32 · MONEY
INTERVIEW
ISSUE 54
KEEPING that CUTTING EDGE Federica Taccogna will chair FinanceMalta’s annual conference for 2019, which has innovation as its theme. She spoke to MONEY about the context of the conference at this point in Malta’s economic development. You have provided consultancy services to a number of jurisdictions around the world. How important is innovation and what does Malta offer that could set it apart from its competitors, who are all trying to do the same? Innovation is critical to the future of Malta; being able to support innovation, in a regulatorily safe and bureaucratically nimble environment, is crucial to attracting investment and achieving growth. I try, though, not to use the term ‘innovation’ for its buzzword-value only. One meaning of the word particularly close to home for me is ‘adaptability’: possibly a product due to my working in the ever-changing world of regulation. It is undeniable that the characteristics (business models, systems, operating structures) required to exist in business today are different from those five or 10 years ago. And much of this change is due to regulatory evolution. I believe successful firms, in the medium and long term, are those capable of constantly adapting. This means developing skills, structures and systems that are not just ‘good today’, but also capable of being ‘good tomorrow’ with minimal effort. For example, most organisations have struggled through multi-year transformation programmes in order to be ready for MiFID II, by and large, succeeding by deploying new cutting-edge (innovative, one could say) systems or fundamentally upgrading existing ones.
But... the scope of MiFID II is quite oddly defined; it excludes, for example, loan products. Were the scope of MiFID to expand to such products (and the possibility is not to be excluded entirely), all those new systems and upgrades will suddenly become insufficient if they were not built in an adaptable manner.
And very often the firm may have had — all along — data and other systems that it could have adapted — thereby achieving innovation, compliance and perhaps even cost saving.
In another area — financial crime — firms are increasingly realising the crucial importance of robust transaction monitoring to identify behaviours indicative of money laundering or terrorist financing, and run to buy the shiniest, most expensive tool they can find in the market.
My initial introduction was about a year and half ago. A few individuals were interested in hearing a ‘global perspective’ on regulatory and compliance matters and I was only happy to discuss topics I am passionate about.
That tool is often built with a ‘typical transaction pattern’ in mind, which, without heavy customisation, does not meet the needs of the average firm and fails to detect anomalous behaviour.
THE THREAT OF FINANCIAL CRIME IS REAL AND THERE IS NOTHING TO BE GAINED FROM EITHER UNDERESTIMATING IT OR PLAYING IT DOWN
How did your involvement in Malta start? What reassured you that you could make a difference?
Being able to make a tangible difference to the present and future of an entire jurisdiction is a unique position. I would lie if I said that reputational concerns were not raised at the initial stages of my involvement with Malta. As I grew to know the individuals and environment, though, my doubts were largely cast aside. Undeniably, there is a widespread desire, in Malta, to ‘do the right thing’. In respect to negative coverage in relation to Pilatus and other financial crime scandals, I have never perceived any attempt to deny shortfalls (that exist in Malta like in a large number of other jurisdictions globally), but rather, a desire not to generalise and condemn an entire jurisdiction for the wrongdoing of a few bad actors. And, provided this is accompanied by a serious investment in enhancing and
