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14 maltatoday | SUNDAY • 3 FEBRUARY 2019 NEWS BLOOMBERG TV airs Theresa May's latest woes as it plays on the television in the lobby of the building that houses Malta's Financial Services regulator. The British PM's last ditch effort to get a Brexit deal is a stark reminder of the turmoil outside the relative safety of Malta's shores. I am here in Mrieħel to meet the Mal- ta Financial Services Authority's chief executive Joseph Cuschieri, ahead of the roll out of a new three-year strategy and rebranding exercise for the regula- tor. The prospect of Britain crashing out of the EU in a month's time comes as a reality check in Malta, a country with an economy that has been performing well above par for its longest streak since independence. There is little space for insularity in an interconnected world. As I tap in my details into an iPad in the lobby to be granted an access card, Bloomberg in the background reports on the impending trade war between the US and China. Donald Trump is trying to roll back the frontiers as he embraces insularity. It is another stark reminder of the complex global reality. I am not here to speak with Cuschieri about the economy, the risks and pros- pects it faces. He is concerned about regulation. His job is to ensure that the financial services sector, a key econom- ic driver, operates correctly. But Malta is pretty much like a teen- ager who has rapidly outgrown her clothes. While the private sector has found the space to flourish in a coun- try with a government that calls itself business-friendly, public services and infrastructure have lagged behind. Champions League football The MFSA is no exception as it tries to keep up with a financial services sec- tor that has grown bigger, become more complex and is challenging traditional models with technological innovation. Cuschieri has been at the helm of the MFSA since April last year, taking over at a time when the authority faced flak over actual or perceived failings to properly supervise and act on concerns of money laundering. He is unfazed by the criticism but ac- knowledges the need for change at the regulator that was born out of political consensus in its current outfit almost 20 years ago. Statistics put the contribution of the financial services sector to gross value added at 11%, and rising. It also ac- counts for more than 10% of employ- ment. The MFSA is responsible for 2,300 licensed entities. But despite the importance of the sec- tor to the domestic economy, Malta does not yet feature among the top Eu- ropean jurisdictions. This is something Cuschieri would like to change and to do so, the MFSA will have to up its game. "Malta is playing football in the lo- cal premier league but I would like this jurisdiction to play in the Champions League. I want Malta to be up there among the top five European jurisdic- tions, alongside the likes of Ireland and Luxembourg," he tells me as we sit down at the boardroom table in a makeshift office while refurbishment works are going on in other parts of the building. Cuschieri acknowledges this is an am- bitious target but he is convinced that with the right investment and mental- ity change, it can be achieved. "To play in the top flight we need new players, new tactics and better fa- cilities," he continues with his football analogy. And that is what the Vision 2021 rolled out last Thursday plans to achieve. It was also accompanied by a consulta- tion document laying out the MFSA's fintech strategy to "harness innovation through technology". Leaping out of the paper world Embracing technology is key, Cuschie- ri insists. And it is not just about how to respond to technological innovation driven by the private sector – the Revo- luts of this world – but also the manner through which the MFSA operates. The regulator is still largely a paper- driven organisation in a world where transactions are carried out through mobile phone. He points to a cabinet in his office full of files linked to a re- cent case of enforcement. The informa- tion is all there but requires time to sift through. "The MFSA of tomorrow has to pro- vide regulatory efficacy. We need to in- crease the depth of our supervisions, be pro-active and fast. To do so, we need to invest in the right people and have systems running on the latest technolo- gy to help us rationalise the knowledge we collect and use it productively," Cuschieri says. He is under no illusion that this will require a big investment. Cuschieri envisages a regulator that will employ around 480 people by the end of 2021, up from the approximately 320 em- ployees currently on its books. The authority will have to invest more in training and rope in foreign nation- als to boost its skills base. Over the next three years, he says, the MFSA will have to invest anything be- tween €8 million and €10 million to up- grade and change the technology that underpins its operations. "If we want to become a top-tier regu- lator in Europe we need to invest… in a dynamic financial environment, our technology has to be mission-critical and people have to undergo continuous training to beef up expertise and tech- nical competences," he insists. One of the objectives of the vision is to set up what is being dubbed as an academy of excellence for financial su- pervisors. The proposal is to provide training to young and experienced supervisors both within the MFSA and private in- dustry. "Supervision is also the responsibility of private operators and this is why we will be releasing a supervisory strategy document that will list what is expect- ed from licence holders to comply with anti-money laundering regulations," he adds. The supervisory strategy document will be released tomorrow and will provide regulatory clarity for licence holders. It will form part of the regu- lator's efforts to communicate better with stakeholders and raise the level of awareness on money laundering issues. Fees will have to go up Cuschieri says the proposed transfor- mation of the MFSA is likely to see the organisation's budget surpass the €40 million mark. The regulator's current budget is a yearly average of €26 million. Cuschieri hopes to bridge the gap in funding by increasing the fees operators pay the MFSA. He insists this is also an issue of operational independence for the regulator. "The International Monetary Fund and other international organisations insist on operational independence for regulators like the MFSA. Today, half of our funding comes from the govern- ment and the rest comes from fees that Knocking on the door of The Malta Financial Services Authority has rolled out its Vision 2021 as it prepares for change. CEO JOSEPH CUSCHIERI tells Kurt Sansone of his plan to make Malta a top-tier jurisdiction for financial services KURT SANSONE