Obtaining a banking licence in Malta

Introduction

Countless pecuniary establishments seek a banking charter in Malta, enticed by its unparalleled amalgamation of propitious geographical situation, sophisticated regulatory legislation, and alluring tax milieu. As a constituent of the European Union, Malta furnishes banks with the passkey to the EU marketplace while ensuring a steadfast and lucid supervisory framework. Instituting a banking charter on the isle of Malta empowers financial establishments to employ the jurisdiction as a nucleus for the worldwide deployment of their enterprise, whilst relishing paltry levies and a favorable commercial milieu.

A consequential boon is the exalted echelon of erudition and acquaintance of the indigenous regulatory and pecuniary authorities, expediting the celerity and efficacy of the licensing progression. Furthermore, Malta's receptivity to novelty in the pecuniary domain, encompassing the cultivation of fintech and blockchain, renders it enticing to banks and pecuniary institutions desiring to inaugurate and amplify the avant-garde pecuniary commodities and amenities. Procuring a banking sanction here additionally confers ingress to caliber banking and IT infrastructure assets, which are pivotal to the adept and impregnable operation of pecuniary enterprises.

Overview of the regulatory environment

Main legislation governing the obtaining of a banking licence in Malta

In Malta, the maneuvering of unclosing a currency charta is governed by a multitude of cardinal statutes that erect the groundwork for the oversight of the nation's monetary sector. The legislative fabric for the regulation of banks is buttressed by the ensuing Banking Act, which delineates the rudimentary precepts of the monetary framework, encompassing the standards for the bestowal of chartas, the administration of monetary entities, and their surveillance and exploration mechanisms. The Edict elaborates on the stipulations for suitors for a pecuniary charta in Malta, mandating the presentation of an extensive compilation of documentary evidence, including incorporation parchments, scrutinized statements of monetary stance (if pertinent), an intricate commercial strategy, and particulars of the charta's stewards.

Furthermore, in conjunction with the Banking Statute, alternative enactments wield considerable influence, encompassing Banking regulations,which elucidate the licensure petition procedure, augment risk oversight prerequisites, and establish operational benchmarks for financial institutions.

The bestowal of a banking entitlement in Malta also demands adherence to the ensuing Financial Institutions Act, broadening the ambit of regulation to fiscal establishments that proffer particular amenities that do not necessitate a typical banking entitlement but are overseen by the Malta Fiscal Amenities Authority (MFSA). The Act encompasses e-currency administration, remittance mechanisms, and other fiscal dealings that lie beyond the ambit of traditional banking but necessitate an entitlement.

To acquire a banking charter in Malta, aspirants must deeply acquaint themselves with and adhere to the requisites of the aforementioned statutes and decrees, guaranteeing not solely triumphant culmination of the chartering procedure but also ensuing adherence to the regulatory and operational benchmarks proscribed by Maltese law and the regulator MFSA.

Powers of the Malta Financial Services Authority

The methodology of inaugurating a banking permit in Malta is intimately intertwined with the deeds of Malta Financial Services Authority, which assumes a preeminent function in governing the fiscal realm on the isle. The MFSA is charged with guaranteeing the efficacious and lucid functioning of Malta's monetary marketplace, encompassing the supervision of all varieties of fiscal amenities, from banking to indemnification and investment pool administration.

In the course of the banking licensing process, the MFSA's duties encompass evaluating petitions proffered by pecuniary entities to ensure they adhere to specific criteria and benchmarks. This involves a meticulous scrutiny of the papers presented, comprising business paradigms, reporting, pivotal personnel and investor particulars, along with authentication of robust hazard administration systems and internal restraints.

Moreover, the MFSA incessantly surveils the undertakings of chartered establishments to ascertain adherence with statutes, safeguard the entitlements of depositaries, and assure constancy in the fiscal framework. The bureau possesses the prerogative to perform examinations, solicit intermittent documentation, and, when requisite, institute measures against establishments transgressing statutes or enabling transgressions to transpire.

Those desiring to petition for a banking charter in Malta ought to be cognizant that the MFSA assumes a pivotal function in guaranteeing transparency and rectitude in the pecuniary bazaar, which encompasses the cultivation of regulatory norms, enlightenment, and intelligence endeavors amid market stakeholders. The Authority is dedicated to enhancing the regulatory structure and corresponding with pecuniary establishments to foster originality and enduringness in the rendering of monetary amenities.

