A lawyer by profession, Manfred Galdes is the Managing Partner at professional services provider ARQ. He has held top roles in the area of regulatory and AML compliance in both the private and public sectors, including an eight-year tenure leading the FIAU, Malta’s financial intelligence unit and principal AML supervisory authority.

What benefits might businesses and individual investors gain by adopting Malta as their domicile?

The maturity of the sector, the ecosystem that has been built over the past 30 years, as well as the re-established trust in our regulatory bodies.

What an investor wants is peace of mind, legal certainty, stability, robust regulation, and the ability to rely on affordable professionals of the highest quality.

Access to the European passport for financial services and the application of the single EU Rulebook contribute substantially to that legal certainty and peace of mind.

Does any particular success story of a company capitalising on Malta’s financial services infrastructure spring to mind?

I’ve witnessed so many of these over the past 22 years that I don’t know where to start. Perhaps I can mention the potential acquisition that we’re working on right now, which somehow epitomises the growth potential that the island offers through its licensing regime, sound regulatory infrastructure, and the reassurances that these give to investors.

In this case, a payment service provider that obtained authorisation around seven years ago is now attracting the interest of one of the world’s largest operators in the field after registering remarkable year-on-year growth.

I’ve seen the same happen in other sectors of our financial services industry, and it all goes to show that the combination of a Maltese licence and the European legislative framework is a hallmark of investor confidence.

How is Malta reacting to the reputational threat presented by its brief stint on the FATF grey list?

We must use every opportunity that comes our way to make it clear that there is only one way of doing business in Malta, and that is the right way. The compliance standards in place today are among the highest in all of Europe and the supervisory authorities have not shied away from imposing hefty penalties where this was necessary.

Entry criteria are steep, the expected level of conduct is beyond high, and prudential supervision leaves no room for complacency, allowing our international partners to remain confident about our integrity and commitment.

What are the first steps anyone thinking of investing in Malta should consider?

A potential investor will only take this step if there is confidence in the regulatory framework and the level of supervision, awareness of the benefits of passporting rights, and clear growth potential. These factors all need to be considered when a business plan is being drawn up.

Queries relating to licence conditions, tax consequences, applicability of certain norms, technical requirements, and resourcing are best addressed through the engagement of local professionals at the earliest stage of the process.

Which elements of the global financial system are most likely to find Malta to be a good fit for their needs?

Malta has various success stories to relay. When it comes to managed services in industries such as insurance and funds, we have been extremely successful and can compete with the most accomplished jurisdictions. The same can be said for the establishment of payment institutions operating from Malta

What opportunities do you see ahead for Malta’s financial services sector?

The overhaul of the country’s compliance infrastructure and the strengthening of all its preventative mechanisms could actually be an unmissable opportunity. With some more effort, we can start to be perceived as a leading country where compliance standards are concerned. There are opportunities in the development of FinTech and RegTech using artificial intelligence and other innovative technologies, as well as in the broader area of compliance support services.

Especially when one considers that a single rulebook for financial services has emerged within the EU, which is now being extended to AML/CFT, it is high time to look at the possibility of exporting our high standards overseas.

This feature was first carried in the Malta Invest 2023 edition. Malta Invest is the first-ever comprehensive international investment guide focusing on Malta as a destination. It is produced by Content House Group.