Banking Law
Modern and comprehensive banking and other financial services legislation further enhances Malta's already well established banking reputation for soundness and professional integrity and ensures the efficiency of all credit institutions operating in or from Malta. Moreover, the legislation's alignment with all EU directives as a result of Malta’s relatively new status as a full member of the EU ensures that this jurisdiction is very well geared for the challenges that lie ahead, including fully adhering with its responsibilities to align itself with the general trend for harmonisation in international banking regulation.
Banking and other financial services in Malta are regulated by a plethora of modern and forward-looking legislative acts, including the Central Bank Act, the Banking Act, the Malta Financial Services Centre Act, the Financial Institutions Act, the Investment Services Act, the Malta Stock Exchange Act, the Trusts and Trustee Act, the Insurance Business Act and the Insurance Brokers and other Intermediaries Act. Needless to say there are also a number of other acts which effect, in one way or another, this growing sector of the Maltese economy. Of particular relevance in this respect is the Companies Act, the Income Tax Acts, the Duty on Documents and Transfers Act, the Money Laundering Act, the Professional Secrecy Act and the Insider Dealing Act. Virtually all the above-mentioned legislative acts have been enacted or revamped in the mid-nineties in an effort to provide Malta with a fresh and updated legislative slate and place it very much in line with the relevant EU directives.
Central Bank and Malta Financial Services Authority :
At present the Central Bank of Malta, as setup under the enabling Central Bank Act, is responsible, for monetary policy and is the lender of last resort. However the regulation and supervision of banking business under the Banking Act lies with the Malta Financial Services Authority (MFSA), which is the primary regulator of international financial business in Malta. Indeed, besides the above, the MFSA is also in charge of the regulation and supervision of financial institutions that are not credit institutions, investments services providers, collective investment schemes and insurance companies.
Domestic and international banks:
The business of banking, as defined in the Banking Act, is as follows: "The business of accepting deposits of money from the public which are repayable or can be withdrawn on demand or after a fixed time, or of borrowing or raising money from the public, say via the issue of debentures or other instruments of indebtedness, with the purpose of on lending to others or investing them for their own account and risk". In Malta, one finds a number of banks, including commercial banks serving mainly the local market but also capable of serving international clients, Private Banks, Banks specializing in specific areas such as trade finance and wealth planning, and International banks which are precluded from conducting banking business with persons who are resident or are deemed to be resident.
The Banking Act also regulates the authorisation of branches and representative offices of local and foreign banks in Malta, whether with an unrestricted domestic license or with a restricted international banking license. Furthermore, the Act sets down minimum paid up capital and capital adequacy requirements on a risk weighted asset basis, these reflecting accepted international policies in this respect. Furthermore, all encompassing prudential requirements have also been stipulated through the issuance of Banking Directives pursuant to the Banking Act, particularly with respect to credit institutions' application procedures, large exposures, own funds, solvency ratios and liquidity requirements.
Mifsud & Mifsud Advocates provides banking law advice and related services to its local and international clients. For further information on Banking law please contact us