In compendium, the pivotal function of the MFSA is to uphold a lively, veracious, and secure pecuniary milieu in Malta, which holds a momentous sway on alluring banks and sundry financial entities to procure licenses to function on the isle.

The process of obtaining a banking licence in Malta

Choosing the best form of legal entity

The Maltese code furnishes for sundry kinds of juridical bodies apt for conducting banking commerce, each of which possesses its individual attributes and prerequisites.

Private Limited Company, which possesses the characteristic of restricted obligation of stockholders up to the quantum of their contributions. This is the most ordinary configuration for banks with a confined ownership composition.

Public Limited Company, which similarly safeguards stockholders with restricted obligation, but is distinguished by the capacity to amass funds through a communal tender. This configuration is appropriate for banks contemplating to broaden by drawing investment from the populace in general.

The election of a specific configuration of legal entity hinges upon the bank's stratagem aims, its commercial paradigm, and its capital procurement designs. Irrespective of the configuration selected, each bank must fulfill the overarching prerequisites for sanctioned capital and a domicile in Malta, along with furnishing a comprehensive dossier of papers to evince adherence to the regulatory and operational mandates delineated by the MFSA.

Preparatory phase

The procedure of conferring a banking chart in Malta necessitates contenders to prepare meticulously and fulfill specific criteria established by the nation's regulatory authorities. At the outset, contenders must ascertain that they can satisfy two pivotal requisites: a minimal portion pecuniary of €350,000 and the establishment of a corporeal presence in Malta, which encompasses a staffed bureau.

In regards to workplace premises, aspirants are mandated to establish a corporeal workplace within Malta outfitted with all the requisite amenities to bolster operations, encompassing dependable communications and cyberspace ingress. Such a presence warrants a tangible existence on the isle and a readiness to collaborate with overseers and patrons, whilst adhering to local judicial and regulatory requisites.

The inaugural phase of soliciting for a banking charter entails meticulous strategizing and concentration on the finer details to adhere to all statutes and augment the probability of the solicitation being sanctioned. This procedure encompasses crafting and dispatching sundry papers, comprising a comprehensive business schema, substantiation of managerial prowess, and a delineation of hazard mitigation protocols. These endeavors are aimed at showcasing the petitioner's readiness to engage in a lofty degree of banking operations in stringent conformity with established regulatory norms and security stipulations.

Submitting an application

In order to endure the banking licensure process in Malta, petitioners are necessitated to concoct and tender a collection of papers that evince adherence with the Maltese financial regulator's requisites.

Required documents include:

1. A franchise entreaty parchment arranged pursuant to the ordinances and requisites of the Malta Financial Services Authority.
2. An in-depth business plan that includes:
   • A comprehensive elucidation of the pecuniary amenities and commodities slated for execution.
   • Commercial exploration, delineation of target demographics, and specification of patron procurement methodologies.
   • Monetary prognostications for the inaugural triennium, encompassing anticipated pecuniary outcomes and liquidity streams.
   • A hazard supervision scheme expounding protocols for discerning, quantifying, overseeing, and alleviating fiscal and operational hazards.
   • Corroboration of sanctioned capital of no less than €350,000.
3. Information on management and key personnel, including:
   • Biopics.
   • Demonstration of credentials and occupational acumen in finance.
   • Delinquency record attestations and epistles of endorsement.
4. A description of the bank's management system containing:
   • Hierarchal arrangement.
   • Edicts and methodologies to guarantee inner restraint.
   • Inward and outward examination blueprints.
   • Judicial manuscripts, encompassing articles of establishment and enrollment parchments and other requisite charters or sanctions to operate beyond Malta.

The commencement of a banking privilege in Malta entails a meticulous scrutiny of all documentation tendered by the MFSA to evaluate the petitioner's suitability. The primary aim of this phase is to ensure the steadiness and security of the pecuniary framework and to safeguard the entitlements and concerns of its depositors and bank patrons.

Consideration of application

The procedure of acquiring a banking authorization in Malta encompasses numerous stages that adhere to the standards established by the Malta Financial Services Authority.

Step 1: Proactive engagement with the MFSA

Petitioners ought to commence communication with the MFSA to deliberate their permit intentions beforehand, affording them the opportunity to elucidate all matters and ready themselves to furnish the requisite array of manuscripts.

