Today, Malta’s financial sector is very robust, yet it is sometimes unfairly criticized by broad statements that fail to acknowledge the real improvements. “Contrary to recent allegations, no bank in Malta grants automatic access to a bank account upon the registration of a company – a rather rich statement given that ironically, most complaints concern the complexities of opening bank accounts,” says Karol Gabarretta from the Malta Bankers Association.

Malta has long been recognised as a stable and well-regulated jurisdiction for banking and financial services that upholds the highest international standards and significant investments continue to be made to strengthen the country’s regulatory framework, ensuring robust compliance with EU and global Anti-Money Laundering and Combatting Financing of Terrorism measures.

Unfortunately, misconceptions about Malta’s financial sector persist, often overlooking the stringent requirements to which banks and other financial institutions must adhere.

“One of the most common misunderstandings relates to the process of opening corporate bank accounts,” explains Karol Gabarretta, Secretary General of the Malta Bankers’ Association.

“Contrary to some recent allegations, no bank in Malta grants automatic access to a bank account upon the registration of a company. Instead, banks  are legally obliged to undertake rigorous due diligence procedures that align with international best practices.”

“Therefore, such allegations are very ironic given that we often find ourselves on the receiving end of complaints about the complexities of opening bank accounts, as the process is far from straightforward.”

“Know your customer, source of funds and source of wealth verifications are non-negotiable, ensuring that only legitimate business activities can be undertaken through our banking system,” he added.

Gabarretta stresses that Malta’s commitment to good governance and financial integrity has been widely acknowledged, particularly following the country’s rapid and successful exit from the Financial Action Task Force grey list.

“This achievement was the result of sustained collaboration between the public and private sectors and demonstrated Malta’s ability to address concerns swiftly and enhance its financial oversight. Today, the country’s financial ecosystem is more resilient than ever, with the Malta Financial Services Authority, the Financial Intelligence Analysis Unit and other regulatory bodies implementing rigorous supervision and enforcement mechanisms.”

Gabarretta notes how banks have played a crucial role in upholding these high standards.

“Banks’ significant investments in compliance, technology and human resources reflect a proactive approach to risk management to ensure that Malta remains a trusted and secure financial hub. The scrutiny applied to financial transactions in Malta is on par with, if not more stringent than that of other EU jurisdictions, and compliance officers within the banking sector exercise extreme caution before granting access to banking services.

“Financial crime remains a global challenge but Malta has been consistently showing an ability to adapt and strengthen its financial framework to mitigate risks.

“It is crucial to recognise that regulatory systems, no matter how robust, will always be tested by individuals or entities seeking to circumvent rules but this does not mean that the system itself is weak. On the contrary, Malta’s financial institutions, regulators and law enforcement agencies are working together to detect and prevent illicit activities, taking swift action whenever necessary.”

Despite these efforts, Malta’s financial sector is sometimes unfairly characterised, with broad statements in the media that fail to acknowledge the real improvements and the level of scrutiny that is faced by financial operators.

“It is important to differentiate between isolated incidents of wrongdoing – which happen in every jurisdiction - and systemic regulatory frameworks that are built to prevent and mitigate risk,” highlights Gabarretta.

“The Malta Bankers’ Association remains committed to ensuring that the sector continues to evolve in line with international best practices and we shall keep encouraging open dialogue and constructive engagement with all stakeholders to ensure that Malta’s reputation is fairly represented.”

Gabarretta acknowledges that today, Malta’s financial sector is built on strong foundations and remains an important pillar of the country’s economy and that the continuous improvements made in regulation and compliance, continue to reaffirm Malta’s role as a serious and reputable financial centre within the EU and beyond.

“Today, banks and other financial institutions in Malta operate within a tightly regulated environment. It is high time that these efforts start being recognised as part of a national collective commitment to upholding transparency, security and good governance,” he concluded.

This article was first published in The Corporate Times

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