“Tax reform is occurring across the globe and changes cannot be seen as a threat but as an opportunity to positively redefine Malta’s strategy around high-value, technology-oriented development and other innovative niches,” says Bernice Buttigieg from the Program Management Office of the Malta Financial Services Advisory Council.

In March 2023, the Malta Financial Services Advisory Council (MFSAC) launched a National Strategy for a stronger financial services industry to promote Malta as a more reputable and innovative international financial centre.

The strategy’s 175 proposed initiatives focus on five vertical pillars: banking and payments, insurance and pensions, capital markets, wealth management, and fintech and AI as well as horizontal enablers such as the elimination of bureaucracy, taxation, the supply of talent through HR and education and open and sustainable finance.

Describing the National Strategy as “very ambitious and varied in scope, scale, and complexity,” Dr Buttigieg, who is also FinanceMalta’s Chief Strategy Officer noted how thanks to 15 distinct workstreams and the contribution from experienced stakeholders from firms and regulators, half of this year’s planned deliverables are already completed.

“Technology needs to be at the core of Malta as a financial services jurisdiction. Digitalisation and innovation feature very prominently in this strategy. In fact, three of our four key initiatives are deeply embedded in technology. We also want to expand our potential in Fintech.”

“In fact, given the MFSAC’s focus on capital and talent acquisition, regulatory frameworks, technical infrastructure, and the promotion of Malta within this framework, we are very happy seeing Malta-based companies proposing very innovative tech services in areas such as compliance,” she added.

Has Malta learnt its lesson?

Dr Buttigieg acknowledges that the fight against financial crime remains a key element in strengthening Malta’s competitiveness and, following Malta’s greylisting, the approach to financial crime has changed significantly in the past two years.

“Malta’s swift exit from the FATF grey list within just a year reflected the country’s commitment to rigorous financial regulations and more robust anti-money laundering measures and today, there is real awareness and understanding that the crimes by a few can hurt the reputation of many.”

“This is why we are in line with Moody’s expectations in its latest report about Malta to continue to engage with the financial community to ensure more effective compliance and enforcement of the regulatory framework to support the island’s financial competitiveness more sustainably”, she added, noting how the increase in Suspicious Transaction Reports filed with the FIAU and the decrease in Malta’s overall money laundering residual risk as reported by the latest National Risk Assessment reflect a higher level of vigilance.

What to expect in the months ahead?

According to Dr Buttigieg, the new National Strategy will encourage the financial sector to also redirect private capital towards more sustainable investments and to promote greater transparency with more focus on sustainable finance and specific financial instruments that promote sustainability.

This includes initiatives which incentivise instruments such as green and blue bonds, sustainability-linked bonds and social bonds, as well as Real Estate Investment Trusts (REITs).

Following Malta's swift exit from the FATF grey list, there is real awareness and understanding that the crimes by a few can hurt the reputation of many

Innovation is also seen as a key element of growth as the jurisdiction moves towards further specialised niches including the fintech sector, asset management and insurance. Legislative developments include the completion of a new NPIF framework, while the publication of new legislation on Limited Partnerships without legal personality is in the pipeline.

In the insurance field, new legislation for the transfer of cells and cell winding up and insolvency rules is expected shortly, offering new opportunities for further expansion of this sector. The regulator is also gearing up through training and up-skilling in areas such as RSPVs and insurance-linked securitisation (ILS), while supporting the industry in meeting with foreign practitioners in conjunction with established conferences in NYC and London.

A race for talent

The financial services sector is poised for more growth. From 11,000 employees in 2018, the sector today employs around 18,000 people, including professional activities which support the industry.

“Finding talent remains a challenge for many and one of the key thrusts in the National Strategy refers to ‘building talent’ because although Malta is already highly regarded for its skilled financial services workforce, potential growth is leading to a high demand for new sought-after skills. The Advisory Council’s HR & Education team is working on recommendations to increase the availability of skills and to achieve better retention, focusing first on third-country nationals.”

The National Strategy is expected to address the skills gap, policy and regulation, professional and academic education and efforts to encourage students to consider this industry in their subject option considerations.

Dr Buttigieg also referred to the University of Malta’s newly launched Post-graduate Diploma in Financial Compliance and Regulation being offered in collaboration with the MFSA’s Financial Supervisors Academy as “an important development” to attract individuals and professionals to the financial services industry and to strengthen Malta’s capacity in compliance and anti-money laundering (AML).

On a nationwide level, there is increasing recognition of enhancing financial literacy among the population, with the Strategy identifying some 70 active financial literacy programmes or activities. FinanceMalta is also doing its part by collaborating with both FreeHour and JA on two separate initiatives aimed at promoting financial literacy with youth towards the end of the year.

Dr Buttigieg also highlighted Malta’s continued growth in the aviation sector particularly through aircraft registration and maintenance activities and how the MFSAC has received conclusions of an extensive study on the opportunities in aircraft leasing.

“This will be followed with a plan of required legislative changes and incentives and some major developments are targeted for the end of this year,” concluded Dr Buttigieg.