The Malta Financial Services Authority's two year strategy, which takes it up to the year 2021, is so impressive that it could - if implemented fully - serve as a benchmark for the Germany regulator BaFin, BaFin's own President Felix Hufeld told The Malta Independent on Monday.
MFSA CEO Joseph Cuschieri briefed a hall of 300 or so delegates about the MFSA's reform strategy on Monday, with the strategy itself garnering praise from Cuschieri's German counterpart.
"I think it's a very impressive strategy; very ambitious, and very good. I think if [the MFSA] does implement everything we have heard today in the next couple of years we will come back and take it as a benchmark", Hufeld told this newsroom.
Asked which part of the strategy had stood out the most, Hufeld said that, aside from the basics, he was impressed by its very strong focus on technology, adding that the level of ambition shown by Cuschieri to transform the MFSA through technology, and improve data management is "absolutely fantastic".
In his presentation, MFSA CEO Joseph Cuschieri said that the authority had received constructive feedback from stakeholders which all pointed towards the desire for an authority which is robust, forward looking, efficient, and effective.
In explaining the MFSA strategy up until 2021, he denoted various key priorities.
Firstly, a reform is needed in governance, culture, and conduct, he said, with a soon to be published reform in the standards for corporate service providers an example of this. He said that the industry however needs to raise its own standards to make sure that the jurisdiction remains safe.
A lot of money meanwhile - €3 million this year alone - has been invested in financial crime compliance and Cuschieri noted that more collaboration between regulators can minimise the risks of financial crime entering the Maltese system.
The key priorities, he said, are - governance, culture and conduct (publishing a major reform in standards for corporate service provides in the coming days to raise standards and give new framework); financial crime compliance; financial sustainability; innovation (12m in cutting edge tech); cyber security and resilience; organisation and operational capacity (increase resources); conduct supervision.
He said that the MFSA was working, for instance, on knowledge management so to be more knowledge based, while it was also working in the technology and innovation sector as well, with a €12 million investment in cutting edge technology coming in as of late and with systems which will automatically manage all supervision also being procured. Cuschieri said that by 2021 he wanted the MFSA to be the role model for the application of the latest technology.
He commented on the need for a focus on cyber security, saying that cyber security guidelines for all supervised firms will be issued, noting that a concerted effort will be made to ensure that there are implemented and complied with. He also noted that at an organisational and operational capacity there will be more staff training and also the introduction of an Academy of Financial Supervisors as part of this strategy.
On supervision, he said that nothing replaces on-site visits, and added that the only way the MFSA can ensure compliance is by visiting companies more often, with the riskier companies being visited even more frequently.
"The aim is for a more robust and future proof organisation", he said before speaking about the importance of sustainability in reform, resources, and technological investment.
There should be a drive for technological, evidence-based and data-driven regulation with a proactive approach, risk-based supervision, and, above all else, ongoing engagement with stakeholders, he concluded.
Meanwhile, in his own keynote address on the future of financial supervision, Hufeld said that what is being witnessed in the financial world is that everything is changing at a very fast pace.
He noted that financial regulation must take into account a variety of challenges, most notably the digital transformation that is shaking up the global market. "We must endeavour to shape the digital transformation in the scope of our mandate; to make and keep ourselves fit for the digital era", he said.
Hufeld looked at five issues pertaining to the world of financial supervision. Firstly, he noted, however much the market changes, the need to draw analytical, data-based conclusions will not change.
However, while the craft will not change in principle, the supervisors themselves must remain technically up to date and be able to operate shrewdly and competently in the international arena, he said.
He said that care and attention must be given to new forms of businesses entering the market, drawing an example from Apple and their new Apple Pay system, which could eventually influence the European market.
He also questioned who, in the future, would actually be doing the supervising and said that the question of how much reliance should be given to computer and algorithms in the financial supervision world. He said that the ultimate responsibility should still remain in the
Photos and video: Michael Camilleri