The Maltese financial sector grew 9.5% in 2018 amid a year characterised by challenges, the annual report of the Malta Financial Services (MFSA) shows, according to a press statement published by the financial services watchdog.
Last year, the authority registered an additional 144 new entities, as more businesses have sought to make Malta their jurisdiction of choice, totalling the number of entities licensed by the MFSA up to over 2,300, according to the MFSA’s Annual Report and Financial Statements for the year ending on 31 December 2018.
The financial sector now contributes 11.6% to the Gross Value Added (GVA), when taking supplementary services offered by the sector into account, making it one of the highest-ranking contributors to the Maltese economy, says the press release.
The local employment share within the financial services sector went up to 5.3%, almost double that recorded from other member states of the European Union, which stands at 2.9%. The sector employed more than 12,000 people, by the end of 2018, 1,000 of which were new jobs generated last year.
Busy year behind
The MFSA had a relatively busy year in 2018, taking some major actions throughout the twelve months that constitute their financial year. The Virtual Financial Assets Act (VFA) introduced in November 2018, has given international recognition to Malta globally in terms of distributed ledger technologies and digital assets. The MFSA also carried out major restructuring exercises to strengthen the authority’s organisational capability.
The financial sector took regulatory action against Pilatus Bank and Satanbank for alleged prudential and AML/CFT breaches, the press statement notes.
A Memorandum of Understanding (MoU) was signed with the Financial Intelligence Analysis Unit (FIAU), with the aim of enhancing collaboration and improving the intensity of AML/CFL on-site inspections.
The MFSA and the International Monetary Fund (IMF) partnered up in working together on a Financial Stability Assessment Programme (FSAP) on Malta. Their findings concluded that even under severe stress scenarios, the Maltese banking system remains resilient, the press release says.
Furthermore, the authority published over 600 regulatory notifications, with the aim of guiding regulated entities and safeguarding financial services consumers. The MFSA engaged with the financial sector 15 times last year, issuing consultation documents on certain topics, such as initial coin offerings, virtual currencies and investor protection.
Mystery shopping exercises were carried out and over 11,000 hours of training to MFSA employees was delivered, 19% more than the previous year. Moreover, the authority demerged the Registry of Companies from the MFSA to better focus on its regulatory role and duties. The registry has established itself as a standalone agency and is now known as the Malta Business Registry (MBR), says the press release.
During 2018, the MFSA focused on four specific areas as part of its supervisory activity. These being: restructuring the organisational structure, in order to strengthen the authority’s governance, culture and conduct; combating money laundering and terrorist financing; embracing technological innovation; and re-positioning the authority as a leading employer, according to Joseph Cuschieri, Chief Executive Officer of the MFSA.
In view of the wide-ranging impact of money laundering and terrorist financing, “the Authority will be strengthening its supervisory engagement, with the purpose of achieving our statutory objectives better, and this will, in turn, safeguard the reputation of Malta as a jurisdiction of choice for financial services. While supervisory engagement shall be enhanced across the board, emphasis shall be placed on AML/CFT Supervision, in line with our AML/CFT Supervisory Strategy”, said Mr Cuschieri.
The MFSA Annual Report and Financial Statements are available for public view on the authority’s website.