VALLETTA, Malta (AP) — A watchdog on the lookout for money laundering and terror financing said Friday it has placed the tiny Mediterranean island nation of Malta on a list for increased monitoring.

The Paris-based Financial Action Task Force, or FATF, added the European Union member to its so-called gray list, along with Haiti, the Philippines and South Sudan.

It is exceptional for an EU country to be put on this list, which also includes Pakistan, Zimbabwe and Syria. The move raised concerns in Malta about the potentially damaging impact on the nation's economy.

The Maltese government quickly issued a statement saying it believes that Malta doesn’t deserve to be subjected to increased monitoring, given that in the last two years it has already launched a program of reforms.

“Malta underwent a mutual evaluation in 2019,” FATF president Marcus Pleyer told reporters at a news conference conducted remotely. “The final report had outlined a large number of serious issues regarding risks in the country.”

Pleyer added: “Malta has made good progress” in some areas but “serious issues remain.”

“Malta’s financial intelligence unit needs to support law enforcement authorities" to pursue criminal tax and related money-laundering cases, he said.

The Maltese government said “a plethora of reforms (have) led to tangible progress in Malta’s ability to prevent, detect and combat money laundering and the funding of terrorism effectively.”

Still, it said, "Malta has been and will remain fully committed to working with the FATF and other international partners to ensure that the partially addressed recommended actions are addressed within the shortest possible timeframes.”