Haiti and South Sudan were also placed on a “grey list” of countries under increased monitoring to counter money laundering and terrorist financing, while Ghana was removed from the list.
Global money laundering and terrorist financing watchdog Financial Action Task Force has removed Ghana from its increased monitoring process and added other nations to the list.
"The FATF congratulated Ghana for the significant progress it has made," the Financial Action Task Force said in a statement on Friday.
Haiti, Malta, the Philippines and South Sudan were placed on the organisation's "grey list" to monitor and counter money laundering and terrorist financing.
FATF said nations on the "grey list" are working with it to correct deficiencies in their financial systems.
Malta's Prime Minister Robert Abela pledged to improve oversight on financial crimes on Wednesday. He spoke at a press conference ahead of the official FATF announcement.
FATF's mostly African list
The task force places on the grey list countries subjected to increased monitoring who have "committed to resolve swiftly the identified strategic deficiencies within agreed timeframes".
Nineteen countries — mostly in Africa and none in Europe — are currently under increased monitoring by the intergovernmental watchdog, which was created in 1989.
While describing the decision as "undeserved", Abela said Malta would remain committed to more reforms in fighting money laundering.
"While I consider this decision as one which is unjust, our country will continue to build on the many reforms we have already done", Abela said.
"Instead of complaining, we will see this challenge as an opportunity", he told journalists, pledging to respect the watchdog's decision.
Impact on Malta's foreign investment
The move comes one month after the Council of Europe's anti-money laundering body, Moneyval, cited Malta's improvement in combating money laundering based on the country's higher international compliance ratings in certain areas.
Malta had reached full compliance with 12 of FATF's 40 recommendations, Moneyval said last month, retaining "minor deficiencies" in the implementation of 28 others.
Media in Malta this week quoted senior government sources as saying that the United States, Britain and Germany were among those wanting the island to be grey-listed.
Inclusion on the list can have negative consequences for Malta's financial services, especially gaming and banking, as well as its attractiveness to foreign investment — all of which are key to the economy.
Malta has long been dogged by charges of laxity on corruption, the focus of journalist Daphne Caruana Galizia's investigations before her 2017 murder.