Muscat makes Malta pitch for US businesses seeking European base

Maltese prime minister discusses correspondent banking issues for banks affected by US curtailment

The Prime Minister of Malta is holding talks in New York, USA, over issues regarding correspondent banking and custodian services, among others, that are affecting Maltese banks and gaming companies.

American banks are limiting their networks to the United States and cutting down channels to the EU, in a bid to render themselves only liable on intra-US transactions.

But the shrinking network is making it harder for European banks to process American payments, and is also affecting Maltese banks, which would have to otherwise rely on other banks.

Joseph Muscat left Malta for New York last Sunday, with Finance Minister Edward Scicluna, Malta Financial Services Authority chairman Joe Bannister, and the Central Bank of Malta’s deputy governor, Sandro Demarco.

All banks, especially smaller ones, depend on correspondent relationships with banks in other jurisdictions.

After the 2008 financial crisis, US banks particularly ceased to have anything to do with online gambling, tax avoidance or adult entertainment, and transferring their funds. This in itself is a problem for Maltese gaming businesses as well as for online banking software companies specialising in the processing of adult entertainment site payments.

Even the Bank of International Settlements is attempting to introduce a form of acceptable security for banks so that they can carry out transfers for their clients.

MaltaToday is also informed that Muscat plans on marketing Malta as an alternative to US businesses hit by the Brexit effect, and are seeking to retain a European base.

A spokesperson said the PM and his delegation are in the United States as part of a drive to attract new business towards Malta. “Long planned meetings were held with insurance, fintech companies and others setting new trends in banking. Hopefully, as in previous occasions, results will be seen in coming months. The delegation is also meeting decision makers to further diversify Malta’s financial services infrastructure, such as in custodian services and correspondent banking.”