For over a decade, PKF Malta has been actively collaborating with FinanceMalta, sharing the same commitment to advancing the island’s stature in the global financial services industry. “Our foreign clients and investors feel very strongly about Malta as a financial services jurisdiction but now, they are also noticing the digital transformation and the significant adoption of technology in our financial services sector, says George Mangion, Senior Partner at PKF Malta.
Established 36 years ago, PKF Malta specializes in audit and assurance, tax, advisory services, and internal audit insurance and as George Mangion explains, the firm has been instrumental in establishing many e-commerce and international trading companies in Malta and developed relationships with market leaders across the globe.
“Today, the feedback from our foreign clients and investors about Malta continues to be very positive, especially with regards to the attitude, the resourcefulness of the industry and the support they find from local firms,” explained Mangion. “They are particularly impressed about the way the sector has embraced technology over the past few years, how technologies like cloud computing, APIs, and mobile apps have been widely adopted and their positive impact on areas such as payments and commercial banking,” he added.
Mr Mangion believes that direct interaction with potential businesses is essential and travel and attendance to international conferences serve as opportunities to expand business opportunities, grow networks and expand knowledge. Recently, and with the support of FinanceMalta, PKF Malta attended several international conferences and forums.
“These events have also been an exciting opportunity to collaborate more closely with FinanceMalta as we both strive to enhance Malta’s appeal, its conducive environment for business and its robust regulatory framework,” explained Mangion.
Sustainable finance
Mangion notes that across foreign markets, the area of sustainable finance and the role of ESG in shaping the financial services industry are subjects that have gained a lot of traction.
“Unfortunately, the local market is still somewhat lacking in terms of maturity on the subject and the concept of green bonds and other financial instruments is still very much in its infancy. At PKF, we have recognised the importance of sustainable finance and the role of ESG and we also managed to raise more awareness on these topics with three conferences organised last year.”
Mr Mangion referred to the concept of greenwashing and how abroad, this concept has become a big reality and a huge topic of discussion.
‘Greenwashing is considered a key threat to ESG-related claims by companies. In Malta, the MFSA has started doing some campaigns, and this year, our team also attended two sustainable finance-related conferences specifically related to this topic. But this is a crucial subject and in Malta we need to talk about this more,” he added.
Strengths and weaknesses
Referring to the strengths and weaknesses of Malta’s regulatory environment for financial services, Mr Mangion argues that while there is a national consensus that Malta has managed to develop a robust regulatory system, as a jurisdiction, Malta tends to be a little reactive especially in view of incoming regulations, such as the CSRD and the implementation of IFRS19.
Top rating agencies’ high rating of Malta gives that secure feeling that credit and investment risks in the Maltese economy are equivalent, if not better, than other top financial domiciles
“The notion of integrating ESG has been in discussion at European Commission level for a long time, way before the MFSA and the MGA started guiding local financial services players on the matter. Likewise, on the matter of IFRS 19, whilst still in the early days, the local market should delve into this subject because this has the advantage of permitting different disclosure requirements for subsidiaries than those as required under other IFRS Accounting Standards.”
Mangion continued to explain how the new standard adopted in May 2024 has the advantage of enabling eligible subsidiaries to keep one set of accounting records whilst providing disclosures that are appropriate for the information needs of the users of their financial statements.
“This simplifies reporting for subsidiaries by allowing the same financial reporting across the whole group, thus reducing costs for eligible SMEs.”
Challenges and improvements
According to Mangion, greylisting and rigorous AML procedures remain two main challenges when it comes to promoting Malta, together with the impact of bad press concerning money laundering at a political level.
“However, we need to look ahead and continue improving. Services can be streamlined by creating a one-stop shop for all services related to the financial services industry.”
“Timeliness for the provision of certain services is also an issue such as the long time to simply open a bank account for clients because a lack of timely cooperation may mean losing a client to another jurisdiction,” he said.
“Another major barrier remains Malta’s geographical limitation and small size. Sometimes, before promoting Malta as a financial services hub we need to promote Malta’s location.”
On a wider level, Mr Mangion also believes that there are more niche areas that Malta should be promoting such as REITS, Green Bonds, Venture Capital, international business incubator systems, a better ecology of co-ordinated fintech products, aircraft financing and jet leasing under the Cape Town convention and a comprehensive structure facilitating the securitisation of assets.
High marks for Malta
Mangion acknowledged that notwithstanding the challenges and the issues, international clients and investors continue to rate Malta very highly in terms of its overall business environment and its financial services ecosystem.
“Top rating agencies’ high rating of Malta gives that secure feeling that credit and investment risks in the Maltese economy are equivalent, if not better, than other top financial domiciles. Efforts by the Malta Development Bank to introduce easy credit for Green Bond applications and to facilitate investment in renewables and environmental projects are also to be commended.”
According to Mangion, Malta also ranks very high thanks to its membership in the European Union and the Euro Area, its highly educated and multilingual workforce, the regulators’ pro-business approach, regulations modelled on international best practice and an open and accessible regulatory environment.”
“More should be done from an education point of view to provide students in finance-related courses with the opportunity to work and gain exposure and experience whilst studying,” he concluded.
This article was first published in The Corporate Times
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