Last week, in a speech in Parliament unfortunately missed by the media, Opposition MP Tony Abela, a practising notary, complained that banks are being forced to subject clients, entrepreneurs, businessmen, etc to rigorous checks and controls that make any investment venture a hard and hazardous climb.

It is no use, thus Dr Abela, that a client has been working with a bank for many years and has had a trouble-free relationship. The banks have to submit him to rigorous checks as if he is a thief. The relationship has been turned to one based on suspicion.

Dr Abela admitted this is all because of an increased concern as regards money laundering and that the pressure to increase the checks has come from abroad, especially the EU, but the end result is that an increasing number of people have started to operate outside the banking system, that is, on a cash basis. Malta already has a problem in that it is one of the most cash-based economies in Europe.

Now, while understandable, this is neither to the banks' benefit nor to the clients'. Clearly, clients need banks or lending institutions, as otherwise they would have to operate on their own resources and little else. Clearly too, banks need clients as their 'raison d'etre'.

The banks in Malta have proven themselves in the bad days of the European crisis and have emerged unblemished.

To take but the latest in authoritative pronouncements on the sector, the IMF said just last week (see page 4): "The banking system remains resilient. Banks are well capitalized, profitable, and liquid. Solvency and liquidity of core domestic banks and other peer banks remain above the minimum regulatory requirements, and their profitability is above the euro area average.

"But nonperforming loans and the cost of credit remain high. The increase in the coverage ratio and the national authorities' consideration of using further Pillar II measures to reduce NPLs are welcome, and further increases in coverage ratios as envisaged is appropriate. The completion of the ongoing work on insolvency legislation, aiming to reduce court proceedings time and enhance contract enforcement, should help improve NPL resolution.

"Given the large size of the financial sector and ongoing regulatory and supervisory changes, continued policy actions are needed to boost resilience of the banks. Policies should focus on:

(i)                   a swift implementation of bank action plans to ensure a level playing field and sound supervision;

(ii)                  following the transposition of BRRD into national law and the establishment of a separate resolution unit in the MFSA, developing bank recovery plans and collecting of contributions for the resolution fund;

(iii)                 strengthening the contingency framework, including by reducing the share of special contributions to DCS fund,

(iv)                 introducing additional precautionary macroprudential measures, given the rapid increases in mortgages and pick up in real estate prices, and

(v)                 (continuing to coordinate closely and ensure robust implementation of the AML/CFT framework in line with the 2012 FATF standard."

There is nowhere the advice to treat clients/customers with underlying suspicion, nor to be sure, to cut corners for clients or customers.

The more clients are pushed out of the banking system, the more they will be tempted to resort to unregulated and possibly criminal money lenders with dire consequences all around.

It is true that the Notary was most probably reflecting on the clients a notary would have, ie people engaged in the construction or property business, and there is a lot to say in this regard, but the banks themselves would be wise to resist pressures from outside Malta which are not really addressing the situation in Malta and trying to impose a one-size-fits-all regulation that would remove the almost family-like relations between the bank and its clients.