Malta offers many other advantages as a domicile for international banking business. Apart from having an ideal geographical location, as well as benefiting from EU membership and the Euro as a single currency, the country also enjoys a prompt, efficient and accessible Regulator – the Malta Financial Services Authority (MFSA). As UK companies are seeking post-Brexit solutions as those based within the UK will not be able to keep operating as they do so today, Malta offers various attractive opportunities within the Banking Sector.
The Maltese fiscal regime has also been one of the main drivers in creating an attractive investment environment. Malta’s tax system has been deemed by the European Commission to be compliant with EU non-discrimination principles, and with proper planning and structuring, investors can achieve considerable fiscal efficiency using Malta as their base.
Prudent management and a conservative approach allowed the Maltese Banking industry to emerge largely unscathed from the financial storms of the past decade. The Maltese banking system has consistently been found to be among the top fifteen soundest banking systems in the world by the World Economic Forum Competitiveness Report.
Banking & Financial Institutions Act Within Malta's Banking Sector
Banking institutions in Malta are regulated by the Banking Act (“BA”) which is founded on European Union legislation and is compliant with the Basle Core Principles. Non-bank financial institutions are regulated by the Financial Institutions Act (“FIA”). In 2010, the provisions of the Payment Services Directive, regulating payment institutions were transposed into Maltese law. This was followed by the EU Electronic Money Institutions Directive, regulating Electronic Money Institutions, transposed into national law in 2011.
Malta's Banking Sector for A Single European Passport
Following Malta’s accession to the European Union, credit institutions authorised in the EU or EEA can use their European passporting rights to establish a Maltese branch or provide cross-border services in Malta, without the requirement to obtain a separate licence from the MFSA. Vice versa, credit institutions licensed by the MFSA may apply for their licence to be passported to other EU member states. This has proved to be of interest to promoters who have chosen to use Malta as a platform to launch their banking activities into Europe.
Some conditions need to be satisfied before this right may be availed of, including that the bank must notify its home state regulatory authority of its intentions. A credit institution in Malta must establish, maintain, and operate an operational office in order to allow ongoing supervision by MFSA. In addition to an operational office in Malta, the credit institution must also have a number of key management officials present in Malta who may take decisions on behalf of the institution.
Licencing
Any company which intends to carry out the business of banking in Malta must, prior to the commencement of any such business, obtain a licence from the MFSA.
Why Malta?
The island nation is one of the most attractive jurisdictions within the EU to set up credit and financial institutions. The island presents a highly professional English speaking work-force, security and stability, and a European opportunity for those looking to enter this industry.
Malta’s roots as a financial sector sprouted in the 1990s. Since then the country has gained considerable traction and has established foremost and significant European financial centres. Financial entities in Malta benefit from a mature, domestic market, with a complement of sound local banks as well as a fast-growing number of international operators offering online services.
Malta is recognized as one of Europe’s leading financial centres and has won plaudits from top business media outlets like The Business Insider, The Financial Times and Bloomberg as a centre of financial services excellence. The factors that have led to Malta’s success can be summarized as follows:
Firm but approachable regulator (MFSA)
Lower set-up and licensing costs than other top EU jurisdictions
Competitive fiscal regime
Well-educated, English speaking workforce available at competitive salaries
Passporting opportunities throughout the EU
Extensive double tax treaty network
English is an official language
Reliable IT infrastructure
The MFSA has always been a very approachable and nimble regulator that works in consultation with market practitioners and operators to create an avant-garde, serious jurisdiction aimed at providing investor and consumer protection while permitting businesses the necessary flexibility to innovate and develop. This approach has encouraged a number of international banks to set up in Malta with success.
Malta has positioned itself as a jurisdiction of choice for international banking business. Chetcuti Cauchi Advocates had organised webinars specific to banking and the implications of a post-Brexit in such sector. For more information and to watch the recording of the webinars: click here!
Read our article about Modern Banking System in Malta here!
