each taxpayer under investigation to account for all his or her assets, we also have a system that allows people to openly flout the income tax and prevention of money laundering acts. So the honest taxpayer is victimised for expanding his business every time a competitor reports him to the Tax Compliance Unit, and the people who have never filled an income tax return are being given an amnesty for never declaring any income.
There is in Malta at present one law for the good and one law for the bad. And as usual, it is always the bad who get away with murder, because the pardoning scheme introduced by the government, coupled with the sale of property that is taking place at present, the bonds issues, the trust deposits account, are to my mind nothing more than a pardon for tax evaders and for those possibly dabbling in money laundering, as some financial experts have been reported to have said in one of the local newspapers yesterday week.
Not only that, but we are waiting for the government to make it mandatory, as in other countries, for every person to have an income tax number, so that no one can open a bank account, register a company, be involved in a company, purchase any property or do any civil or commercial business without being registered as a taxpayer. Because in case Minister Dolores Cristina doesn’t know, there are people out there who are boarded out and receiving a full pension, and yet are registered as directors or shareholders and manage to make an living from the company when at law they have been certified as being unfit for any kind of employment.
I hope that the police know that for the time being, laundering of dirty money is no longer a crime. And by the way: I also assume that all this enjoys the blessing of Brussels...
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