PRESIDENT’S ADDRESS

FABIOAXISA

AT THE TIME OF DRAFTING THIS ADDRESS, AS A COUNTRY WE SEEM TO BE HEADING TOWARDS ANOTHER UNEXPECTED PAGE IN THIS CORONAVIRUS SAGA. THIS IS A DEFINING TIME FOR EVERYONE AS WE NAVIGATE THROUGH THIS AND OTHER CHALLENGES - FOR US AS THE INSTITUTE, AS A PROFESSION, AS AN ECONOMY, AND AS A NATION. OUR BEHAVIOUR AND PERFORMANCE WILL BE JUDGED BY REFERENCE TO WHAT WE WILL MANAGE TO ACHIEVE THROUGHOUT THIS INTENSE PERIOD OF UNCERTAINTY. THE PANDEMIC AND THE MONEYVAL CHALLENGES HAVE BEEN PERSISTENT CAUSES FOR CONCERN FOR THE COUNTRY AND, EVEN MORE SO, FOR US WITHIN THE ACCOUNTANCY PROFESSION. FURTHERMORE, IMPORTANT DEVELOPMENTS IN THE REGULATORY FRAMEWORK, MARKET CONDITIONS AND EXPECTATIONS PRESENT NEW CHALLENGES THAT REQUIRE MORE RESILIENT AND CLINICAL PERFORMANCE BY PROFESSIONAL ACCOUNTANTS.

In the last few months, the Institute continued to engage in intensive interaction with members, stakeholders, other professions, public bodies and authorities to identify the main difficulties our members are encountering and to contribute with effective solutions to overcome these challenges. We are doing our very best to stay close to our members and to be decisive in our members’ lives. I am sure you want more and I will not rest until all our members feel included and proud to be part of this Institute.

Our strong voice on Moneyval

One of the key issues that worries our members is the country’s fate in respect of the Moneyval evaluation. In July as your President I represented the Institute in a high-level delegation which met Prime Minister Robert Abela to discuss the major issues surrounding the Moneyval evaluation and discuss the impact on the Financial Services Sector in Malta. This specially-designated forum also includes the Financial Services Business Section of the Malta Chamber, the Malta Bankers’ Association (MBA), the Chamber of Advocates, the Institute of Financial Services Practitioners (IFSP) and the Malta Institute of Taxation (MIT). Together, we presented a series of proposals to Government suggesting concrete ways on how to address the Moneyval matter and how to navigate through the evaluation in the coming months to safeguard the country and our market. Your Institute is considered relevant and influential - I was pleased that our feedback shaped the proposals and was attributed a lot of weight. The importance of having 3,700 accountants’ voices extremely concerned about this situation is evident.

The ‘Recommendations for the Moneyval Assessment’ document insists on continued enhancement of Malta’s regulatory and legal infrastructure in respect of AntiMoney Laundering/Combating the Financing of Terrorism (AML/ CFT) as well as Rule of Law, together with more concrete steps in the areas of investigations, prosecutions and confiscations. Our message to the Prime Minister was very clear and articulated. A fair degree of optimism in respect of going through the evaluation successfully was shared with us, which gives us a degree of confidence. However, as a country we have to raise the bar and ensure the appropriate actions and decisions are taken.

Together with the other partners, the MIA is also pushing for more transparency and effective communication to all stakeholders in respect of developments in this area, focusing specifically on Government’s actions on both technical and political fronts to ensure the damage to the country’s reputation is repaired. The recommendations go further, and we are suggesting the appointment of a technical, national frontperson on Moneyval related matters, who communicates the stance and progress on all Moneyval initiatives. Clearly, the strategy must be that we are on a long-term voyage – beyond the coming few months – to cleanse our name and re-establish the aura around Malta as a financial services jurisdiction and a reputable country. This will take time and will only work if all

elements within the chain work relentlessly and row in the same direction.

