Legal and regulatory issues in offshore banking

Abstract

The decision to develop Malta into an international financial, business and service centre of repute, with the consequent enactment of offshore legislation in 1988, makes the study of offshore finance one of very topical importance. The Maltese offshore legislation is aimed at attracting a wide spectrum of offshore activities including offshore banking, captive insurance, insurance broking, general trading and nontrading activities, offshore trusts and ship registration. I have chosen to concentrate my study on one very important area of the whole subject - offshore banking. I have divided my thesis into five chapters : an introductory chapter dealing with the nature of offshore banking; the next three chapters deal with what I consider as the three essential features of the subject in question, namely regulation, supervision and confidentiality; finally, the last chapter is concerned with the negative aspect of the subject, money laundering, and the measures which have been taken to combat this problem. The prospects for the future of offshore banking in Malta look positive. The two largest Maltese commercial banks have incorporated their own subsidiary banking offshore local companies whilst Melita Bank International Limited, a subsidiary of Istituto Bancario San Paolo of Turin conducts offshore banking business under an ad hoe banking licence issued to it in 1981. Due to the fact that in recent years the international banking climate has not been one which is conducive to expansion, no internationat banking group has . as yet established an offshore banking presence in Malta.However, the Maltese supervisory and regulatory authority, the Malta International Business Authority, with a number of has developed and maintained international banking groups. important This has contacts institutions establishing a first foothold general trading and non-trading off shore purposes or for the use of their customers. led to a number of these in Malta by registering companies for their own Besides, the Authority had important and material discussions with certain substantial institutions which have shown an interest in establishing themselves in Malta during the last months. These indications augur well for the future and it is hoped that international banks of standing and repute will very soon establish a full offshore banking presence in Malta. In completing this work I have conducted considerable research through various legal and other publications as well as several recent Law Journals both in Malta and abroad. In my research I found few comprehensive works which directly expounded the topic. My aim was to assemble all the material at hand and to make a thorough exposition of the subject. I honestly hope that I have been to a certain degree successful in accomplishing this goal.