The government has received a 50-point plus plan, actionable over the next three years, on how to strengthen its financial institutions from a leading international consultancy firm that has carried out a national risk assessment.

The plan, which is being led by the finance ministry, aims to strengthen the national institutions that have come under considerable fire of late and to bolster efforts to combat money laundering and fight tax evasion. The plan covers the operations of entities such as the Malta Financial Services Authority, the Central Bank of Malta, the Financial Intelligence Analysis Unit, the ministry itself, the Inland Revenue Department, and the Police Force.

Contacted about the initiative yesterday, Finance Minister Edward Scicluna stressed that it was not the result of a kneejerk reaction to recent developments and criticisms but, rather, is to be seen in the wider context the financial services sector’s rapidly changing landscape. 

This is also considering that Malta is “specialising in certain areas such as iGaming, financial technology (FinTech) and blockchain”, which require special attention to the dark underbelly that comes with such areas of operations

With such services, which far outstrip the needs of the local market and which are global in nature, also comes a tangible risk. As such, he explains, the country needs to have the right levels of efficiency, expertise and even software of a certain calibre with which to keep an eagle eye on such activities.

“One needs to be careful with new industries such as FinTech,” Scicluna explains, “because every once in a while there can be a bad apple. With companies out there specialising in money laundering, for example, there will be risks and we need to maintain our reputation, and we need to mean it. We also need to have the energy and dynamism to really go for it.”

The plan, he said, was also to be seen in the context of visits this year by the International Monetary Fund’s Financial Sector Assessment Programme and the Council of Europe’s Moneyval Committee, visits which normally do not coincide with each other but did so this year because of the exigencies related to the timing of last June’s snap general election.

Scicluna was, however, reticent about going into the specific recommendations from the consultancy firm, explaining that the government will be communicating a specific strategic plan on 11 April to the European Commission, in which the details will be spelt out.

The plan, he said, demands results and the consultancy firm, the name of which has been made available to this newspaper but which is being withheld in the interest of confidentiality, has determined the areas that are of high, medium and low risk. The firm will also help see the project through to fruition.

Scicluna explained that a National Coordinating Committee, with its own permanent secretariat, has been set up and that it will work closely with the finance ministry, whose permanent secretary will also serve as its chair. Skilled professionals will also be sought to staff the new secretariat.

The plan Scicluna explains, consists of not only recommendations, but also “specific, doable and tangible” targets, and that the ball will be set rolling sooner rather than later as the issues raised are of paramount importance.

The International Monetary Fund’s Financial Sector Assessment Programme’s chair and deputy chair, Scicluna explained, were just here in Malta for consultations, and, he remarked, “They saw a case study in real time of our regulatory process with the Pilatus Bank issue. If that had not been handled well, they would have been shocked but they were, in fact, largely satisfied.”

The Moneyval committee, Scicluna added, was here about a month-and-a-half ago and gave training to institutions such as the Malta Financial Services Authority, the Central Bank of Malta, the Financial Intelligence Analysis Unit, the Finance Ministry, the Inland Revenue Department, the Police Force and the Sanctions Board. 

The relatively new Asset Recovery Bureau, which deals with the freezing of assets from the proceeds of crime, also recently visited The Netherlands to view their best practices and to learn from them.