As President of the MIA I have been interviewed at length by the media about the seriousness and the impacts of Moneyval on our country. I believe I was very clear on the MIA’s stance and have taken a strong position on all topics. The members want a vociferous Institute and we will be firm, demanding and vociferous. I will not allow that our profession is blamed for the outcome of the Moneyval assessment – I understand that a large section of the membership base was feeling that blame was being shifted on to our profession and that our members were extremely concerned about this.

I will continue to refute this position in a categoric manner as our profession is not the principal polluter and hence should be respected accordingly. However as an Institute we will not tolerate that our members misbehave in this area and we will take action on any member that does not uphold our standards and values. We need to raise the bar and elevate quality – consistently and steadily – we expect this from our members. But rest assured that the Institute will always shield in an obsessive manner its members who do their utmost in terms of AML/CFT and will not allow that any party portrays our profession as a rogue one because of a few bad apples that we will ensure do not form part of our membership base.

The Moneyval outcome will not just affect the profession or the Financial Services Sector, but the country’s economy in its entirety. I believe we have been successful in delivering this message outside our own ecosystem and we have contributed heavily to reinforcing the message’s place on the national agenda. The Institute has emerged as a valued and respected member of the professional circuit and this national discussion is a challenge for the Institute to cement our profession as a fundamental contributor to the economy and marketplace.

I am also extremely proud that we are nearing the completion of the MIA’s project to propose amendments to the legislation regulating our profession – to define the services that can only be carried out by professional accountants and hence ensure that only professional accountants call themselves as such. Through this project we will be able to earmark those services which are relevant activities for AML/CFT purposes and ultimately propose guidelines for the profession in the area of AML/CFT addressing the earmarked relevant activities. These projects are landmark and defining activities. We are working extremely well with the Accountancy Board and the FIAU in this respect. We will reach out to our membership base with further training and education activities in relation to these matters such that the Institute heavily invests in the quality and rigour of our professional activities.

Coronavirus developments

Besides Moneyval, our country is battling another serious challenge with the Covid-19 outbreak – a menace both to people’s health and to our economy. The fallout from the first bout of the pandemic is still being felt among our members, even though we seem to be heading straight into a second wave at the time of writing. This situation affects everyone, and we believe that the Institute has a responsibility to make its voice heard on the matter. Last month, as active cases continued to increase, the MIA endorsed a strong statement by the Malta Federation of Professional Associations which called for the restriction of mass events. We joined other professional organisations to formally raise concern about the spike in Covid-19 infections as a result of gatherings and events that overlook safety protocols imposed by the government. It is part of our ethos as a profession to advocate for good sense and civic responsibility and, while the official joint statement supports a measured re-opening strategy, it calls on all sectors of society – from commercial entities to religious organisations – to exercise restraint and cooperate with health authorities to protect us from another outbreak. We continue to be disappointed that no specific support or aid measures targeted to professionals have been devised and we continue to raise this matter quite vociferously. We will continue monitoring the situation and will remain active in submitting further proposals if need be. We do not give up. Whatever your coronavirus concerns are as members, please do remember and keep front of mind that the Institute is there ready to support you and provide relief as much as possible. You are not alone throughout this corona saga. We will continue to provide our contributions to Government and other stakeholders. In this respect, we have supported the Department of Industrial and Employment Relations with Covid19 top-up exemption procedures, involving reports to be drawn up by professional accountants in certain circumstances, in the context of wage supplement declaration submissions. The Institute is proud to share its expertise and be of service to authorities during these strange times.

Our interaction with institutions and regulatory authorities

The Institute forges ahead with its strategy to pursue closer relationships with other associated institutions and regulators. A key activity was organised jointly with the IFSP and the MIT in late May, wherein the Consolidated Group (Income Tax) Rules issued by the Commissioner for Revenue (CfR) were discussed. The special online session was attended by more than 370 professionals and the CfR representatives went through the application of a Fiscal Unit. The change represents an important step towards more effective compliance. The CfR has published initial guidelines for practitioners, but we are informed that work on more detailed guidelines on technical issues is underway. Besides securing the latest information for our members, the webinar was successful in bringing together professionals involved in different parts of the process.

