One welcomes the new financial crime compliance plan Vision 2021 announced by the Malta Financial Services Authority (MFSA). This move did not come a moment too soon. It is essential that the rules of doing business within the global financial system are not only well-written but also robustly enforced.
Over the two decades that the sector was piloted by Professor Joe Bannister as chairman at MFSA, he saw the financial sector grow from a modest size in 1994, to give birth to a reputable centre of international business. During Prof. Bannister’s watch, commentators lamented that MFSA’s autonomy from the strings at Castille was paper-thin, so it comes as no surprise that the International Monetary Fund (IMF) and other international organisations are now insisting on its operational independence.
The latest move to remove dead wood from the ranks by granting early retirement is noted, since challenges that are facing the incumbent CEO (previously the Chairman and CEO of the Malta Gaming Authority) are significant. The demise of private banks such as Nemea, Sata and Pilatus last year were the fruits of past decisions, but realistically, three bad apples in the barrel does not mean that the entire domicile is beyond redemption. One welcomes the latest IMF report which has been requested by the government, as it gives a very piercing analysis of the factors which attributed to the recent shortcomings in the banking sector. However, it complimented the superlative growth in the economy, in particular, the financial sector. This contributes 11 per cent to the gross value added and also accounts for more than 10 per cent of employment.
MFSA as a single regulator employs 320 professionals. This is no small team to oversee approximately 2,300 licensed entities but MFSA envisages the scope for regulation is growing and wishes to recruit another 160 trained staff in two years’ time. With the current shortage of local professionals, this can only mean enlisting foreign experts. In the wake of international pressure, MFSA now wishes to further tighten the screws by clamping down on potential incidents that lead to the path towards money laundering and terrorist financing. The new CEO wants to be seen as a colossus fighting the infidels that penetrated the fragile fortress, leaving in their wake a stigma of AML and terrorist financings decoys. He claims that Malta needs to grow responsibly and set standards which are in line or better than those of our peers in Europe. Stoically, he embraces technology and innovation, entering the fintech space with optimism and preparedness. This is all very grand, but it needs a higher subvention from Government, possibly reaching €12 million at one go. It is a fact that the annual surplus (circa €10 milllion) posted by the Registry of Companies has always helped fund operations at MFSA with the balance repatriated to Government. This can now be ploughed back to fund the above-mentioned reform.
So why is MFSA contemplating securing the extra funding needed for a transformation to be sourced out of an increase in fees-charged to the sectors and its practitioners? MFSA has long stopped financing promotion of the sector, rightly saying it cannot be seen compromising its impartiality. This is commendable, but then the sector has to be actively promoted to compete with other jurisdictions that are constantly fine-tuning their laws and financial concessions to lure blue chip companies. Practitioners, out of a sense of duty, do not think twice to dig deep into their pockets to tour the globe and promote the island. Together we can succeed to rebuild our ranking as a top-class domicile with the help of Vision 2021.