Step 2: Processing and submission of the application and documents

Upon the attainment of all elucidations, petitioners for a Maltese banking charter proffer a formal supplication concurrently with a comprehensive collection of requisite manuscripts such as a commercial schema, pecuniary delineations, particulars regarding the governing cadre, and the configuration of the establishment.

Step 3: Initial Review of Documents

The MFSA performs an inaugural examination of the tendered manuscripts to ascertain that they adhere to the fundamental requisites, which might endure various weeks and might necessitate supplementary enlightenment or elucidation from petitioners.

Step 4: In-depth analysis of the submitted application

The ensuing phase encompasses an exhaustive scrutiny of the proposed commercial blueprint, pecuniary prognostications, jeopardy governance strategies, and inherent restraint methodologies. The MFSA might solicit supplementary information or orchestrate rendezvous with pivotal personas within the establishment.

Step 5: Making a Licence Decision

The ultimate stage is for the MFSA to formulate a determination on the bestowal of a charter after a thorough contemplation of the entreaty. The duration taken to scrutinize the entreaty and formulate a determination on the bestowal of a banking charter in Malta can fluctuate from three to six moons, contingent on the intricacy of the entreaty and the celerity with which the solicited enlightenment is furnished.

Additional aspects of MFSA screening include:

• Compliance with anti-money laundering (AML) and prevention of financing of criminal organisations (CFT) policies.
• Estimating the adeptness and erudition of leadership and pivotal personnel.
• Scrutinizing the sufficiency of sanctioned wealth to guarantee durability to operational and marketplace hazards.
• Estimating the sufficiency of interior ordinances and methodologies, encompassing jeopardy oversight mechanisms, internal command, and examination frameworks.

To triumphantly acquire a banking permit in Malta, it is indispensable to thoroughly ready oneself and evince adherence with all regulatory exigencies, affirming that you are primed to execute your banking pursuits in a judicious and adept manner.

Licence issuance and post-licence phase

Following the initiation of a banking franchise from the Malta Financial Services Authority, fiscal establishments proceed to a juncture that encompasses accomplishing particular duties and satisfying specific standards to preserve the franchise in commendable condition. This post-franchise epoch underscores the significance of lucidity and probity on the behalf of banks, adding to the safeguarding of patrons' entitlements and ensuring the steadiness of the overarching fiscal framework.

As parcel of this juncture, banks are obliged to pursue the regulations and operational requisites set by the MFSA, which comprise habitually reporting on their pecuniary stance, adhering to corporate governance tenets, complying with anti-money laundering (AML) and CFT regulations, sustaining capital sufficiency and ensuring fluidity. Banks are moreover obliged to apprise the MFSA of any substantive alterations in their operations or governance configuration, encompassing alterations in superior administration or momentous corporate transactions.

Sustaining a banking charter in Malta, alongside adherence to post-licensing requisites, demands banks not merely to act once to procure it, but to persistently toil to uphold lofty operational norms and adhere to regulatory decrees. This entails a duty for banks to incessantly ponder and enhance their intrinsic methodologies and oversee systems to assure conformity with the fluid demands of the regulator and to guarantee that the privileges of their clientele are safeguarded.

Financial matters

Taxes for holders of a banking licence in Malta

The conferring of a banking franchise in Malta necessitates the requirement to reckon for duty liabilities both antecedently and posteriorly securing the franchise. The ensuing tax stipulations and mandates are imposed on possessors of a banking franchise in Malta:

Acquiring a banking franchise in Malta and adhering to fiscal duties necessitates meticulous strategizing and documentation. Enterprises are mandated to submit yearly fiscal attestations and tax submissions within 9 months of the culmination of the fiscal cycle. Depending on the yearly revenue and the workforce count of the enterprise, an examination might be obligatory. It is imperative to vigilantly oversee all fiscal stipulations and cutoffs to avert levies and sanctions for contravening fiscal statutes.

State fees and annual contributions

In the context of applying for and maintaining a banking licence in Malta, there are certain financial obligations which include the payment of government fees and regular contributions.

