Issue link: https://maltatoday.uberflip.com/i/1349491
11.3.2021 6 OPINION Wayne Pisani Wayne Pisani is president of the Institute of Financial Services Practitioners Y ou may quite reasonably think that the title 'Malta at the crossroads' is overly dramatic in an environment where we have quite enough drama in the world of public policy; but it is a reason- able ask that I should start by explaining why this subject, and why now? Let me go back to 2018 and the run up to the Council of Europe's fifth Money- val Evaluation round in November of that same year. is was followed by the July 2019 58th plenary session adopting the ensuing Moneyval evaluation report, amidst the domestic political turbulence that culminated towards the end of that year. en the COVID pandemic, a re- ality which accelerated the digitalisation experience which has, for the very first time in the IFSP's 32-year history, led to the conference being held online; a peri- od throughout which Malta had to un- dergo the remedial measures to address the recommendations reported in the aforesaid Moneyval evaluation report. Aside from the regulatory, compliance and enforcement actions being under- taken in Malta, the international com- munity was active debating and churning out positions on taxation, transparency as well as economic viability and sustain- ability in a post-COVID world, with a focus on revenue collection to stimulate the promised economic recovery pack- ages. … And let us not forget the impact of BREXIT. We know where we are coming from, but are we clear on "Where we stand?", "Where are we heading to?" or even more appropriate, "Where we plan to be heading to?" We are indeed at the crossroads! e past year and a half have been a period of change for the financial services sector in Malta. e outcome of the MONEYVAL evaluation report of 2019 was a not un- expected blow, reflecting a loss of confi- dence in the jurisdiction and spurring a range of developments, partly in order to achieve a positive follow-up evaluation but also, that had been seen as necessary developments for the jurisdiction. As we focus on the Moneyval assess- ment, an assessment which, notwith- standing all its political and reputational ramifications, is after all driven by an- ti-money laundering / funding of terror- ism considerations, we need to look be- yond; plan ahead, set an implementation plan and execute the plan. e IFSP has, as many of you know, been urging the authorities and the industry to adopt a proportionate ap- proach imbued with more efficient procedures and to raise standards for some time. e new CSP framework has been introduced and is set to go live in the coming weeks raising the bar even higher for practitioners. Indeed, Mal- ta is one of the few, if not the only, EU member states that has taken steps to ensure standards are upheld through a regulated regime. e birthing process has been a long one, and one in which the IFSP has been deeply involved with, working closely with the authorities to produce a regulatory regime that should prove capable of both raising the bar and providing a functional framework, all in the interests of establishing Malta as a reliable jurisdiction. We need to raise the bar across the board, be it industry and public bodies, to ensure quality and training is reflec- tive of the importance of the industry, as well as on inspection teams and boards of public entities. It is within this con- text that the IFSP heavily lobbied for the removal of CSP exemptions that were proposed to be extended to individuals taking up offices on public entities. e model followed by the IFSP has been one of cooperation with the au- thorities, allowing the IFSP an insight into the concerns they are seeking to ad- dress, and the authorities an insight into how the industry actually functions, and thus, what would work in practice rather than just on paper. It is to this effect that the Institute has been making repeated representations for proportionality in the approach to both regulation as well as administrative and enforcement actions. Education and continued proficiency are key. e IFSP has over the past 30 years actively run key targeted training on trusts and money laundering / fund- ing of terrorism matters, to name a few. As of this year, an ad hoc CSP course was launched, the syllabus of which was carefully crafted in coordination with the competent supervisory authorities and will continue to be run to ensure an ef- ficient implementation of the standards that are being set upon ourselves in the best interest of our industry and our ju- risdiction. Among the areas in which some pro- gress has been achieved is cooperation between different authorities, through which the requirements of one remain aligned with the requirements of the others, and the information gathered by one dovetail with the information needs of the others. e REQ issued by the FIAU and ancillary coordination with the MFSA is a clear example of this suc- cess. is is a process that needs to be continued, because divergent guidance sows confusion, weakens the overall reg- ulatory