The Malta Financial Services Authority (MFSA) has released its Annual Report, underscoring the resilience and robust growth of Malta’s financial services industry in 2023. The sector, a cornerstone of the nation’s economy, demonstrated impressive growth, contributing significantly to Malta’s Gross Value Added (GVA).
Between 2022 and 2023, the financial services sector achieved a substantial 11.8% increase, generating €1,251 million in GVA. Employment within the sector also saw a notable rise, with nearly 6,500 more people employed between 2019 and 2023. The MFSA received 352 applications for new licenses across various sectors during the year, approving 84% and withdrawing or refusing 16%.
Consumer Protection and Innovation
Ensuring that financial entities operate fairly and consumers feel secure is a central mission for the MFSA. The report highlights the Authority’s efforts to safeguard consumer interests through enhanced oversight and a greater focus on compliance. Between 2023 and 2024, the Authority increased its supervisory interactions by 50%, emphasizing financial crime compliance. Throughout the year, 77 enforcement actions were taken, resulting in €444,800 in penalties.
The MFSA adopts a proactive stance on digital resilience and cybersecurity, viewing innovation as complementary to consumer protection. When balanced correctly, these forces can propel the industry forward.
Regulatory Leadership
The MFSA has established benchmarks in several regulatory areas, including the Virtual Financial Assets (VFA) Framework, aligning closely with the European Union’s Markets in Crypto-Assets (MiCA) regulation. This alignment positions Malta at the forefront of digital finance. The launch of the Notified Professional Investor Funds (NPIF) Framework in December 2023 further enhances Malta’s attractiveness as a fund management jurisdiction.
Through participation in an EU multi-country project aimed at bolstering supervisory capacity in sustainable finance, the MFSA underscores its commitment to forward-thinking regulation.
Commitment to Stakeholder Engagement
In 2023, the MFSA strengthened its global collaborations, signing several new Memoranda of Understanding with both local and foreign institutions. Bilateral meetings with regulatory peers were held to exchange best practices. The Authority also hosted 10 regulatory briefings and conferences, fostering open dialogue with industry participants and stakeholders. These efforts were supplemented by various official publications, including Dear CEO letters and guidance notes, setting clear expectations for licensed entities.
To protect consumers, the MFSA issued over 30 warnings and conducted four educational campaigns to enhance financial literacy. These campaigns provided information on scams, the impact of inflation, and the risks associated with crypto investments.
Investing in Human Capital and Digitalisation
The MFSA’s success is driven by its team’s expertise and the need to stay abreast of sector developments. In 2023, employees received 27,400 training hours through the Financial Supervisors Academy, a 29% increase from 2022. The Authority’s investment in its people is supported by a comprehensive digitalisation strategy, leveraging advanced technology. The Supervisory Case Management System (SCMS) will be crucial in enabling the MFSA to harness data insights and streamline business processes for a more agile and effective supervisory approach.
“I am immensely proud of the progress we have made this year,” said Kenneth Farrugia, CEO of the MFSA. “Our focus on being an effective and efficient regulator has strengthened our role in the financial services sector, both in Malta and internationally. We will continue to achieve our mission and uphold the highest standards of regulation and supervision with the support of our dedicated team, industry partners, and stakeholders.”
Jesmond Gatt, Chairman of the MFSA, added, “We understand that financial services are not merely about numbers and transactions; they are about people’s lives, aspirations, and futures. Our regulatory framework is designed to protect consumers, ensuring they have access to transparent and reliable financial products and services.”
The MFSA’s comprehensive report highlights the Authority’s commitment to maintaining a stable and innovative financial sector, reinforcing Malta’s position as a key player in global finance.