High Building

Payment Services Series : Capital Adequacy

Issue No 3 : Capital Adequacy

As regulated financial services providers, payment and e-money institutions are subject to a capital adequacy obligation, referred to as the own funds requirement. Apart from being a key regulatory requirement, capital adequacy is a fundamental safeguard to stakeholders of a financial institution in the event of a wind down and a crucial aspect in strengthening financial and operational resilience.

Embark (Malta) Limited can provide you with specialist advisory services in relation to your capital adequacy processes.

Get in touch should you wish to learn more on how we can help.

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ESG & Succession Planning


Maintaining momentum is one of the key ingredients to a successful business. When faced with loss of talent, some businesses may crawl until they get back on their feet. A strong succession plan bridges this gap, securing continuity, continued growth and making for a smoother transition. Today’s fast-paced reality is hardly forgiving – succession planning provides the peace of mind that the organisation can continue to run without interruption while people move on to either new opportunities, retirement or pass on.


One of the considerations which is often missed in this systematic process is that succession planning should be gradual. Knowledge-sharing is built through time, creating a strong foundation so in the eventuality, the transition is made smoother and is almost a non-event.


Far from a new concept, succession planning should be included as part of an organisation’s sustainability framework as part of good governance also with ESG principles in mind.


The hardest part is convincing people who are set in their own ways and who have always gone about doing things in a certain manner, dedicating long hours of their day to the operations of the company they helped to build.


Many businesses lack the level of preparedness and understanding the importance of long-term strategic planning. Succession planning creates peace of mind to both internal and the external stakeholder, assuring investors, directors and employees alike of the organisation’s plans for continued growth.


Investors are increasingly looking for these trends also with the increased awareness that ESG principles are bringing about.


Planning for succession and implementing these plans creates a more agile business; one which is ready to face challenges and changes without the knowledge being lost.


So how does a company prepare for the unexpected? A gap analysis followed by an introspective / inward look within can reveal employees with greatest potential; desired qualities such as intellect, aptitude, attitude, agility and leadership skills are among the traits mostly sought after. With an effective employee development plan in place and mentoring, this increases the level of employee engagement.


A carefully planned succession process ensures sustainable growth and continuity while leveraging a transition into a strategic opportunity. Afterall, great leadership, success and lasting values are measured by succession.


We partner with businesses to enable all this and craft a smooth succession process in a well-planned journey. We do this with passion with a view to ensure long-lasting success. Talk to us today for more information on how we can assist you in this transition. 


This article was authored by Robert Ancilleri (Chief Executive Officer)

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Payment Services Series : Safeguarding of Funds

Issue No 2 : Safeguarding of Funds

Payment and e-money institutions authorised under the Financial Institutions Act (Cap. 376) are required to safeguard clients’ funds in accordance with applicable regulatory requirements.  This is fundamental to give consumers confidence that their funds are protected. 

The rationale behind safeguarding clients’ funds is fully understood and universally accepted, but the practical application of regulatory principles has proven at times to be rather complex.

Embark can assist in developing a robust safeguarding of funds framework.  Get in touch should you wish to learn more on how we can help.

This article was authored by Pierre-Paul Gauci (Senior Advisor – Regulatory and Business)

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Payment Services Series : PSD3-The EBA Wishlist

We are today launching a new series of informative articles covering key compliance issues in payment services.  Our articles will help you navigate the complex world of payments compliance helping you keep up-to-date with latest developments in this space.

Issue No 1: PSD3 – The EBA Wishlist

All eyes are set on the European Commission which is currently undergoing a review of the second Payment Services Directive (PSD2). While it is expected that a first legislative draft shall be published in Q2 2023, the coming into force of the revised Directive is expected to be well beyond 2023 in view of the long-wielded EU legislative processes.

In this article, we critically analyse key proposals made by the European Banking Authority in response to a Call for Advice by the European Commission – a first step towards shaping a revised Directive.

Embark (Malta) Ltd can provide you with specialist advisory services in relation to your payment and/or e-money business.

This article was authored by Pierre-Paul Gauci (Senior Advisor – Regulatory and Business)

Payment Services – 2023 Regulatory Outlook


2023 is expected to be a year of consolidation for the payments’ sector ahead of a major regulatory reform brought about by the so-called PSD3 beyond 2023.   Payment services firms need to be mindful of the worsening economic realities which may impact financial resilience.

