A €24.7 million government grant was needed last year to keep the Malta Financial Services Authority (MFSA) in the black, according to the authority’s annual report.

The financial regulator aims to become financially independent from the government by 2024 and its five-year business plan includes the introduction of new fees to cover services provided for free, as well as a revision in authorisation and supervisory fees.

Experts from the International Monetary Fund (IMF) said in their latest report about Malta last month that the MFSA’s operational and financial independence should be assured.

According to the IMF, the authority remains under strain due to the large number of financial institutions under supervision, the evolving regulatory environment and challenges associated with new and complex products.

It has faced a significant drop in revenue since 2018, when the Malta Business Registry’s functions were hived off.

The MFSA’s 2019 accounts show its operating expenses shot up by 46 per cent to €35.2 million, as the authority continues to invest in boosting its supervisory capabilities.

A total of €8.8 million was spent on enforcement and compliance fees, which is more than double the amount spent by the regulator the previous year.

Spending on professional fees cost €2.4 million.

A voluntary severance scheme has cost the MFSA €1.2 million over two years.

It registered an operating surplus of €673,582 last year, up from a €7.9 million deficit the previous year thanks to the government grant.

The MFSA is on the front line along with other key authorities to try to prevent Malta from being placed on a Financial Action Task Force watchlist that includes countries like Panama, North Korea and Iran.

A reshuffle of portfolio responsibilities when Prime Minister Robert Abela took office in January saw responsibility for the MFSA shifting away from his office to the Finance Ministry.