Issue link: https://maltatoday.uberflip.com/i/1471449
5 INTERVIEW 23.6.2022 Malta's banking sector has become difficult. And even though there is a general consensus about this, the situation seems to be stuck. e factors that led to the country's greylisting reached the banking sector way in advance and today, the general feeling is that the sector reacted to this reality only as a direct unescapable con- sequence. To redress certain issues, we went from one extreme to another - from an 'an- ything goes' situation to a 'guilty until proven innocent' mode. Investors were the most impacted as they felt unfairly victimized especially as bank accounts started being closed at short notice and promising investments that would have passed the incorpora- tion stage, failed at bank-account open- ing stage, often after months of unnec- essary delays. What can be done about this? Banks play a pivotal role in the entire investment cycle but then they cannot be expected to play ball no matter what. Unless banks move away from risk aver- sion and start implementing adequate risk management policies and controls, we are risking killing the goose that lays the golden eggs. The Maltese seem to have an emotional affinity with Banks… True. But nowadays, banking seems to no longer be a right but rather a luxury. Although safeguarding the banks' integ- rity and reputation when taking business decisions is important, the provision of basic banking services to SMEs and oth- er corporate entities is of tantamount importance, and a right to each citizen and/or organisation. Reason, coupled with the invaluable experience of the banks' experts need to prevail, now more than ever. What was your personal take on Malta's greylisting? You always felt that the country would be struck off the list? Why? Greylisting dealt a severe blow to our national reputation. Although we could try to quantify lost business as a result of the grey listing, we can never truly quantify what we have lost in terms of reputation. Having said that, there was a concerted effort to address the issues highlighted by FATF and this is why I was convinced that Malta would be struck off the list especially after last February's FATF comment that Malta had "substan- tially completed its action plan". Whilst it has been acknowledged that Malta's response to the grey listing was acknowledged as a 'success story", let's not forget that we should have never been put on that list. We need to learn from our mistakes and work towards re- storing (as much as possible) our repu- tation. What does this mean for Malta now? at we are finally off this list is cer- tainly of paramount importance and a much-needed achievement. However, this does not mean that our shaken na- tional reputation has suddenly been re- stored. We have a lot of work to do now, and we will need to make sure to never lose sight again of the factors that led us in this situation. is was also confirmed by Malta's PM Dr Robert Abela and also by the FATF president, Marcus Player. e coming two years are critical. As during this period, Malta still needs to report on progress made. Last November, a month after Malta's greylisting, you had spoken very openly about the importance of effective AML policies but also that the sudden over-zealousness in AML measures could harm the industry. What has happened since then? While the banks' over-zealous ap- proach was a trigger reaction to the situ- ation, the Regulator's reaction was more down to earth and not as severe as ini- tially expected. Several information ses- sions were organised by both the FIAU and the MFSA, and guidance was indeed provided. However, there still is a sense of fear across the industry's landscape, to at- tract and conduct new business, due to the ever-changing environment espe- cially amongst local banks. is is un- doubtedly going to have an effect on the local economy in the medium to longer term. A lot needs to be done to eradicate the many unhealthy practices that have set in. We will need to find the necessary balance between getting our house in order and providing efficient, cost-effec- tive, and reliable options for any compa- ny interested in setting base in Malta. A bit more than a year ago, you were appointed Risk and Compliance Director at NOUV. What insights can you share about your experience to date? Notwithstanding all that has happened, at NOUV, we took this opportunity to deep-dive into our own processes which helped us identify some very promising new opportunities. While we maintained a steady momentum on the development of our traditional services like audits and accounts, we identified new niches of opportunity to really serve as a boutique partner to our clients. e challenges that we continue to face due to Malta's greylisting, reporting obligations, and the banking sector, have given a more tangible dimension to the notion of risk and compliance across the sector, which led our firm to develop a new level of re- silience to be able to continue supporting our clients along these avenues as well. Is the notion of corporate governance gaining any traction in the business community? We have started noticing more compa- nies ensuring that corporate governance becomes a staple subject on most board meetings' agendas. Today, internal au- dit committees expect audit plans that give particular attention to corporate governance issues when preparing their risk-based audit plans. Cyclical audits of corporate governance are becoming a regular occurrence as executive man- agements and boards are viewing such reports as very crucial to achieving their business objectives. Three years ago, NOUV set up GetGovernanz to promote corporate good governance. Tell us more about this initiative.... NOUV's setting up of GetGovernanz reflects our belief in the ever-growing importance of reinstating the culture of good governance across the board and also of NOUV's forward-looking approach within the industry. rough GetGovernanz we aim to set the stand- ard for NOUV itself and seek to share this experience with operators in the field. e experience so far has been in- deed both positive and promising. We certainly look forward to more. How receptive are businesses to implementing corporate governance frameworks? GetGovernanz has seen a significant uptake of its training services on govern- ance. We also conduct governance as- sessments followed by support activities to implement an effective governance policy throughout their procedures and practices. ere is recognition that em- ployees need to better understand what governance is and how they can help in its implementation through their ethical behaviour which is an integral aspect in the projection of a positive image of their company in public. Now that Malta is no longer greylisted, what in your opinion should be the main steps to be taken to avoid a similar situation in the future? Addressing fundamental issues is no longer about ticking boxes. Malta's big- gest test starts now. Good governance, structured, yet decisive actions, trans- parency, and accountability will need to be achieved for our reputation to be pro- fessionally restored. Now, this is our collective national re- sponsibility. A closer and more coop- erative meaningful dialogue between Regulators and our industry should also be placed high on the country's agenda. Last but not least, as a country, we could do well with a reassessment and a reset of our standards when it comes to the type and quality of foreign investment we want to attract. 'We need to reassess our foreign investment standards' 'Now that Malta is no longer on the FATF's grey list, we need to look at fundamental issues such as good governance, transparency, and accountability'. DANIEL BILOCCA, Risk and Compliance Director at NOUV, discusses the current tight banking scenario now that Malta is no longer greylisted and what the country should do to avoid a repeat of the past year