Business Outlook – Expect economic headwinds

The pandemic has undoubtedly boosted payment services firms, drawing significant interest from investors into this growing sector.  The usage of digital payments has seen exponential growth year-on-year in the past three years.  However, heading into 2023, the economic landscape looks starkly different.  Due to the global economic downturn, it is quite plausible that payment volumes shall drop as consumer spending power continues to decrease, while firms offering deferred payment products may experience delays in customer repayments.  This may strain firms’ financial resilience leading to the need to refocus on cost-cutting measures.  Start-ups might face a steeper growth curve to achieve long-term sustainability. 

Meanwhile, payment services firms need to remain vigilant of the competitive threat posed by new payment technologies such as blockchain and Non-Fungible Tokens (‘NFTs’), the mainstreaming of payments through crypto assets as well as the ever-growing presence of big-techs in the payments sphere.

Regulatory Outlook – No significant changes expected but keep an eye on PSD3

With the EBA having exhausted its legislative mandates under PSD2, we do not expect any changes to the prudential regulatory framework in 2023. In the EU, all eyes are on the European Commission to see what legislative proposals emanate from its ongoing PSD2 review. In response to the European Commission’s Call for Advice on the review of PSD2, the EBA published in June 2022 an Opinion and a detailed Report putting forward more than 200 proposals. It is expected that any legislative proposals will set the wheels in motion for PSD3, which is however coming into force well beyond end 2023 in view of the long-wielded EU legislative processes.

In addition, the Commission’s 2020 retail payment strategy also emphasises the need for an EU-wide instant payments scheme. The Commission has proposed legislation to help bring this to life. The draft law aims to make instant euro payments available to all citizens and businesses holding a bank account in the EU by amending the 2012 SEPA Regulation. The text will be scrutinised by the European Parliament and Council over the course of 2023.

Supervisory Focus – Expect the continuation of 2022 MFSA Supervisory Priorities

While the MFSA is yet to issue its 2023 supervisory priorities document (which is usually issued mid-Q1 annually), we expect that the MFSA’s supervisory strategy to largely represent a continuation of the 2022 supervisory priorities.  Similarly, the EBA’s European Supervisory Examination Programme (ESEP) published in October 2022, focuses on recurring themes from the previous ESEPs, albeit considering emerging risks from the new economic realities.  Under convergence rules, national competent authorities are required to shape their supervisory priorities on the annual ESEP issued by the European Supervisory Authorities (ESAs). 

Based on the above and given the economic context, we expect the regulator’s focus on the following areas, at both the authorisation and on-going supervision phases:

  • Financial Resilience – the regulator will want to see that firms have sufficient capital, liquidity and resources to operate their business. In this context, an adequate capital plan is necessary to mitigate such risk;
  • Consumer protection – payment services firms need to ensure that clients’ funds are safeguarded in line with regulatory requirements at all times. Firms are required to have in place appropriate (bespoke) safeguarding policies and accompanying procedures;
  • Governance – firms are to ensure that directors and key function holders have adequate skills and experience for the role they hold, as well as being fit and proper persons. In this context, and in view of the shortage of skilled resources in the local market, talent acquisition and retention are key to ensuring a robust governance structure;
  • Operational Resilience – the pandemic and the Russian invasion of Ukraine has led to an enhanced level of cyber-security risks forcing payment firms to continue building their operational resilience by placing security at the forefront in system design. Firms are furthermore expected to ramp up their preparations to bridge any gaps with the newly introduced Digital Operational Resilience Act (DORA) which shall be fully applicable by Q1 2025.
  • Financial Crime Compliance – the regulatory drive to ensure that financial services firms are not exploited for money laundering and financing of terrorism activities is expected to be sustained in 2023.

UK business – End of the Temporary Permissions Regime and Regulatory Divergence

2023 is a watershed year for payment services firms operating a business model which incorporates UK business.  The post-Brexit UK Temporary Permissions Regime (TPR) is scheduled to cease at the end of 2023, with all applications made for full authorisation made by TPR firms expected to be processed by the UK Financial Conduct Authority (FCA) during the year.  UK industry analysts report that while the FCA has pledged to go through the backlog of applications in time, it is apparent that it is adopting a more assertive approach to authorisation, implying a higher incidence of refusals.

