July 31, 2023
The Malta Financial Services Authority is the regulator for financial services in Malta and as an authority holds a crucial role in the economy of the country. As recently stated in its annual report for 2022, the Maltese economy continued its path to recovery from the turmoil experienced during the COVID-19 pandemic, despite also being negatively affected by the indirect impact of the Russian war in Ukraine. During the same year, Malta was removed from the FATF grey list and resources for Anti-Money Laundering / Combating the Financing of Terrorism (AML/CFT) have been increased, helping the long-term sustainability of reforms.
The industry was closely monitored during the past year in order to ensure compliance with the new rules on capital and liquidity requirements; internal capital adequacy risk assessment and reporting and disclosure requirements. Building on the work carried out in 2021, the MFSA conducted a thematic supervisory interaction on safekeeping arrangements, segregation of client assets and subsequently a reconciliation process assessment to ensure that clients’ monies and assets are adequately safeguarded.
The National Statistics Office (NSO) revealed that in 2022 the Maltese economy grew by 6.9% in real terms. The Central Bank of Malta (CBM) reports that the local economy is expected to grow by a further 3.7% in 2023. Unemployment fell to a record low of 3% by the end of 2022 and is expected to remain stable in 2023. The CBM reported that as at December 2022, inflation stood at 6.1%, however this figure is expected to fall to 4.5% in 2023.
The financial sector continues to be one of the most important pillars of the Maltese economy and this has been confirmed by the fact that employment within this sector increased by 5.4% when compared to 2021 with more than 17,500 working for the 2,122 financial institutions established around the island.
With reference to the investment schemes sector, the Net Asset Value of Malta-domiciled funds as at end 2022 was Euro 19,813 billion for a total number of 562 funds (456 licenced and 106 notified) with 89.5% of the fund being administrated in Malta.
The Professional Investor Fund (PIF), which is an exclusive regime of the Maltese fund industry remains one of the most attractive choices for both local and foreign asset managers thanks to its flexibility in terms of investment strategies. An additional boost to the industry will be expected in the coming months by the launch of the Notified Professional Investor Fund (NPIF) which will allow 3rd party fund managers or De-Minimis Fund Managers launch their Collective Investment Scheme with the MFSA committed to give the green light and including the fund in a dedicated list of NPIFs in 10 working days without any licencing requirements.