Financial institutions refer to non-bank financial institutions, namely institutions which do not fund their activities through the taking of deposits. Such institutions require a pertinent license if they intend on carrying out any business in or from Malta.

Since the implementation of the Payments Services Directive II ("PSD II"), the number of payment institutions and electronic money institutions within the EU has grown enormously. In fact, over 50 financial institutions (including payment and electronic money institutions) have obtained their licence from the MFSA, demonstrating that Malta remains a popular and well-regulated jurisdiction from which to obtain a licence and to carry out such services.

The following is a non-exhaustive list of activities which financial institutions may be licenced to carry out in terms of the Financial Institutions Act ("Act"):

• lending (including personal credits, mortgage credits, factoring with or without recourse, financing of commercial transactions including forfaiting)
• financial leasing
• venture or risk capital
• payment services as defined in the Second Schedule of the Act
• issuing and administering means of payment (e.g. travellers' cheques, bankers' drafts, and similar instruments)
• guarantees and commitments
• trading for own account or for account of customers in:
  • money market instruments (e.g. cheques, bills, Certificates of deposits, etc.)
  • foreign exchange
  • financial futures and options
  • exchange and interest rate instruments
  • transferable instrument
• underwriting share issues and the participation in such issues
• money broking
• issuing of electronic money as defined in the Third Schedule of the Act

A company shall be granted a licence only if:

• its own funds are equal to such amount established by the Malta Financial Services Authority ("MFSA") as appropriate for the activities to be undertaken by the applicant. Therefore, the initial own funds of the applicant institution will be set on a case-by-case basis and will be commensurate to the business plan submitted by prospective applicants
• there are at least two individuals who will effectively direct the business of the Malta financial institution
• all qualifying shareholders, controllers and all persons who will effectively direct the business of the financial institution are suitable persons to ensure its prudent management
• the MFSA is satisfied that the financial institution has sound and prudent management and a clear organizational structure
• the MFSA is satisfied that there are no close links between that company and another person(s) which through any law, regulation, administrative provision or in any manner prevent the company from exercising effective supervision of that company

Branches of Overseas Financial Institutions

Maltese Financial Services legislation provides for the opening of branches by licenced financial institutions. A financial institution is required to inform the MFSA in writing before opening a new branch, agency or office in Malta.