Choosing Malta as a Financial Services Domicile
Malta, as a small island in the heart of the Mediterranean, has become one of Europe’s most attractive domiciles for companies established in the financial services industry.
Malta became a Member State of the European Union in 2004 and a member of the European Monetary Union in 2008 when it adopted the Euro as its currency. The Maltese economy is based on tourism, manufacturing and financial services, which is becoming one of the main pillars of the economy. Malta has been a member of Commonwealth since 1964 and is also a member of the Council of Europe, Organization for Security and Co-operation in Europe, United Nations and World Trade Organization.
The Malta Financial Services Authority is the sole financial services regulator, responsible for the supervision and enforcement of regulations.
The Maltese regulatory framework is a secure and stable framework for prudential and conduct supervision, consumer protection, market surveillance and prevention of money laundering. The financial services sector in Malta is regulated by a regime which incorporates all EU financial services legislation and consequently operators benefit from the single market passporting rights under freedom of services and freedom of establishment.
As an EU Member State, Malta transposes and implements all the Directives of the European Union, European regulations are directly applicable in Malta, whereas Guidelines or Technical Standards issued by the European Supervisory Authorities are transposed within the national legislation. In Malta, English is the language of financial services business and hence all financial services legislation is in English.
Malta is very pro-active in the EU financial services sector and has always maintained timely implementation of internal market rules for financial services.
The key to Malta’s success in the insurance sector lies in its EU membership, which allows licensed companies in Malta to write business directly into any of the EU and EEA member states. However, Malta’s success in the financial services sector is also widespread in the gaming, trusts, investment services and pension transfers industries.
Malta’s sophisticated finance infrastructure enables a variety of insurance structures including Affiliated Insurance Companies (Captives), Protected Cell Companies and Incorporated Cell Companies. Malta has a solid legal foundation, an approachable regulator and competitive regulatory fees.
Malta can be considered an ideal outsourcing destination, mainly as a result of an efficient infrastructure and a multi-lingual workforce; a high educational system and a wealth of insurance, legal and accounting professionals. Moreover, it offers a varied advisory network, including the global big four accountancy firms. Malta is a hub, in the middle of the Mediterranean, with easy flight connections to the EU mainland and Eastern European countries with major airlines, making it easier for foreign investors to choose Malta.
Malta also allows the migration from other jurisdictions. The Continuation of Insurance Companies Regulations 2003 enables captives to be easily relocated from other jurisdictions which have similar legislation.
When Malta joined the EU in May 2004, it had already taken steps to implement an effective and responsive regulatory framework that operated to EU standards and could accommodate insurance companies. Malta is worth considering as the location for a captive where the ability to issue policies directly into the EU/EEA may provide significant savings on fronting and collateral costs.
This offers cost saving advantages to Multinationals with operations in EU locations; UK corporations paying significant Employers’ Liability and Motor Third Party premiums and also Companies using captives to provide insurance to their customer base, for instance travel, warranty, credit protection, room cancellation insurance.
Malta is also one of the very few domiciles which allow a Protected Cell Company (PCC) structure in the insurance sector. A protected cell in Malta allows a cell owner to insure directly own risk in the EEA and sell insurance to third parties in the EEA. The PCC structure can be applied to both insurance companies and insurance broker companies.
The latest form of insurance legislation which has been issued by the MFSA and which could be highly interesting to companies considering setting up an insurance vehicle in Malta, would be the new legislation regarding Reinsurance Special Purpose Vehicles and Insurance Linked Securities, which include the ways of securing capital for insurance entities.
These benefits characterise Malta as an attractive domicile for insurance companies and brokers.