An analysis of international aspects of Maltese financial services legislation and of international regulatory collaboration

Abstract

The aim and object of this thesis is to examine the regulatory co-operation and collaboration between supervisory authorities of financial services. As financial services markets become increasingly globalised, so the opportunities for cross-border crime and other misconduct proliferate. In the light of these trends, international co-operation amongst financial services regulators is growing increasingly important. This study evaluates the way the changing international situation has affected Maltese laws and practices on financial services. Both laws and practices have had to undergo substantial often-radical changes in order to reflect the binding legal order of the European Union. The recent amendments to our laws are a clear-cut consensus towards a more liberal framework for exchange of information and collaboration with foreign regulators. The continuous evaluation and updating of legislation and regulation in the financial services sector guarantees Malta remaining in the optimum position to maximise any opportunities presented. Malta has made progress in gaining international recognition as a financial centre and practitioners in the sector have been encouraged by the creation of this positive legislative framework that ensures strong compliance. Malta's efforts to attract players in this market are based upon a solid foundation of legislation, infrastructure and efficiency, as well as human resources capability. Chapter one sets the background upon which the subject matter evolves. This gives a general picture of the international financial architecture and what kind of progress is needed to strengthen it even further. A brief overview of the international aspects of Malta's and the UK's financial services legislative framework is also considered. Chapter two then relates to the cross-border supervisory and regulatory collaboration and co-operative efforts undertaken by financial standard-setting bodies such as BCBS, FATF, IAIS, IOSCO, IMF and OECD. In Chapter three, the issue revolves around the various forms in which co-operative efforts among financial regulators are set out. These range from Memorandum of Understandings and other co-operative undertakings to exchange of letters and information, on-site inspections, joint notes and sharing of financial records. The MFSA has concluded a number of bilateral Mo Us with foreign regulators of financial services. These will be dealt with specifically. Chapter four then discusses the European Union's co-operation framework in the financial services sector. Apart from the Directives which cater for ongoing co-operation between the competent authorities of the Member States, this chapter will also examine the adoption of the new financial services committee and how beneficial it has been up to now. Finally, Chapter five looks into Malta's relations with international organisations such as the OECD and the WTO. Furthermore, it surveys the local co-operative legislative framework and the ways in which Malta assists overseas regulatory authorities when a request is made by the latter. Although the Maltese legislative situation has kept up with international developments in relation to international financial co-operation, there is still a lot to be done. This study will attempt to address the key areas which need improvement in enabling Malta become a reliable international financial hub.