Malta's strategic position to become a leading international financial centre : a comparative study of legal perspectives

Abstract

The scope of this thesis is to analyse the principal frameworks that have led to the development of Malta as an International Financial Centre. Primary focus is placed on the domestic legal, fiscal and regulatory set-up which constitutes the core of any efficient and effective financial centre. It was also felt necessary to consider briefly whether a jurisdiction's legal tradition, namely civil or common law tradition, influences its financial development and economic growth. Substantial focus also had to be placed on the impact that EU membership, consequential implementation of EU legislation into domestic laws and participation in the single market had on the path undertaken by Malta to becoming a successful financial centre. In undertaking the above-said examination this thesis endeavours to compare the development of Malta's relatively young financial centre with that of other European financial centres, namely Luxembourg and Ireland, considering that the latter jurisdictions have a successful history of financial services. The ultimate purpose of such a comparative analysis is to try and establish what key features already exist and what other fundamental characteristics should be created or developed further so as to see more international investors and institutions choosing Malta as the ultimate jurisdiction for their investments. It is for this reason that various vehicles providing financial products and services are essential to render Malta as competitive as possible on the international front. However, such a vast network of vehicles alone is not sufficient; other elements must be in place. For, example, the protection of investors' privacy translated into a duty of confidentiality owed by various professionals and institutions is expected of any financial centre. However, such a legitimate right must be balanced to prevent abuses thereof, especially in the fight against financial crimes such as money laundering and tax evasion in accordance with international best practice. Such a balance is crucial for a jurisdiction to maintain a legitimate reputation. Furthermore, another essential element expected of any financial centre is a well-regulated environment providing 'high-quality' products on its local market whilst trying to reduce the regulatory burden and costs imposed on investors. Finally, the fiscal implications on incoming and outgoing capital cannot be ignored. Such implications are essential to provide the flexibility required by investors to plan their business structures so as to have tax leakage reduced to the greatest extent possible. This combination of factors makes a financial centre successful. Therefore, it is optimization in the said frameworks backed by the provision of sufficient human resources that is crucial for the efficient provision of financial services.