15 - 21 June 2000

Malta leaves offshore banking organisation

by Anthony Manduca

The Governor of the Central Bank of Malta and the chairman of Malta Financial Services Centre yesterday announced that Malta has withdrawn from the Offshore Group of Banking Supervisors (OGBS).

Finance Minister John Dalli said that membership of the OGBS was no longer appropriate for Malta. "Coming out of the OGBS is simply another step in the process begun in 1994 of Malta disengaging itself from offshore licences and the few remaining licences will terminate on schedule. There is now no logical reason for Malta to retain its OGBS membership.

"Malta's application to join the European Union is progressing well and increasingly our banking and regulatory relationships will be with the European Union and authoritative international bodies such as the OECD and the Basle Committee on Banking Supervision."

Malta introduced legislation in 1994 to phase out the island's offshore operations and re-modelled much of its finance sector legislation and regulation along EU lines. It has also developed and implemented fiscal policies that retain the island's attractiveness to investors while supporting international efforts to maintain global financial stability.

Malta is very keen to remove its image of an offshore financial centre and is eagerly awaiting a report by the Organisation for Economic Cooperation and Development (OCED) on international financial centres which is expected to be published soon. The report will focus on the transparency of financial centres and on their cooperation in fighting tax evasion. The Malta Business Weekly had revealed on 1 June that the report is expected to be positive for Malta.

Last month The Financial Stability Forum, a grouping of financial regulators, finance regulators and central banks, had published a classification of international financial centres, in which Malta was placed in the second category.

This immediately led to a strongly-worded letter of protest to the chairman of the Forum by the heads of Malta's three financial authorities, the Central Bank, the Malta Financial Services Centre and the Malta Stock Exchange.