• Starting the application process requires payment of a predetermined amount. Licence applicants are required to pay a fee of €12,500, which is non-refundable and directed at offsetting the costs associated with the initial assessment and verification of the application by the regulator.
• Payment for the issuance of the licence. Immediately following the approval of the application and the decision to grant a licence to a bank in Malta, the applicant must make a payment of €18,000, which is a one-off fee for the registration of the licence.
• Annual Supervision Fee. Once a licence is granted, the bank is subject to annual monitoring by the Malta Financial Services Authority, which is accompanied by an annual fee. This fee is defined as 0.000175 of the bank's total deposits, with a minimum threshold of €25,000 and a maximum of €1,200,000, depending on the size of the deposit base.
• Annual fee for the operation of the representative office. If a bank establishes a representative office in Maltese territory, an annual fee of €3,600 must also be paid.

These financial conditions play a key role in the process of acquiring and maintaining a banking licence in Malta, requiring applicants and licence holders to plan carefully financially and ensure that they meet the economic requirements set by the regulator in order to keep the licence active.

Requirements for management and shareholders

When granting a banking licence in Malta, the Malta Financial Services Authority sets clear requirements for management and shareholders focused on ensuring a high level of professionalism and soundness in the banking system.

In the context of the qualification requirements, the MFSA expects bank managers and key employees to have significant experience in the financial industry, preferably more than five years in senior positions related to risk management, compliance and financial operations. This experience should be supported by appropriate documentation and references.

Additionally, the MFSA conducts a thorough review of the financial condition and origin of funds of applicants wishing to open a banking licence in Malta, in order to rule out any possibility of funding illegal activities. This includes analysing financial statements, bank statements and other documents that prove the legitimacy of the sources of capital.

Compliance with international anti-money laundering (AML) and financing of criminal organisations (CFT) standards is also crucial. Management and shareholders must demonstrate not only the existence of appropriate internal policies and procedures, but also their effective application in practice, as demonstrated by regular staff training and the implementation of transaction monitoring systems.

In the process of obtaining a banking licence in Malta, the MFSA may request additional information or interview key personnel to ascertain first-hand their competence and ability to manage the bank effectively. These measures are directed at minimising risks to Malta's financial system and ensuring that the interests of its participants are protected.

Types of activities allowed after obtaining a licence

Obtaining a banking licence in Malta provides access to a wide range of financial and investment services. This enables financial organisations to conduct a wide range of operations under the regulation of the Malta Financial Services Authority, covering both standard banking services and various investment offerings. Malta's stable economic environment, favourable tax policies and strategic location within the EU make it an attractive location for international financial institutions.

With a fiscal warrant in Malta, establishments are sanctioned to allure deposits and other pecuniary resources from the populace, proffering patrons an array of deposit commodities, encompassing hoard and extant accounts, as well as determined term deposits. They are likewise sanctioned to dispense loans, encompassing mortgage, consumer and enterprise loans, which is a pivotal component of their commerce.

In the precinct of investments, the permit authorizes the rendering of opulence stewardship amenities, whether under discretionary or non-discretionary compacts, the elaboration of investment stratagems to attain patrons' goals, and the execution of pecuniary marketplace dealings on behalf of the bank or its patrons with a vast assortment of investment wares.

Embanks may also proffer corporate pecuniary counsel, encompassing amalgamations and acquisitions, indebtedness reorganization, and securities promulgation counsel, empowering them to contribute to the proliferation of the corporate domain through the provision of amalgamated fiscal resolutions.

Overall, banking licensing in Malta opens the door for financial institutions to offer multifaceted and innovative financial products and services that meet the requirements of modern customers and are in line with current trends in the financial markets.

Conclusion

Obtaining a banking licence in Malta is a procedure that requires careful preparation and precise compliance with regulatory rules and requirements. Malta attracts global financial institutions due to its economic stability, favourable tax system and favourable geographical location within the European Union. By obtaining a licence, financial institutions open their doors to a wide range of financial and investment services, thus expanding their operations and strengthening their position in the global financial market.

By complying with all regulations and maintaining a high level of quality in their operations, the banks are successfully embedded in Malta's financial infrastructure, contributing to the development of the Maltese economy and building a reputation for reliability and excellence. Malta, in turn, is consolidating its position as one of the leading financial centres, creating a favourable environment for the growth of the banking sector and attracting investment from all corners of the world.

Our organisation provides comprehensive services and expertise at every step of the Malta banking licence process. We are ready to offer comprehensive information and assistance. To contact us, please use the method of contact described in the contact section of our website.