Following the publication of “Edinburgh Reforms” in December 2022, the UK has set in motion reforms which will lead the UK regulatory framework to diverge from the EU model.  The “Edinburgh Reforms” include 30 proposals aimed at taking advantage of Brexit freedoms.  This presents complexities to firms operating across the UK and the EU/EEA.  Where there is divergence, such firms will have to ensure awareness and compliance with both sets of requirements.


Sustainable Finance – ESG in payments

In the EU to date, various legislative acts have been introduced in the field of sustainable finance, none directly targeting payment and e-money institutions. These include the Sustainable Finance Disclosure Regulation (SFDR), the Non-Financial Reporting Directive Regulation (NFRD) and the Taxonomy Regulation. Additionally, the Corporate Sustainability Reporting Directive (CSRD) in the EU, although not directly applicable to payment and e-money institutions, makes such companies accountable to their shareholders on ESG matters.



Over time, ESG regulation is likely to increasingly affect payments firms, whether at the investor level, within an existing regulatory framework or as a completely new kind of requirement. ESG is likely to mean increased regulatory requirements, adding to the burden. However, ESG as a topic, if embedded into the business model, can be transformed into an opportunity.  Such firms are more likely to be perceived by consumers and investors as responsible and able to mitigate risks, thereby eventually increasing shareholder value. 

In conclusion, the general trend is clear: while there is no expectation for significant changes to regulatory requirements and supervisory expectations in 2023, payment services firms need to tackle various exogenous risks emanating from their operating environment.  In doing so, as regulated companies, they need to demonstrate their ability to invariably comply with applicable regulatory requirements.

Embark (Malta) Ltd can provide you with specialist advisory services in relation to your payment and/or e-money business.   We also provide ongoing regulatory compliance support to institutions on a retainer basis.

If you require any further information and/or assistance, contact us!

This article was authored by Pierre-Paul Gauci (Senior Advisor – Regulatory and Business)

The MFSA Corporate Governance Code – Avoiding a tick-box approach!

In its efforts to further raise the bar for corporate governance standards, the Malta Financial Services Authority (‘the MFSA’) has recently issued a revamped Corporate Governance Code for authorised entities (‘the Code’).  Through the new Code, the MFSA encourages entities to adopt a prudent and consumer-focused corporate culture which in turn enables enhanced protection for investors and consumers and promotes stability and integrity in local markets.  Fundamentally, the Code serves to strengthen (or instil in certain instances) the compliance culture within authorised entities.

While applicable to all legal authorised entities (except those that fall within the scope of the Capital Markets Rules), the MFSA clarifies that the application of the code is based on the principle of proportionality and is to be applied on a best effort basis.  The MFSA further notes that the Code is not legally binding or tied to any reporting obligations.  In doing so, the regulator therefore recognises that there is no single path to an effective corporate governance structure and that a single approach cannot be applied to all authorised entities. 

The Code has been widely debated pre- and post-publication by industry practitioners with most emphasis being made on the fact that the Code is principles-based and to be applied on a best effort basis and proportionately.  So, how do we strike a balance?

Piecing up the corporate governance puzzle is no mean feat particularly in a financial services sector characterised by high staff turnover amongst a limited pool of experienced professionals.  However, caution should be exercised on the grave pitfalls of engaging in a ticking-the-box compliance exercise.   


While it is widely acknowledged that progress has been made over the recent years in enhancing governance structures and controls, in many cases a thoughtful approach to corporate governance is lacking, often a result of a tick-box approach and an anything goes mentality.   

