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.

Chess pieces aligned in strategic business moves generated by AI

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)

MFSA Supervisory Priorities

The MFSA has on the 16th February 2024 issued its 2024 Supervisory Priorities document, outlining its key objectives and focus for supervisory engagement in 2024.


There are a number of key developments in this year’s publication including an over-arching theme relating to a shift towards an ‘outcomes-based’ approach to supervision.  This seems to imply a higher demand for immediate action from licence holders to meet supervisory expectations.


The most fundamental development in our view relates to the enhanced focus on FinTechs (payment and e-money institutions and VFSAs) through their inclusion in the so-called pilot project for outcomes-based supervision.

The dedication of a sizeable part of the MFSA Supervisory Priorities document to FinTechs is unprecedented and underscores the increasing relevance of the Fintech sector in Malta.  It further increases the expectation of more intrusive supervisory interactions with FinTechs during this year. 


The four key supervisory outcomes applicable to FinTechs are:

  1. Adequate arrangements relating to Safeguarding/Safekeeping of Assets;
  2. Adequate Governance arrangements and compliance with Passporting Rules (new area of emphasis)
  3. Strong Business Resilience
  4. Sufficient MiCA Preparedness (applicable to VFAs only).

While the afore-mentioned four key supervisory outcomes are generally speaking recurring objectives, the MFSA’s distinct approach is already being felt.  In this respect, the MFSA commenced on the 23rd February 2024 its first 2024 thematic through the issuance of a Survey on Safeguarding to all VFASPs.  VFASPs have been given two weeks to respond.

An additional four supervisory outcomes related to ICT Risk and Cybersecurity are fully applicable to FinTechs:

  1. Sufficient DORA Preparedness
  2. Implementation of Strong Risk Management and Compliance Functions
  3. Adequate Incident Management Processes; and
  4. Satisfactory Status of Third Party Providers.

Be prepared

The timeless Scout Motto “Be Prepared” couldn’t be more accurate.  The MFSA’s 2024 Outcomes Based supervisory approach is a call to action for all licence holders, and in particular Fintechs, which are at the heart of the so-called pilot project.


Drawing from indications obtained through the first thematic review on Safeguarding of Assets, Fintechs are required to provide the MFSA with prompt and detailed information on their internal set-ups and control frameworks.  Institutions need to up their game in managing compliance risk and build capacity and technical knowledge to meet the MFSA’s expectations.


Embark can help manage your compliance risk through our diverse regulatory advisory services.  Please visit our Regulatory Compliance brochure for further info.


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

the colorful sky is reflected in the windows of the building

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)

Close-Up Of Modern Office Buildings,Shanghai

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)

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