Hopes for more sustainable financial services sector post-Covid outlined in FinanceMalta conference

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    Hopes for a more sustainable and robust financial services industry in the post Covid-19 era were outlined on the first day of FinanceMalta’s 13th annual conference on Tuesday.

    The conference, which is being held between today and Thursday, titled ‘Innovation in Financial Services: Gearing up for the new post Covid-19 era, is being hosted by FinanceMalta with the participation of a number of stakeholders, both local and international.

    The conference was opened by FinanceMalta Chairman Rudolph Psaila and Prime Minister Robert Abela, who said that Malta is re-gaining the trust of its international partners when it comes to the financial services sector.

    The first day of the conference saw a total of three panel discussions take place.

    The first, titled Malta’s Vision for the Financial Services Industry, saw the participation of FinanceMalta Chairmain Rudolph Psaila, MFSA CEO Joseph Cuschieri and the President of the IFSP Wayne Pisani. Deborah Webster, the Co-Founder and CEO of AMANIcircle, moderated the panel.

    Within this panel discussion, Cuschieri noted how the Covid-19 had left a minimal impact on the financial services sector, with only a 1.5% decrease in profits registered.  He said that the pandemic had also given the MFSA time to plan beyond the pandemic, revealing that the authority will soon be publishing a Post-Covid Strategic Statement.

    He hoped that a positive outcome of the pandemic will be the triggering of sustainable growth within a more robust sector.

    MFSA CEO Joseph Cuschieri

    Psaila meanwhile said that practical issues need to be kept in mind, saying that initiatives such as those pioneered by FinanceMalta in the form of a banking working committee in order to keep contact with institutions to aid stakeholders and those coming to Malta to open bank accounts, hence making the country more attractive to investors.

    He said that in mapping out Malta’s vision for the future of the sector, the country needs to go back to ground-zero and envisage how the industry would have evolved if the tools which are available today had been made available when the sector was still in its infancy.

    Pisani meanwhile advocated for a healthy capital market environment, and also looked at learning from positive experiences such as the Prospects MTF launched and operated by the Malta Stock Exchange, which helps larger SMEs tap into the capital market and increase the appetite of businesses to go public.

    FinanceMalta Chairman Rudolph Psaila

    A session focused on Anti-Money Laundering followed, with two panel discussions taking place.

    The first panel discussion gave a more overseas look at matters, with Igor Nebyvaev, the Executive Secretary of MONEYVAL, participating through a video message answering questions.  Ilza Znotina, the Head of the Financial Intelligence Unit in Latvia, Liliya Gelemerova, the Senior Financial Crime Advisor, Head of Transactions Monitoring and Investigations/UKFIU, DMLRO, and Director at Commerzbank, and Alfred Camilleri, the Chairman of Malta’s National Coordinating Committee on Combating Money Laundering and Funding of Terrorism also took part.

    The panel was moderated by Federica Taccogna, the Senior Managing Director of FTI Consulting.

    During the discussion, Nebyvaev said that if there is one thing that the FinCEN files – which is a recently leaked cache of suspicious transaction reports flagged by some of the world’s biggest banks – demonstrated, it is that further investment needs to be made in the analytical capacity of Financial Intelligence Units across the world.

    He said that he is hopeful that there will be a number of guidelines in the near future from international standards centres which will help facilitate the practical arrangements necessary for the exchange of information between supervisors in different countries.

    MONEYVAL Executive Secretary Igor Nebyvaev

    Camilleri meanwhile noted how in order for supervisors to be able to work effectively, they need the absolute cooperation of all other stakeholders in the industry.

    “We need to pull the same rope, as otherwise the system will not work as effectively as we desire it to work”, he said.

    Gelemerova said that there needs to be clarity on what practices to follow when a suspicious activity report (SAR) is filed and what is to be done with the business who is victim of this SAR.  She said that currently there is the practice of de-risking and immediately offloading the client, but noted that it may be worth considering educating the clients on what they did wrong rather than de-risking them.

    It is important that any such practice is approved by the country’s regulators however, Gelemerova said.

    Znotina meanwhile spoke of Latvia’s experience in reforming themselves following a less than complimentary Moneyval report – where the country failed 10 out of the 11 assessment criteria.

    She described the initial assessment as a “reality check” and said that she understands what Malta is going through in preparing for its own final assessment.

    She said that what is important is continued, close cooperation between the different stakeholders, and a political conviction to support all the necessary processes and reforms which are needed to satisfy the recommended points of action.

    Chairman of National Coordinating Committee on Combating Money Laundering and Funding of Terrorism, Alfred Camilleri

    The final panel of the day was made of the MFSA’s Chief Officer Christopher Buttigieg, the FIAU’s Director Kenneth Farrugia, the Assistant Police Commissioner responsible for the Financial Crime Investigations Department Alexandra Mamo, and the Executive Head of the National Coordinating Committee on Combating Money Laundering & Funding of Terrorism Helga Buttigieg Debono. 

    The panel was moderated by Aidan Larkin, who is a partner at Asset Reality.

    Assistant Police Commissioner Alexandra Mamo

    During the short discussion, Mamo detailed how the police had revamped its handling of economic crimes in recent months, with an inspector now solely dedicated to investigating tax-related offences, and eight inspectors dedicated specifically to fraud and corruption.  A new blockchain analysis unit has also been set up, while she said that the police are continuously investing in new software and technology in order to combat new types of crime.

    Executive Head of the National Coordinating Committee on Combating Money Laundering & Funding of Terrorism Helga Buttigieg Debono

    Buttigieg Debono spoke about the barriers associated with virtual assets, which are still very young in nature, wherein she noted that different jurisdictions are still identifying different ways of tackling these virtual assets.  She said that one needs to understand them, their risks and how to mitigate them when coming up with a regulatory framework for them.

    Building on this point, Chris Buttigieg meanwhile said, when asked about striking a balance between allowing business to flourish and preventing money laundering, that he believes that Malta’s framework has reached a certain degree of proportionality in this regard.  He said that while there are instances where Malta has gone above and beyond, overall balance has been achieved especially when comparing to what the European Commission has proposed.

    He said that Malta had started off with 180 interested parties, which resulted in 34 actual applications. These have been whittled down to just 21 after further analysis and due diligence, with one of those having received principle approval.

    This is a long term sustainable strategy and Buttigieg said that they are pleased to see Europe propose something similar to what they have implemented.

    FIAU Director Kenneth Farrugia

    Kenneth Farrugia finally said that the FIAU’s enforcement has not been just about pecuniary fines, which attract the most coverage, but noted that there have been a number of other actions taken which are very effective in enhancing compliance in subject persons.

    FinanceMalta’s 13th Annual Conference, titled ‘Innovation in Financial Services: Gearing up for the new post Covid-19 era’, will continue on Wednesday and Thursday.

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