Malta Financial Services Authority Chairman Jesmond Gatt on Wednesday acknowledged that Malta’s Financial Action Task Force (FATF) grey listing encouraged the business community to unite and improve the country’s economic situation.

He was speaking during the latest edition of the Malta Stock Exchange (MSE) Executive Spotlight, where during an interview conducted by MSE Executive Chairman Joseph Portelli, he delved into a number of topics, one being Malta’s grey listing in 2021.

The FATF grey list identifies countries with strategic anti-money laundering and countering the financing of terrorism deficiencies. Malta was placed in the international anti-money laundering watchdog in June 2021 after it was deemed that the country is not doing enough to combat financial crime. A year later, it was removed from the grey list, restoring trust in the Maltese jurisdiction.

At the time of the grey listing, Mr Gatt was still Chairman at the Financial Intelligence Analysis Unit (FIAU), the role he was occupying prior to becoming Chairman of the MFSA last February.

The period during which Malta was on the grey list proved to be a time of reflection for the country’s financial services sector. Mr Gatt stressed that it “convinced the business community” that it needs to “come together and do the right thing” for the good of everyone in Malta.

Since being appointed MFSA Chairman, more industry stakeholders have reached out to him and the MFSA as a whole about the need for Malta's financial services industry to maintain a "robust reputation".

“The grey listing was a challenge to our reputation and the market tends to believe it is one of the most important points to work on,” he said.

Mr Gatt remarked that despite the grey listing, it is fair to say that considering the significant amount of licencees the MFSA has, it has had “a very limited number of incidents”.

He noted that this is one of the “strongpoints” for both the MFSA and the local financial services industry as a whole.

Mr Portelli then questioned which aspects of the MFSA need to be “transformed”, especially since Mr Gatt joined just earlier this year, bringing his extensive financial industry experience to the authority.

He pointed towards three particular areas, starting with that of technology.

“I’m a technology person, and I tend to use it a lot. However, when I arrived at the MFSA, I noticed that it wasn’t used that much. It was a matter of public procurement, as the MFSA was trying to acquire very specialised technology that was difficult to get,” Mr Gatt said.

He explained that the MFSA is now at “the point of resolving this”, aiming to use more technology and make great strides in terms of pushing for automation, enabling staff to focus on other areas rather than more repetitive tasks.

Additionally, Mr Gatt said that the MFSA is working on a number of new opportunities, including making strides with the Digital Operational Resilience Act (DORA) and Markets in Crypto-Assets Regulation (MICA), two initiatives that look towards the future of the financial services industry.

He also acknowledged that these opportunities are guiding the MFSA towards a restructuring.

Mr Gatt affirmed that staff poaching, a common issue within the public sector, is indeed a “reality”, but in a bid to compensate for this, the MFSA is providing its team of professionals with countless hours of training every year through its Financial Supervisors Academy (FSA). Developing this academy is one of the MFSA’s “key objectives”, he said.

“Staff poaching is a perennial problem in Malta, and for that reason we have quite a young cohort, which brings a lot of enthusiasm, but at the same time, we have a number of seasoned experts,” Mr Gatt continued.

Turning to the local financial services industry, he remarked that business has relatively slowed down in recent years because there are always times when an industry “develops” and times when it may “subside a bit”.

“I believe we’ve been very successful in terms of funds and insurance, as they have grown and have been successful. Now we need to look forward towards ESG and crowdfunding, among other things. We have many opportunities looking forward. We have to look forward at what’s happening in the next 10 years and we must be proactive,” he emphasised.

He said that cryptocurrencies “are here to stay” and MICA will “create opportunities for this to grow”.

“Digitalisation is on, and there’s no way out. I think there’s a convergence towards the idea that digital technology will be used for so many things that it not been used for before,” Mr Gatt concluded.