Dirty money law lacks bite without unexplained wealth orders, says MP

A law that could help Malta clamp down on organised crime and money laundering has been watered down to the extent that it could allow people with known criminal ties, to retain unexplained wealth as long as they live.

The Proceeds of Crime Bill, which was recently debated in the House, contains provisions for the confiscation of assets suspected of having been procured through criminal methods, without the need of a conviction.

But the three cases in which this will be possible does not include any moment in which the owner of the assets is actually alive or inside Malta: according to the Bill, non-conviction confiscation will only be possible when a perpetrator absconds or is not in Malta; or when they die, whether during or without criminal proceedings hanging over them.

That means that, unlike the Irish example, the police cannot seize assets which upon ‘belief evidence’ they suspect are proceeds of crime and for which their owner must account for how they were obatined.

Justice minister Edward Zammit Lewis disagreed with the suggestion that the law is not as effective as initially made out to be. “The concept of ‘unexplained wealth’ is already found in our law... inclusive of concepts such as income tax, social security and other laws.”

Zammit Lewis said the Bill meets all requisites of Moneyval recommendations. “We had the political guts to take on reforms which for long have been shelved by governments in past years.”

But MaltaToday understands that, as it originally reported earlier in the year, ministers’ complaints at the concept of a UWO had placed the instrument on the backburner.

Nationalist MP Claudio Grech, who agrees that the law is a step in the right direction and will enjoy the Opposition’s support, says that it misses a fundamental piece of the puzzle without which no meaningful change will be realised.

“This is the introduction of a tool known as the unexplained wealth order, with which the investigative authorities would have the powers to seize assets which a person investigated on very serious crimes cannot justify the source of funds for. We are not reinventing the wheel here as similar legislation has been enacted in other jurisdictions like the UK,” Grech says.

Ireland was one of the first countries in Europe to adopt the UWO following the deaths of crime reporter Veronica Guerin and Jerry McCabe, a detective, at the hands of organised criminals. The UWO reverses the burden of proof to prove the source of the assets on to the respondent.

Unlike the UK’s own version of the UWO, the Irish law applies more broadly and does not additionally focus on foreign PEPs, primarily targeting persons suspected of being involved in serious and organised crime when there is reasonable grounds to suspect a property is connected to the proceeds of crime, which must be admissible as evidence during proceedings.

“I have been strongly appealing to the government to reconsider its position on this tool and introduce it as an integral part of this Bill,” Grech said.

“We cannot miss this window of opportunity to do what’s right and strengthen the arm of our financial crime agencies and empower them with strong instruments to be effective and not spend their efforts in vain. The asset seizures over the years have been incredibly low, clearly showing that we have a crater not a small hole to address.”

Grech said legitimate business has nothing to be afraid of with this legislation which is exclusively focused on proceeds of very serious crimes, local or cross-border. “The changes we are doing in our legislation should not be merely intended to pass the MONEYVAL test or align to the Venice Commission’s requirements. These should be instruments of change which contribute to the common good of our society.”

Grech has stated in the House that a stronger law would strengthen the process to avoid Moneyval greylisting. “I understand you cannot have a law that allows you to capriciously pick on anyone one chooses... but we need a collective effort for a strong UWO. I understand you need courage to introduce such a law.”