The financial services industry is possibly the golden goose of the Maltese economy, pumping up to €1.7 billion to our Gross Domestic Product per year and providing for over 12,000 families with high quality jobs. It all started with the genial ability of the Maltese to make lemon juice from lemons. The jurisdiction that could not provide much in terms of natural resources and natural connectivity in mainland Europe turned those disadvantages into a competitive edge, becoming a natural landing place for financial services handling and hosting.

This golden goose was something to be proud of, also from a political stand-point. For long years, all politicians across the board and without regard to party affiliation defended and promoted the industry. Be them labour or nationalist, everyone highlighted the solid regulations underpinning Malta's appeal to the industry. Barring a few incidents in the European Socialists' Manifesto, hopefully to remain dead letter, we also stood united to defend Malta's position fending off tax harmonisation, as this would risk nibbling at our competitive edge.  

That climate of unity and single national resolve helped this golden goose prosper. Malta was indeed there to attract business when other jurisdictions were losing their grip. We did that in the late nineties and also later on. Over the past few years we seem, however, to have been losing the grip ourselves. The industry itself continues to deliver. Our professionals continue to specialise and innovate, providing to constantly evolving client needs. Our services have also weathered, with contained impact, the myriad of additional regulations brought over the years due to the banking crises and money laundering rules.

But while the professionals can adapt to the changing context and come up on top, the reputation of Malta as a permanent address for their financial portfolios does not depend on them alone. Over the past years, our brand has been tainted by incidents, gradually piling up a case against our previously solid reputation. So much so that the Financial Action Task Force is now in the process of evaluating whether Malta deserves its place among the reputable financial services centres. The toil and investment of thousands over decades is now coming to a decisive judgement which could deal a death blow to the industry.

Yes. We are speaking of a death blow, not a simple pull at the ear. For if, tragically, Malta ends up on the FATF grey list (which is akin to its black list given that only Iran and North Korea are on that), doing business with Malta will simply become too complicated to be worth it. As it stands, with EU money laundering and financial rules, banks and financial operators are already burdened with enough compliance costs to question the viability of a number of business models in the industry. The handling of transactions from countries on a grey list would make business intolerably bureaucratic. Instead of vetting one off transactions, our counterparts would need to basically vet every move relating to a Maltese account. This would lead to a gradual but almost certain asphyxia of the golden goose.

Government is well aware of all of the above. Its resolution is, however, split in two contrasting expressions of will. The first one is adamant on responding to the Moneyval recommendations and is presently deploying all technical measures in an attempt to avert the grey-listing. The second expression of will is not so resolute and is giving contradictory political messages that seem to want to condone alleged corruption and abuse of power instead of cutting the head of the snake.

The first expression of will is the one behind the FIAU finally coming to life after years of deep sleep and numerous closet reports. Over the past few months, the body has dished out penalties exceeding by far the tally over the last seven years. This resolution to save Malta from the grey-list is also clearly evident in the efforts of our civil service, now working overdrive to respond to the shortcomings identified in the 11 criteria analysed by Moneyval. If it were to depend on these guys, clearly the FATF should have no more hesitation but proceed to place Malta on its list of reputable jurisdictions.

Unfortunately, the industrious efforts of our industry and our public service are not matched with the same dedication by the second expression of Government will. This is the one clearly represented by Prime Minister Abela when he refuses to condemn the conflict of interest by the MFSA chair and legal counsel on a very shady trip with Yorgen Fenech. That yard stick will have its bearing on the Moneyval assessment and the subsequent FATF decision.

To me, the contrast is painful. So while the diligent public officials working overtime to restore our reputation would be prohibited from taking a basic gift in the course of their duty, the MFSA Chairman was providing his out-of-office services to Yorgen Fenech in the flamboyant Caesar's Palace in Las Vegas.

While our reputable financial operators now live in the anxiety of FIAU penalties up to a million euros for sanctionable mistakes in the bureaucratic documentation of a PEP, the actions of an FIAU board member who felt at liberty to take gifts from the owner of 17 black go unpunished.

This contrast highlights the tragedy steered by none other than Prime Minister Robert Abela. He has shown himself to be weak once again, by not taking immediate action in this last in a string of cases. He has shown himself weak or too hooked on propaganda to face reality when he keeps on insisting that the European Commission has no basis to take Malta to the European Court of the passport sales.  

Abela's demeanour is a slap in the face to Malta's efforts to avert the Moneyval disaster. With his predecessor, they dug the grave pretty deep already. All in not yet lost however. There may be one way of averting this if Abela seeks for the political common ground which has been the foundation of the Maltese services industry since the nineties. That will require his biggest sacrifice. He will need to start by shedding off the propaganda ridden, populistic tone, that is quickly becoming his hallmark.

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