Last month we held a crucial information session with the Malta Business Registry (MBR) in response to doubts and concerns about recent changes to the registry. The Institute had the pleasure of welcoming top officials from the MBR, whom we thank for their eagerness to support our activities. We are interacting well with the MBR and we hope to continue recommending enhancements to support our members. Among other themes, the MBR officials explained the details of the legal requirements in respect of the Beneficial Owner (BO) disclosures and the revised requirements of the online submission document. Participants in the webinar also had the opportunity to learn about upcoming projects by MBR. This was one of the two occasions in July for members to ask questions to the MBR directly. Following the enactment of Legal Notice 247 of 2020, in mid-June, the Institute organised a briefing session on the latest changes to the Companies Act (Register of Beneficial Owners) Regulations. Participants raised over 100 queries in an engaging session led by MBR. Professional accountants are instrumental to the success of revised laws, rules, and processes. Our questions and concerns during information sessions are as important to regulators as their guidance is to us. Our professional pragmatism and experience help authorities design more effective procedures. The value of the profession’s insight was evident in the feedback that the Institute has once again collated from different segments of the membership base on the proposed regulatory framework for Company Service Providers (CSP) drafted by the Malta Financial Services Authority (MFSA). The supervision of Company Service Providers is a delicate matter, particularly in the current circumstances. Whilst we do not agree with all the published proposals, and we made this amply clear, we are ready to support and work together with MFSA to sustain a robust CSP framework. A delegation from the Institute presented our second round of feedback to the MFSA and we expressed our concerns in a detailed manner. I am pleased that some of our concerns and suggestions were addressed. Clearly on other matters we will endeavour to work with MFSA to find effective manners of cleansing the sector for the sake of the jurisdiction’s reputation and longterm sustainability. We have the same long-term objectives as the MFSA and whilst we do not agree on certain short-term and tactical solutions, we can work together with the regulator in a constructive manner to elevate quality in this sector. At the same time, we will demonstrate the prevailing quality of our profession through this process.

Our continued focus on members’ concerns

In these last weeks, the MIA was actively reaching out to stakeholders and authorities. At the same time, this was a period of upheaval for many of our members, too. We held a series of webinars to take stock of the situation and understand better where the Institute can intervene and assist professional accountants.

Amongst other initiatives, I attended a constructive meeting with representatives of the Professional Accountants in Business (PAIB) Advisory Focus Group in which we discussed the major concerns of professionals in this segment, especially in the face of pressures from coronavirus and the Moneyval assessment. The session was held prior to the meeting at the Office of the Prime Minister I referred to, and this helped the Institute in forming and cementing our views to be put forward officially. In the PAIB Group meeting we also discussed other matters such as the perceived independence of our regulator, the attractiveness of our profession to new talent, and the standards that must be upheld to preserve the integrity of the profession. It is clear that members expect the Institute to act as a voice of reason and change on national matters. And you have my word we will leave no stone unturned to achieve this.

In a separate meeting with the Small and Medium Practitioners (SMP) Advisory Committee, we discussed the MIA’s role in raising important issues on the country’s agenda. In that session, I assured the Committee that we are offering authorities and stakeholders, technical advice and support on the current important themes. Above all we continue to interact with regulators and entities to improve the lives of our members on day to day professional matters. We are working on different initiatives that emanated from this forum, necessitating interaction with MBR, CfR, FIAU, MFSA and MBA. It is our duty to see to the practical needs of our members and this is exactly why our internal committees and fora are invaluable. We discussed the regulatory and compliance regime SMPs experience. The meeting also focused on other sensitive matters including obstacles that practitioners face in opening banking accounts, the update to the CSP regulatory process, enforcement of professional clearance, and the Institute’s relationship with regulators and other professional bodies. It is always refreshing to meet seasoned members and professional accountants in these fora who are so enthusiastic about our profession today, as much as they were when they started off their professional lives.