One of the key pillars of the revamped Code is The Effective Board.  The use of the word ‘effective’ by the MFSA is fitting in this ambit in view of the noticeable gaps in the effectiveness of Boards which persist to date:

  • Non-executive directors – serve a key role in providing checks and balances to the Board of Directors. Notwithstanding efforts in various fora, including the Institute of Directors – Malta and the MFSA itself, there is still little appreciation of the importance of the role of non-executive directors in the corporate structure;
  • The role of the Chair – the pivotal role of the Chair is generally underestimated, often considered to be a figure-head rather than the leader of the board of directors;
  • Collective suitability of the Board of Directors – performing a regular assessment of the collective suitability of the board remains a sore point for directors;
  • Diversity, inclusion, and succession planning – fundamental aspects especially for small boards, remain overlooked.
  • Outsourcing – there remains the falls sense of comfort in outsourcing key functions. The Board is fundamental in selecting the right outsourcing service provider (which should be able to offer the right skill set and time commitment) and overseeing the effectiveness of the outsourcing partner.  Most importantly, the Board retains accountability for the outsourced service.

The MFSA has issued clear expectations on how authorised entities are to strengthen their corporate governance structures.  It is now up to the industry to take advantage of this long-awaited revamp of the Code and strive towards achieving compliance in a smart and effective way.  Key to this is understanding your current position (gap analysis) and devise a medium-term plan on how to reach the regulatory bar.  Financial and operational failures normally result from inappropriate governance and oversight.  On the other hand, demonstrating effective corporate governance builds trust that is necessary to attract business and investment towards the company. Embedding such an effective culture before being subject to either listing requirements or regulation, renders the adoption of sound governance principles less painful.

Embark (Malta) Limited helps embed a corporate compliance culture that adds value. We can assist you in developing an effective corporate governance framework. Contact us today!

When consultancy is more than just mere advice


As a company seeks to grow, so do the responsibilities. Inhouse expertise may not always be available and when hard work is not enough for a solid strategy to take the business to new levels, an outsider’s unbiased perspective often turns out to be a key ingredient. It is about knowledge and skills-gaps in areas that may not be readily available internally. This is when a consultant’s role is a learning opportunity to take businesses to newer heights in the shortest time, filling in the identified areas for a smoother future.


The Benefits of a consulting associate



Different consultants specialise in distinct areas. Consultants can analyse your business providing an impartial perspective and offer the business with bespoke guiding solutions to the identified requirements.

Consultants bring with them a wealth of information and various business opportunities including any funding opportunities of which the business may not be aware of and which they can tap into.

Guidance can also be offered in various areas including succession planning, business continuity planning, strategic management, human resourcing as well funding options.



Challenges are part of the daily business life. When such challenges require immediate corrective action and inhouse expertise is not readily available, consulting services have the possibility of acting fast. Companies that incorporate the use of consultants in their planning, avoid having to do that in a crisis situation with the consequence that it might not result as cost effective.


A bird’s eye view

Being captivated by the daily management of the organisation, business owners often struggle to see the complete picture. Strengths and weaknesses are part of each and every business, and with time it is very easy to become blinded to them and therefore, overlooked. As consultants often work in different industries, they have the ability to use this acquired knowledge and adapt it across other industries to see the bigger picture.


Expanding Your Business

Whether it is in the interest of growth, expansion, diversification or business innovation, a business consultant who specialises, and has practical experience in the identified area, can analyse the business identifying potential weaknesses and devising strategies to address these issues for a future-proof and sturdy growth.


Attracting and Retaining top talent

An expanding business is more attractive to prospective employees. Top talent is an asset for any company, and growth and expansion provide newer opportunities to present and future employees. Newer heights are also facilitated with top talent at hand. This is a winning streak either way.


Long Term Cost Effectiveness

It is to be ensured that the time and money allocated to the involvement of consultants is an investment and not a cost and is driven by a long-term plan. While you continue with the daily work of your business, consultants will be at work solving your company’s issue. This saves you valuable time which at the end of the day costs money. Your business stands to gain the knowledge of consultants where gaps can be identified thus provide your trusted employees with a learning experience in the identified skills gap.


Our policy is to provide you with our honest judgement which may not necessarily be what you would like to hear. This is our policy and how we build trust with all our clients. You can contact us with your requirements; there is no obligation. Our offices at Embark (Malta) Ltd may be reached between Monday and Friday between 8am and 5pm. You can also send us an email on info@embark.mt

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Can you future-proof your business?

Can you future-proof your business?

No business can be run without the key roles being replaced with suitable, talented people when the current occupants, family members, decide to either take a back seat or call it a day. The most successful of businesses can easily hit a wall if a solid succession plan is not in place. Irrespective of the company size, all organisations should plan for a successful succession. This is more so for small family-run businesses.

