Malta’s trust industry plays a vital role in shaping the country as a wealth management location, and the sector is seeing continued interest from trust companies setting up operations on the island. While the country has been a prominent player in administering private wealth structures for almost 30 years, to maintain its competitive edge on rival trust jurisdictions, Malta has updated its Trusts and Trustees Act, ensuring that the island remains one of the ‘go-to’ names for those in search of wealth management solutions. Malta’s EU membership and its onshore financial services sector are key attractions for trust companies.
A Unique Proposition
Malta does not only offer the option to establish a trust, it is also one of the few places in the EU that caters for foundations too. This ‘marketable advantage’ has attracted more than 170 service providers, including branches of international trust administrators, independently owned trust companies and smaller niche providers to the Mediterranean island. The Society of Trust and Estate Practitioners (STEP) has about 100 members in Malta, evidencing the depth of experience available. Both trustees and foundation administrators must be licensed by the Malta Financial Services Authority (MFSA) and are legally bound to treat the interests of beneficiaries as paramount. However, Malta is not a secrecy jurisdiction, and the focus of service providers firmly rests on providing a world-class service to affluent, tax-compliant customers from around the world.
Malta’s laws are in line with global standards on KYC and AML, and all Maltese trusts and foundations are obliged to identify, record and report their beneficial owners to the MFSA. The beneficial owner register is not public but accessible by law enforcement officials and others with legitimate interests. The MFSA also operates a fast- track authorisation for trust companies licensed in other approved jurisdictions. Legal costs, management fees and auditing rates are all lower in Malta than in the majority of European jurisdictions. Malta’s law also allows settlors to establish trusts governed by a foreign law, which means service providers can offer their clients the option to choose the law of another jurisdiction to govern their trust. In addition, Malta offers an attractive ‘light touch’ regulatory process for Private Trust Companies (PTCs), whereby a family trust can hold assets to the benefit of one specific family. The trustee of a PTC is not required to undergo a full authorisation process with the MFSA, but is merely required to register with the MFSA, which significantly speeds up the process.
Towards the Future
Malta’s advantage for international trust companies lies in the fact that it recognises all forms of trusts found in any other jurisdiction. In addition to traditional wealth planning and philanthropic uses of a trust, Malta’s trust law identifies a number of commercial applications for the use of trusts, ranging from securitisation to holding aircraft assets. This bodes well for the future of Malta’s trust and fiduciary industry. Maltese trusts and foundations offer security, assurance and flexibility in an EU-regulated environment, while maintaining the principle of confidentiality that clients expect.