MALTA: through the eyes of other jurisdictions

A perspective of the island from the financial service operators based in Italy and Switzerland

I have spent over two decades working and collaborating with different Maltese entities with the aim to promote Malta as an international financial centre, and to bring forth the several advantages that the island has to offer to foreign financial operators and investors.

During these years, I had the opportunity to experience the evolution and development of the jurisdiction from a financial services domicile perspective, which passed through some crucial steps.

Malta’s accession to the EU in 2004 and as a Eurozone country as from 2008 was delivered by the Government and was fully supported by the financial regulatory Authority, aiming to enable Malta to leave behind its offshore past, while presenting itself as an attractive, alternative European financial jurisdiction in the international space.

It is very clear that the prevailing perception of Malta as a financial domicile has changed, as the result of a number of different circumstances, conditions and events that have characterised its economic, social and political history, particularly over the last 10 years.

What is the perception of the Maltese jurisdiction currently in overseas markets? The answer is not so obvious.

Italy and Switzerland represent two significant markets for Malta for the financial services sector, most notably the fund industry.

From the vantage point of Milan – the Italian financial capital and the direct link with the Swiss market, particularly for the Ticino area – I was able to collate feedback and the opinions of a number of operators and professionals. These cover a range of roles, from asset managers to bankers, wealth advisors, lawyers, financial consultants, accountants and so on, who have consistently shown concrete interest in exploring the various opportunities offered by the country as a financial hub and fund domicile.

Malta today is a name that is recognisable by the international financial operators:  the country has been able to position itself on the map as a valid option available to set up, launch and develop a business efficiently in the core financial services sectors, ranging from asset management and investment funds to insurance, private wealth and corporate services. Its attractiveness is based on acknowledged strengths, such as the accessibility and pro-business mindset of a single regulator, a solid and comprehensive financial legislation, a diversified economy with one of the highest growth rates in Europe, the highly skilled and talented workforce, the time to market considerations and the competitive costs…. as well as the island’s strategic geographical location.

On the flipside, the country’s reputation can be singled out as the easily identifiable factor that has impacted to some extent the aforementioned appeal. Since the early 1990s, Malta went to great lengths to break away from its old profile and to acquire EU membership. Notwithstanding this, it has continued to be overshadowed by the past, with an image to a certain extent still more appropriate for an exotic country and with stereotypes often associated with tax havens.

In addition to this, the scandals and the events related to the second half of the last decade helped fuel the common misconception that the jurisdiction is not a reputable place and that Malta is a ‘borderline’ jurisdiction, despite it being a member of the Union.

Reputation is the cornerstone on which to build both the present and the future of Malta’s financial sector: for this purpose, I strongly believe that the most powerful tool is an ongoing and direct external communication, as also explicitly mentioned by the Malta Financial Services Advisory Council in its Strategy Document issued a few months ago. Good communication is the key enabler for this strategy.

The starting point is that international financial operators might not be fully aware of Malta’s current situation in terms of regulation and legal framework; for this reason, it may very well be the case that they look at the island from a mistaken perspective, which may not reflect the true picture.

A prime example of this I recently experienced is Malta’s exit in June 2022 from the FATF greylist: its inclusion was on everybody’s lips (and was even given extensive coverage by the international media), but its removal within less than a year has gone completely unnoticed. No one seems to have bothered to make sure that this important development was suitably and adequately communicated across the core markets of interest, to ensure that both companies as well as individual professionals with an interest in the island are kept duly informed about these updates. This is even more important if such communication could have a real impact on their business assessments or decisions with regard to Malta. In this case, “No news is good news” is a radically wrong concept, which is particularly harmful to the image of the whole jurisdiction.

A quite famous Neapolitan adage says “A mala nova la porta ‘o viento; la bbona la trattiene lu diente” which literally translates into “The wind brings negative news; the good ones are retained by the teeth”. The clear meaning is that bad news spreads quickly, while good news is slow in coming.  This should not be acceptable to Malta and it is imperative to start with a strong and continuous communication process developed by an holistic action addressed by the Government, the Malta Financial Services Authority, the institutional bodies and the private players in the market, to create dialogue with the respective foreign counterparties, rendering feasible a successful change in the perception of the country.

Photo: Simone Meneghini, Head of International Business Development, CC Fund Services Malta