A step in the right direction... but a long way to go

Malta’s financial regulators and authorities have found themselves under heavy scrutiny these past few years, due to the countless scandals that have plagued the Malta.

And indeed, the criticism has been on point, given the lack of action seen to be taken by certain authorities over recent years when it comes to those who are considered to be in the top echelons on power. Regulations have also been found to be lacking by international authorities, and changes have been ordered.

However, heavy international scrutiny had begun to take its toll, and Malta’s reputation falling to pieces was something that needed to be addressed.

The Financial Intelligence Analysis Unit began working to address a lot of issues that had been found with regard to anti-money laundering legislation, which in this newsroom’s opinion is a great step forward.

Now the he Malta Financial Services

Authority is undergoing a two-year strategy, which takes it up to the year 2021. German regulator BaFin’s own president, Felix Hufeld, had told The Malta Independent that the strategy is so impressive that it could – if fully implemented – serve as a benchmark for the Germany regulator.

The key priorities of the strategy, MFSA CEO Joseph Cuschieri had said, “are governance, culture and conduct; financial crime compliance; financial sustainability; innovation; cyber security and resilience; organisation and operational capacity (increase resources); conduct supervision.

Such a statement by the head of the German regulator is surely a sign that things are moving in the right direction, at least in terms of regulation and strategy.

Nevertheless, the fact remains that Malta’s institutions have taken a beating. While the FIAU, for example, have conducted many investigations, it is the police who are being criticised for not following up, as was the case with a number of recent scandals.

Until the authorities put their money where their mouth is in terms of allowing the public to see justice taking its course; to see investigations actually taking place, rather than giving the impression that those with most power can do as they please, then all these changes being made by the authorities will simply remain cosmetic.

That said, praise from the head of a foreign regulator like BaFin is not something we are used to seeing nowadays. It is also commendable that the MFSA is striving to improve regulations and internal operations in light of the foreign authority’s scrutiny, and not dragging its feet. This was evident during discussions at the recent EY conference, for instance.

This year’s budget speech also included a particularly interesting proposal – the introduction of a limitation on cash transactions to €10,000 for high-value purchases such as property, vehicles, art, precious stones and yachts. This is one issue which can help fight tax evasion. Obviously, how this will be monitored is a challenge which the authorities need to sort out.

Indeed, all the changes being made in terms of regulation to combat financial crime need to be paired with strong and effective enforcement. The problem today is that Malta’s enforcement agencies are often seen as too lenient or, at times, willfully blind to the misdeeds of those in power. For Malta to be seen as a serious jurisdiction, this needs to change.