The financial services sector is a very valid and important contributor to the nation’s prosperity, as during the pandemic the sector rose by 6%, while the economy contracted by 7%.
In his address to the 14th edition of FinanceMalta’s Annual conference titled ‘Malta’s Financial Services Industry: Emerging Stronger’, Prime Minister Robert Abela said that the financial services sector forms an essential part of the diversification of our economy and generates substantial numbers of high-quality employment for our graduates. He added that having a good financial centre is a pull factor for foreign direct investment.
The Prime Minister believes that it is crucial that we do not let the low-lying fruit of the financial services sector hinder its evolution:
“We cannot afford to be trapped in those parts of the financial services sector that are of less value added than others. It is one thing to operate in large traffic low value processing of international payments, and another to be a centre that offers specialised finance high value-added services to airlines, and shipping lines.”
Following the action plan agreed with FATF, the government is redoubling its efforts to successfully implement further reforms which boost resources to regulators, the courts and our investigative and prosectorial authorities. The Prime Minister said that he is heartened by the positive signals already sent by two of the four rating agencies that rate Malta. DBRS has confirmed our A(high) rating while Fitch have issued a press release to state that we will retain our A+ rating. On the other hand, the European Commission has also indicated its trust in our economy, by upgrading our forecast economic growth by twice the amount it upgraded its forecast for the rest of the EU. The Prime Minister said:
“This shows that we are starting with considerable trust, which reflects the very positive assessment made by MONEYVAL, certifying that our framework conforms to good standards on a technical level. What FATF is now asking is for better effectiveness in three particular areas.”
During the pandemic the sector rose by 6%, while the economy contracted by 7%.
In view of this, more measures will be undertaken to strengthen Malta’s anti-money laundering and combating the financing of terrorism framework, while further action will then be taken to continue to demonstrate that beneficial ownership information is accurate, to support authorities pursuing criminal tax and related money laundering cases, and to increase the focus of the FIAU’s analysis on these types of offences, by producing intelligence that helps Maltese law enforcement detect and investigate cases in line with Malta’s identified money laundering risks. The Prime Minister reiterated that this is a high-level political commitment for him and the government.
Furthermore, good governance is one of the five pillars of the government’s Economic Vision, and a priority is also dedicated to this in the recovery plan. Another €10m will be used to strengthen institutions including the digitalisation of the justice system and the capacity building of the the permanent commission against corruption and the asset recovery bureau.
Looking forward, the Prime Minister said we need to accept that the financial services sector will continue to experience ever rising regulation. Although the digital transition has created new opportunities, it has also given rise to new risks, and regulation will need to address this.
Another area where much more needs to be done is in the area of green finance as we are at the cusp of a veritable green revolution.
The Prime Minister also highlighted the need to integrate further the financial services sector with the rest of the economy by having a stronger local presence:
“The Maltese economy has doubled in size, and offers huge opportunities to financial services firms. I believe that catering more for the needs of operators located in Malta could be a winning formula both for financial services firms and for the economy as a whole.”