The process of opening corporate bank accounts in Malta continues to spark debate, with differing opinions on whether the challenges are exaggerated or genuinely onerous. This topic will take centre stage at an event hosted by FinanceMalta on January 16, in collaboration with the Institute of Financial Services Practitioners (IFSP) and the Malta Bankers Association (MBA). MBA Secretary General Karol Gabarretta and IFSP president Nick Captur offer their perspectives.
“Opening a corporate bank account in Malta is not as daunting as is often portrayed” – MBA Secretary General Karol Gabarretta
According to Karol Gabarretta, opening a corporate bank account in Malta is not as daunting as it is often portrayed and while acknowledging existing challenges, he believes the perception of widespread difficulty may be inflated and that businesses genuinely committed to transparent operations rarely encounter obstacles.
Businesses have a range of options to choose from. The banking industry in Malta is highly competitive and beyond traditional credit institutions there is a growing presence of financial institutions, including electronic money institutions, which also offer solutions for opening accounts.
“The reality is that interest in Malta comes in all forms – the good, the bad, and the ugly. Reputable businesses normally have little trouble completing the banking process and when challenges arise, these may often stem from legitimate concerns.
“In many cases, businesses facing hurdles typically may have a chequered past, whether due to poor credit histories or significant negative findings during due diligence. Such caution is absolutely essential for maintaining the integrity of Malta’s financial system.”
It is true, however, that, as a result of Malta’s FATF grey listing in 2021, banks had taken a cautionary approach and decreased their risk appetite, particularly in areas where they lacked sufficient knowledge of proposed business lines or activities.
However, recent developments, including Malta’s removal from the grey list in 2022, suggest a gradual shift toward a more balanced risk appetite as banks gain confidence and adapt to the updated regulatory environment.
“If you’re planning to operate a cryptocurrency exchange in a foreign jurisdiction outside the EU yet propose to open a bank account in Malta, can you blame the bank for hesitating? Amongst questions regarding what the nexus with Malta is, the bank may well lack the specialised expertise to evaluate such technical operations.”
At times, banks’ policies may not even be determined locally.
“Maltese banks depend on larger correspondent banks for international transactions but have limited influence over the latter’s risk appetite. In the past, several correspondents have withdrawn, citing unsustainable risk-to-return ratios for the jurisdiction. If a correspondent advises against its respondents banking certain sectors, like, say, gaming, Maltese banks must comply, restricting options.”
Asked whether banks have played a part in building the perception that opening bank accounts is an arduous task, Gabarretta says that he cannot exclude this.
“Possibly, it was never a matter of being difficult – banks need to generate business and income for their shareholders and through profit retention enhance their financial robustness. Rather, I believe there might have been a lack of consistency in the kind of documentation which may have been requested from clients. Today, there is certainly better awareness, better application of risk-based approaches, better training and better knowledge among bank staff.
“We must also recognise that, in recent years—and this is not specific to Malta—Anti-money laundering (AML) requirements have grown significantly, with the AML/CFT Directive now in its sixth iteration. Banks must, as a result, process vast information, implement appropriate systems, policies and procedures and train staff accordingly – a challenge amid recruitment and retention struggles. This rapid evolution places immense operational pressure on banks and their resources, impacting their ability to adapt effectively in a seamless manner.
“This discussion must continue. Ongoing dialogue among banks, regulators, professional bodies, and firms is vital to simplify processes, highlight banking practices, address shared concerns with authorities and foster collaboration. Such efforts can yield practical solutions and strengthen the financial ecosystem, promoting mutual support and understanding,” he concluded.
“Opening bank accounts is complex, long and expensive” – IFSP president Nick Captur
Nick Captur, IFSP President, argues that Malta’s regulatory environment and practice often make opening bank accounts excessively complex, lengthy, and costly, forcing companies to seek alternatives like accounts abroad or payment service providers. However, these options have drawbacks, including Malta losing regulatory oversight when accounts are held outside its jurisdiction.
“I can think of many cases where it takes six months or more to open an account, potentially costing tens of thousands of euros in professional fees,” he argues.
“Worse still, he added, is when a bank ultimately declines the application after months of effort and a mountain of documentation.”
For businesses with complex ownership structures—such as those involving private equity investors or trusts or even Malta subsidiaries within very large public groups —the process can be even more challenging. “Complexity is often legitimate, yet front-line bank staff frequently lack the legal or financial training to properly assess the (PML/CFT) risks associated with these structures. Instead, they request more and more documents to pass along internally, leading to inefficiencies that resemble a game of Chinese whispers.”
While the financial sector in Malta offers alternatives such as payment accounts through EMIs, these are not a complete solution. “EMIs are fine for local operational payments, but they aren’t suitable for clients needing to transfer large sums or engage in significant intra-group financing or trading transactions,” Captur explains.
“Clients also consider the credit rating and risk profile of their banking partners, which is why access to global banks with recognisable names remains essential.
“The solution in such cases requires old-fashioned face-to-face discussions. We need advisors, appropriately senior bank representatives (ideally sensitive to both risk management and business development aspects), and client representatives to sit around the table, explain the structure, operations, and safeguards, and get straight to the core issues. This approach could lead to outcomes within a month”.
The IFSP president also suggests that banks could charge for such personalised onboarding services, a cost he believes reputable clients would willingly bear.
Following Malta’s exit from the Financial Action Task Force (FATF) grey list, the need for rigorous anti-money laundering measures is widely accepted and understandable However, he cautions that Malta’s approach to compliance documentation tends to be overly prescriptive.
“We’ve gold-plated certain of our requirements out of caution, and the FIAU’s implementing procedures have entrenched this further. It is time for a more risk-based, judgmental approach, rather than relying on rigid checklists. We also need to allow for more technology in the solutions used in the PMLFT exercise.”
Addressing these issues requires greater collaboration between stakeholders and this is what the event – to be held on January 16 at AM Business Centre in Żejtun, is intended to work towards.
“At the policy and risk appetite level, banks, regulators and practitioners are much more aligned than the front-line experience would suggest. Nobody wants bad business,” he said.
“What’s missing is effective communication, context and judgement, involving the right people at the right time. Regulators, credit institutions, and practitioners need to work together to unblock these challenges. It’s not about where we go or what business we accept, but how to balance bureaucracy with the necessary safeguards.”
This article was first published in The Corporate Times.