The delegation's two-day visit followed the Oct. 16 bombing death of a Maltese journalist who investigated money laundering in the island country. Its inquiry was focused on that topic, as well as on corruption.
The European Parliament members sharply criticized the government's implementation of laws meant to combat money laundering in Malta, which has a reputation as a tax haven.
They also expressed "great concern" over Malta's lucrative system of selling passports to wealthy foreigners without making public the identities of the passport-holders. Delegation leader Ana Gomes said the system, "with all its opacity, bears the risk of importing criminals and money laundering into the whole EU."
"The delegation concluded its visit stressing that the rule of law is the EU's basis for mutual trust and the perception of impunity in Malta cannot continue," a statement from the European Parliament said.
Malta's government didn't immediately respond to the delegation's harsh assessment.
Prime Minister Joseph Muscat, in his welcome speech to the EU lawmakers, told them that "most of the information that you were fed was partial, its analysis one-sided, and conclusions misguided." He questioned the "usefulness of this visit."
Muscat rattled off reforms made under his government, among them a whistleblower's law he said had been "hailed as one of the best in Europe," anti-corruption measures and legislation regulating political party financing.
Besides Muscat, the EU lawmakers met with Malta's justice minister, police commissioner, officials from the Financial Analysis Intelligence Unit and anti-corruption activists.
The EU Parliament statement said the visiting delegation raised "serious concerns about the unclear separation of powers, which has been the source for the perceived lack of independence of the judiciary and the police, the weak implementation of anti-money laundering legislation, the serious problems deriving from the 'investments for citizenship program,'" among other matters.
They also faulted Malta for the "absence of prosecution by the Maltese authorities" resulting from the so-called Panama Papers leaks about Maltese with off-shore tax havens.
The journalist killed by a car bomb, Daphne Caruana Galizia, had written extensively about the leaks. Her slaying remains unsolved,
Gomes also voiced the delegation's worry about "the low number of cases that are being prosecuted in the area of financial crimes," saying in the statement: "This impunity cannot continue."
Copyright 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.