When the Financial Action Task Force decided to place Malta under enhanced monitoring rules, the country turned grey. The business community, from large enterprises to micro-companies, felt a sudden change in the air. For decades, generations of business leaders worked tirelessly to raise Malta’s profile on the global stage and build its name as a smart choice for investment.
That was not an empty promise as foreign investors found a stable and well-regulated country with burgeoning business infrastructure and an able human resource base. Local businesses were the main drivers of this evolution and today we measure our business ecosystem against the highest international standards.
The greylisting by the FATF was a terrible disintegration of all that the country has achieved. In the short period since independence, Malta’s economic success was guided by hard work, industry and enduring values of integrity, trustworthiness and decency. A resourceful nation, we were adept at anticipating global changes and giving companies the opportunity to innovate and expand. Malta’s attractiveness put it in direct competition with the big boys of Europe.
That all changed overnight. We now find ourselves in a lower league populated by countries torn by internal strife and other serious social and political challenges. This is just surreal.
The transformation, however, did not happen overnight. The notorious grey list harms our actual position, but the FATF decision only reflects the opinion that our fellow members in the club have formed about Malta in recent years. Our name was already tarnished by the time the plenary convened in June.
Businesses and their representatives had repeatedly warned authorities about this risk, demanding an honest evaluation of the system of checks and balances and a fair implementation of anti-fraud regulations. Most of us grasp the spirit of the law and abide by it without question, and yet the few wrongdoers have besmirched our reputation and damaged our national brand.
This is an unprecedented obstacle for our economy, greater even than the fallout from the COVID-19 pandemic. It puts us at a disadvantage with competitors right when countries are preparing to emerge from the global slump.
Businesses already know the effects of loss of trust by the international community, with added paperwork, loss of correspondence banking and heavy scrutiny. For years now, companies have been carrying this accumulating burden while the economy was growing, and things are not expected to get any lighter now with the added uncertainty.
It is unhelpful to point towards the new regulations adopted at breakneck speed and expect other jurisdictions to pat us on the back. Businesses had a good reputation even when the stringent rules were not in place, so we were only forced to introduce those measures after that reputation was lost.
The business community in Malta does not belong in this awful arena and we cannot afford to stay here for long. We need action right away.
Although fatalism will not help us overcome the challenge, overconfidence must also be kept in check. When authorities tell us that our economy will continue to grow regardless of the greylisting, they are downplaying the painful consequences of the FATF verdict. This strategy may calm the markets and hearten families in the immediate term, but unless it is coupled with real corrective steps in the areas highlighted by the international body, the self-assured narrative will only serve to erode investor confidence in the future.
What we need, instead, is to embark on an honest and systemic upgrade of our compliance culture. Businesses are already doing a lot, but new regulations without addressing enforcement do not change much. The conclusions of the FATF plenary pointed squarely at shortcomings in the execution of the rule.
We have to reintegrate ourselves into the world system and restore the country’s good name. Often, we seem to believe that Malta is invisible to its international partners and that what we think are internal affairs do not have an impact on other countries. This isolationist attitude does not hold in the modern world and the high-value economy that we are aiming to create.
This is the time to regroup around the common project of rebuilding our credibility. We must leave no stone unturned in establishing stronger foundations in good governance and productive oversight.
The business community has shown great maturity in adjusting to an accelerated programme of new AML procedures, even during the anxiety of the pandemic. We expect nothing less from the political class.
Grey is not our colour and, together, we shall regain the world’s trust. This will be a lesson in principle-based competitiveness. Let us remind future generations of what happens when we ignore the rule book of rectitude. Let us show the strength of character that propelled Malta’s first waves of success. We have all the attributes to realise this mission and prevail we will because we are proudly Maltese.
Franco Azzopardi, CEO, Express Trailers