In our work, we very often encounter a similar pattern of lifecycles. Members of the family who gave birth to a business idea and grew the business steadily to an unprecedented level, often lead themselves to believe that successful practices and methods that helped grow the business to that stage will keep working in future.

What is succession planning?

Succession planning is a strategy for identifying future leaders for your company and its continuity. It does not stop at top roles – it impacts other key roles across different levels. It helps your business prepare for contingencies by preparing potential successors to take the business to new heights, new boundaries, growing steadily and sustainably in a seamless manner. So, how do you go about preparing for such an eventuality?



Plan ahead

Think about the day that you or your immediate relation, who is running at the helm of the business, is thinking of taking the next leap into retirement. Not all surprises are worth waiting for; it may not be so easy to replace key positions and that is the reason you need to plan now so you can future-proof into a smooth transition.

Identify successor/s

The first leap towards a seamless future of the business is identifying the need to plan. Once this has been acknowledged, it is essential to identify the prospective candidates. Successful practices that have worked and helped to grow the business to its standing today can be transcended smoothly and passed on to the rightful candidate. It is not wise to assume that the next person in line in the organisational structure will be the next best fit.

Trial Days

The person/s have been identified but can they perform under increased pressure? –  Do not wait for the day of departure to let the identified successor fill in the shoes. Do a trial run – let the person assume responsibilities. This will be an opportunity for the person to shine and an invaluable experience for both the company and the successor. This will help you assess whether the person might need additional training and development.

There is no such thing as a single successful recipe for succession planning. However, it has to rest on the following four pillars:

i.     Strong governance structures with little dependency on the owners

ii.   Sound business, financial and capital planning

iii.  Promote an ambitious change culture – what worked yesterday will not work tomorrow

iv.  Be driven by creating value in everything you do

Luckily, there are consultants who can identify and highlight key critical areas and provide methodologies which are circled around the company’s requirements for future transitioning and eventual growth of the business.

Opening up to this company culture is a key step in ensuring a successful growth strategy for the company’s future. There are ways of making the transitionary period smoother for companies and planning is the key essential part of this approach.

Talk to us today for more information on how your business can embark on this strategy and transition into the fast-paced and changing future.

Developing employees into leaders

Lack of leadership is one of the largest barriers to growth at companies around the world. The primary talent challenge faced by the worldwide organisations is the development of new leaders; which is quite an urgent issue that requires immediate attention.

Skilled leaders run short, with 85 percent of the executives not confident in their leadership pipelines. Statistically, there are only 13% of the companies who state that they do excellent job developing skilled leaders at all levels.

Millennials are expected to comprise 75 percent of the workforce by 2025; which represent that soon enough they will become the leaders of today rather than the leaders of tomorrow. 66 percent of the companies claim they are “weak” in improving. Simultaneously, employees define opportunities to develop their own leadership skills as their priority for remaining with an organisation.

Currently, organisations are experiencing a training gap rather than a skills gap. This results from 61 percent of the companies who do not offer leadership training to their employees. Hence, there is a deficiency in leadership. Indeed, this shows that these programs are a need for the company for it to continue flourishing and growing with the help of its skilled leaders.

In addition, the performance of your leaders leaves a huge impact on your end result.  Their investment will increase competitive advantage over other companies.

It is of utmost importance to understand your employees and their ambitions, in order to continue developing their personalities professionally to advance in their career. Most of the employees believe they would endure longer with a company if they saw stronger career paths.

It is also important to define what the organisational goals are and ultimately, it is the responsibility of the senior leaders and the key stakeholders to determine the type of skills needed to execute the company’s strategy.

It is beneficial to look at the leadership skills gap by surveying the employees and assessing how they feel on their job. In turn, this will help to identify what improvement can be done in enhancing the company’s culture by enriching learning experiences and adding more value.

Listing the targets and the steps to achieve those organisational objectives is essential. One should also create a tool to measure the organisation’s overall performance and growth.

Our team is ready to assist you in this respect. We help organisations to manage both the training and the skills gap, help organisations prepare themselves to develop employees through specific training and implementation of mentoring programmes. Please feel free to talk to us.