framework and introduces ineffi- ciencies into the practice of financial ser- vices. Disparate initiatives to gather and store information makes life that much harder for practitioners, while mak- ing the overall picture the information should be delivering, almost impossible to achieve. is would also, unfortunate- ly, mean that when formulating respons- es to organisations like MONEYVAL or the OECD, it becomes difficult to deliver a true picture of the jurisdiction. e IFSP has been urging the Govern- ment and authorities to take this process of coordination much more seriously. We are pleased that this has begun; it must continue to eradicate micro repub- lics and silos: • Within the business community • Within regulatory bodies, as well as • Amongst regulatory authorities and public bodies ere remain challenges to be faced, both internally and on the international stage. To tackle these challenges effective- ly what Malta needs is a strategy, a vision for what the jurisdiction can become and wants to be known for in five, ten, and more years down the road. Only then will we be able to determine the direction in which we want to take the jurisdiction, the enablers on how to get there, and thus what further changes are needed to achieve our goals/our ambitions. It is to this effect that just last week, the IFSP, in coordination with the MFSA and other stakeholders constituting the Mal- ta Financial Services Advisory Council within the auspices of the Ministry for Finance and Employment launched a survey to aggregate data to run a SWOT analysis on a number of factors related to specific subsets of Malta's financial servic- es offering. e link to the survey is being shared in the chat function and circulated by email as well as through the Institute's online channels. Your contribution is key to help shape our country's future. Central to all of this is our aim to sup- port members in ensuring Malta retains its position as a platform for financial services; an enabler of financial services opportunities providing the natural fi- nancial ecosystem for go global projects, addressing the social needs and priori- ties to facilitate financial services access to the masses through financial innova- tion - financial services without borders. We have made a start, but we cannot leave it there. It is fundamental that Government does not exclude the private sector when formulating plans for tax changes and other strategic matters involving the fu- ture of the financial service industry and the Maltese economy, as it is a crucial part of the equation. e foregoing must be based on a solid foundation of consensus and buy-in by Maltese society, industry, the political bodies and government. All stakehold- ers, whether government, opposition, practitioners, regulators and society by large must work together in determining the long-term vision, and pull the same rope in this respect ... which naturally brings responsibility on all ... It is therefore imperative that we ad- dress the short-term concerns, the Mon- eyval assessment being the most immi- nent. However, we must be cognisant of the longer-term vision. We cannot afford knee jerk reactions and over regulation which would stifle the economy. Proportionality in all reg- ulatory and administrative action is key. Regulation should be principle based and focused on the public interest rather than the institutional interest, adding lay- er upon layer of regulatory requirements mandated on the regulated stakeholders. We need to ensure proportionality, ef- fectiveness and efficiency in the way we implement and apply the regulations, in the way we approach business, in the way we promote the country and our service offering, in the clients we onboard, in the reports and notifications raised to au- thorities like the FIAU, in the quality of our work and filings with the MBR, CfR, MFSA, IdentityMalta and other bodies. We are all part of one value chain in Mal- ta's offering. We are expected to be socially respon- sible in the way we handle business, and this is not just a matter of environmental consciousness but also a matter of eco- nomic sustainability, balancing the risk / reward factor respecting our ethical val- ues, our economy, our country. We must be aligned and clear in our thoughts, in our plans, in our vision as to what to do next and how to go about it. Taking the right turning at this junc- ture is fundamental and if I may leave you with an acronym to mull over, it is indeed the term CLEAR. Let us draw on the strength of Collaboration of our community to Lead the way and show- case our Excellence in an Agile way whilst Responsibly fulfilling our duties in full Respect of our future generations. We need to be "innovative and distinc- tive" as we craft our service offering for the future. So long as we get our heads together to recalibrate and redefine our competitive advantages in tune with the 21st century, moving on from those of the 20th, and do all that we can to responsibly maxim- ise them, then the future can be one of continued growth and widening oppor- tunity. Malta at the crossroads