Decisive moments

I have to admit that being the President of the Institute and working relentlessly for 3,700 members is sometimes a very difficult job even for an individual like myself with an incredible level of drive and ambition. However the encouraging words from you members, the gratitude you express in respect of our efforts, the sense of pride you demonstrate when we take positions, the desire to participate and contribute, your eagerness to share feedback and – why not – criticism when due, continue to fuel my relentless approach to giving our membership base the best. Many of you have been very kind to me and have supported me in a tremendous way. You are the best profession around and I am proud to be leading your Institute. Help me and support me further in elevating quality and the stature of our profession. These are defining moments for our accountancy profession.

INFO SESSIONS FOR MIA MEMBERS MAY – JULY 2020

4TH MAY WEBINAR: COVID-19 DIER CONDITIONS OF WORK - Q&A SESSION

In response to the frequently asked questions by MIA members arising from the recent COVID-19 disruptions on employment, the MIA invited representatives from the Department of Industrial and Employment Relations (DIER) to provide clarity on queries such as: • Can I force my employees to go on vacation leave? • Does an employer need permission when employees go on unpaid leave? The speakers presented the DIER mission statement before proceeding to answer questions by attendees, submitted both before the webinar as well as during the session. A Q&A list based on the event can be found on https://www.miamalta.org/e-library

29 TH MAY WEBINAR: CONSOLIDATED GROUP INCOME TAX

The Commissioner for Revenue (CfR) approached the MIA together with the Institute of Financial Services Practitioners (IFSP) and the Malta Institute of Taxation (MIT) to hold a joint webinar on the online application for the registration of a Fiscal Unit in terms of the Consolidated Group (Income Tax) Rules. The webinar covered the process of registering a fiscal unit, the new system known as ‘My balances’ (used to keep track of tax balances) as well as the consequences of registering a fiscal unit. The session ended with a Q&A session. The presenters explained that the process of registering a fiscal unit is a one-time process, not an annual exercise. What is required on a yearly basis, however, is the annual confirmation whereby the registered tax representative must confirm the composition of the fiscal unit and notify the CfR of any changes thereto. Companies or individuals who require any further clarification shall get in touch with the CfR calling 144 for queries related to companies, whilst individuals may contact 153.

19 TH MAY AND 7 TH JULY WEBINARS: OPEN DISCUSSION WITH MALTA BUSINESS REGISTRAR (MBR) AND MBR BO FORMS UPDATES Q&A SESSION

After coming to the MIA’s attention that members have been encountering various challenges and had several queries about the MBR, the MIA president, Mr Fabio Axisa invited MBR representatives to a webinar. The guests were Mr Josef Farrugia, Registrar and Chief Executive Officer; Dr Geraldine Ann Spiteri Lucas, Chief Legal Officer; and Mr Kenneth Brincat, Chief Operations Officer. The speakers explained the right interpretation of various issues raised, including the legal requirements of the Beneficial Owner (BO) disclosures and the new requirement of the online submission documents. The upcoming projects by MBR, including the new blockchain system planned to be available by the end of 2020, were also explained. During the session on the BO Forms updates held on 7th July, MBR representatives Dr Geraldine Ann Spiteri Lucas, Chief Legal Officer and Dr Deandra Schembri, Senior Legal Manager presented the latest changes to the Companies Act (Register of Beneficial Owners) Regulations, 2017 which became effective following the entry of Legal Notice 247 of 2020 which came into force on 16th June 2020. After the presentation, participants had the opportunity to ask questions and the MBR representatives addressed over 100 related queries. A Q&A list of the webinars can be found on the MIA website.