Issue link: https://maltatoday.uberflip.com/i/1266179
9 maltatoday | SUNDAY • 5 JULY 2020 INTERVIEW What changes have taken place inside the MFSA since you took on this role – how do you describe the major chang- es you have introduced? There has been an intensifi- cation of efforts to transform the Authority to meet the glob- al challenges emanating from the financial services sector, in addressing the recommenda- tions of international standard setters and keeping up with the implementation of its am- bitious three-year strategic plan which sets out the key pri- orities for the Authority. The focus on efficiency and effec- tiveness with respect to author- isation and supervision have intensified as well. Our focus is primarily addressed towards growing sustainably in a saf- er environment, steering away from risky business models and set-ups. Changes which are ongo- ing include the establishment of a dedicated risk function, strengthening of enforcement as well as investment in tech- nology and data management. The Authority embarked on a major digitalisation process governed by an IT strategy which will see an investment of €20 million over the next four years. The Authority has already started the process to source a new Supervisory Cycle Management System (SCMS) which will enhance its efficien- cy and cost effectiveness. The investment in Data Manage- ment and Business Intelligence tools will strengthen the MF- SA's position as a data-driven supervisor. Another major change is the setting up of the Financial Crime Compliance Unit, men- tioned earlier, to reinforce the MFSA's role in preventing the use and involvement of author- ised persons in money laun- dering and the financing of terrorism. The MFSA has also triggered a number of initia- tives to strengthen the indus- try's competitiveness and sus- tainability such as the launch of the Fintech Strategy. With respect to capital markets, the MFSA has developed a new strategy, focusing on revisions to the regulatory framework and enhancing its supervisory capacity and investor educa- tion. Other initiatives include the development of an Asset Management Strategy and the launch of a FinTech regulatory sandbox. These initiatives will be announced in the coming weeks. Don't you think that Malta's regime of so called 'letterbox' companies, and our tax com- petitiveness regime, is also a lightning rod for unwanted publicity and bad financial practice? Or would you say this problem is spread across the rest of Europe...? There are four elements which distinguish Malta as a juris- diction of choice for financial services: [a] a forward-looking regulatory framework, which is constantly being developed; [b] a strive for efficiency in finan- cial supervision; [c] a pool of professionals that are available to support the industry's devel- opment and growth; and [d] a competitive and transparent tax regime. Malta's tax regime is compliant with EU, OECD and international standards, in- cluding the relevant provisions on transparency and exchange of information. In financial ser- vices, Malta does not promote itself as a jurisdiction for letter- box entities. Indeed, the MFSA mandates that entities should have substance in Malta – sub- stance both in terms of govern- ance structures and the day-to- day conduct of business. This is verified at authorisation stage, as well as throughout the enti- ty's life cycle. Do you agree with critics who accuse Malta of promoting aggressive tax planning prac- tices? Do you see the general sentiment inside the Europe- an Union one day leading to a forcible reform of the way we attract this kind of business? I disagree. EU tax harmonisa- tion is not something new and as in other sectors, the EU's tax framework is the subject of on- going debate and changes are constantly on the EU's policy makers' agenda. Whether there would be a forcible reform on the way we attract business re- mains to be seen and we should always prepare for any even- tuality. Having said this, prac- titioners in Malta should con- tinue exercising prudence at all times when providing services to clients on tax matters, act- ing not only in the best interest of their clients, but should at the same time also ensure that the jurisdiction's reputation is properly safeguarded. This week the MFSA final- ly suspended Satabank's li- cence. Since taking over you have acted faster on these cases than the previous MFSA governor – what has changed in terms of MFSA practice? The Satabank licence was can- celled by the ECB following the MFSA's recommendation, as detailed in the MFSA's Public Notice last Wednesday. Rais- ing compliance standards and increasing the effectiveness of our supervision and enforce- ment are mission-critical pri- orities for the MFSA. We are also approaching supervision and enforcement interventions by applying international best practices – this will help in improving the compliance cul- ture across the entire sector. For example, the approach tak- en by the MFSA and the FIAU with respect to the controlled release of funds at Satabank ensured that suspicious funds were flagged and reported to the FIAU accordingly through STRs while funds identified as legitimate were paid. This ensured that innocent depositors were not penalised through our regulatory inter- vention. juridisction needs a revamp'