Financial services sector grew despite pandemic challenges in 2020 – MFSA

Despite the unfavourable circumstances brought by the Covid-19 pandemic, the financial services sector last year saw an increase of 5.5% in real Gross Value-Added rate, which grew to €1.028 billion in 2020. Employment in the sector grew by 7.6% over 2019.

An overview of the financial sector in 2020 was given in the Malta Financial Services Authority’s annual report, which was tabled in Parliament on Wednesday.

The authority noted that this year was inevitably shaped by the spread of the Covid-19 pandemic.

Yet, despite these challenges, the authority said it remained on course to achieve its target as set out in its Strategic Plan, as its workforce moved to work remotely, embracing virtual meetings, outreach and inspections.

The report for the year under review highlighted a higher number of supervisory inspections totalling to 419. This marked an 84% increase from 2019 and a 149% increase over 2018 figures.

With regard to the integration of Anti-money laundering (AML) and Combatting the Funding of Terrorism (CFT), the authority remarked that this is at the core of the authority’s risk assessment and supervisory frameworks.

The authority said that it conducted 81 supervisory inspections on behalf of the Financial Intelligence Analysis Unit (FIAU), both as full-scope (comprehensive) and focused (targeted) inspections.

In addition, 265 applications were processed for authorisation, 25% of which were withdrawn or refused.

The MFSA also ensured that ongoing monitoring of the effect of Covid-19 as well as Brexit on the sector including its effects on financial stability took place.

The report also showed how during the past year, the MFSA’s human resource underwent significant enhancements and investment.

“A total of 16,383 hours of training was provided to MFSA staff,” the report stated.

In the year 2020, the authority also saw to it that a Financial Supervisors Academy was set up to provide training programmes to employees, as well as to other regulators, supervisors, policymakers and academics outside of the MFSA.

Other measures which the authority took in 2020 was the continuation of the implementation of the Authority’s Technology Strategy as well as reaping the results of recent investments. The authority also focused on ensuring stability, continuity, and growth for both the authority and the sector and continued focusing on investor protection and consumer education.

The report further showed that the MFSA’s Enforcement Directorate issued a total of €975,462 in administrative penalties, as opposed to the combined total of €1.2 million issued in the three years between 2017 and 2019. This year’s penalties resulted into 52 enforcement actions taken.

A tenfold increase in the number of registered beneficial owners of trusts with more than 3,000 decelerations being registered was also highlighted in the report.

MFSA’s Chairman John Mamo observed that “despite the adverse circumstances generated by the pandemic, we are pleased to note that the Maltese financial services sector continued to grow and generate employment opportunities over the past year.”

“We remain determined to steer the sector to a higher threshold of longterm sustainability, also through the integration of new areas of supervision and potential growth,” he added.

Meanwhile, MFSA’s CEO ad interim and Chief Officer Supervision Christopher Buttigieg remarked that in 2020, the MFSA continued to augment its capacity and capabilities, producing supervisory performance results.

“The authority delivered on commitments made with international standard setters and on projects which had been mapped out in our strategic plan,” Buttigieg said.

He added that “we are encouraged by the fact that as eventful as 2020 was, and as ambitious our strategic targets are, the authority and the sector have remained steady on course. Looking ahead, the authority shall be focusing on bringing stability for the long-term benefit of the financial services sector, providing continuity, and fostering the sustainable growth of the sector. By focusing on these three pillars, we shall continue achieving positive results.”