Malta for Financial Services
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Financial services represents one of the pillars of Malta’s economy.
Ever since the Mediterranean island nation’s accession to the EU in 2004, which attracted a raft of new investment opportunities, the sector has rapidly expanded to help Malta become a stable and reputable financial services hub for both domestic and international activities.
The Malta Financial Services Authority (MFSA) regulates the full financial services spectrum, testifying to the comprehensive nature of the industry here. This encompasses banking, financial institutions, insurance companies and insurance intermediaries, investment services companies and collective investment schemes, securities markets, recognized investment exchanges, trust management companies, company services providers pension schemes, and virtual financial assets.
In line with international best practice, Malta has reformed its financial legislation and works in close concert with its EU and Commonwealth counterparts, as well as the OECD to help model global regulatory policy. Today, the sector is marked by low levels of superfluous bureaucracy, cost competitiveness on the fees and compliance fronts, the upholding of standards and efficient operating procedures. It’s small wonder then that at the last count, the US International Trade Commission asserted that the industry contributes an impressive 11 percent to Malta’s GDP and amounts to the fastest growing sector of the economy.
“For English speaking Malta, Brexit has brought fantastic opportunities to Malta’s financial services industry – not least around fund administration, asset management and corporate banking.”
The industry’s growth ambitions are assisted and underpinned by a very supportive government, which seeks to be proactive in evaluating and updating the prevailing regulations and legislation to ensure it remains competitive. It is a sector largely based on the core sectors of asset management, investment funds, insurance, private wealth and corporate services, with the introduction of fintech, including blockchain and e-payments, as well as the aviation, yachting, and maritime services industries.
For English speaking Malta, Brexit has brought fantastic opportunities to Malta’s financial services industry – not least around fund administration, asset management and corporate banking.
Several hundred funds are already domiciled here, including a significant number of AIFs. This has served to raise Malta’s profile and, in turn, attracted banks, investment houses, fund managers and more sophisticated activities, as well as bolstered its international best practice credentials.
Malta also seeks to provide a nurturing landscape for blockchain, cryptocurrency and other pioneering fintech technologies and solutions.
The country has now been removed from the FATF’s grey list – where it spent a very short time – having swiftly strengthened its anti-money laundering and counterterrorist financing (AML/CTF) regimes, thereby addressing concerns regarding Ultimate Beneficial Owners (UBOs) and tax evasion. This speaks to the seriousness the Maltese Government attaches to the integrity and perceived integrity of the financial services sector and its importance to Malta’s continued growth and prosperity.
This compliance with international standards has removed a reputational risk that could have served to deter investors from accessing Malta’s competitive tax environment and business-friendly entrepreneurial ecosystem. By way of evidencing the importance of the removal from the grey list, Moody’s has changed Malta’s outlook from negative to stable in response and drawn attention to the country’s noteworthy credentials in terms of wealth, economic growth, debt affordability, institutional robustness, governance and fiscal strength.
In terms of opportunities for new entrants, these are many and profound, and relate to private banking, trade finance, blockchain, investment banking, venture capital, fund management and administration, captive insurance, accounting, group marketing, and a whole lot more besides. Malta’s workforce is financial services savvy and in being part of the EU, the country benefits from the free flow of EU citizens that the UK no longer enjoys.
And with tourism rebounding, Malta is well positioned in comparison to many of its fellow EU members. This stands even with the impact of the Ukraine conflict on cost of living, corporate margins and inflation, the cumulative negative impacts of which appear to be hitting the Mediterranean jurisdiction less severely than others.
Malta also benefits from a fiscal cushion established in advance of the global pandemic, that has helped to inure it from economic travails, while the country also stands to benefit from the European Recovery and Resilience Facility in the form of grants designed to assist – amongst other things – decarbonisation efforts.
Malta has a fine pedigree of resilience when it comes to weathering storms. Its well-developed financial services industry and strong legislative and regulatory framework saw it emerge from the 2008 global financial crisis relatively unscathed. Meanwhile, the World Bank holds the country in high esteem in respect of political stability, rights, the rule of law, institutional and regulatory quality and control of corruption. According to Fitch Ratings, this relates to Malta’s long history of stable and peaceful political transitions, well established rights for participation in the political process, strong institutional capacity, effective rule of law and a low level of corruption.
The best, most forward-looking financial services players know that their existing and potential customer base is best served through a long-term sustainable strategic focus on innovation, diversification and expansion. Interested parties should be making a beeline for those able to tick these boxes.
