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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.

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)

Coming out of the Covid-19 Crisis – Leadership

The last few months have without doubt seen a dramatic shift in how business is conducted. Life as we knew it has changed immensely over a very short period and businesses have had to change how they operate to adapt to these changes. Many have seen their turnover drop drastically almost overnight, and many have had to make some very tough decisions to survive, several involving the employment, salaries, and lifestyles of their employees.

As we start coming out of the crisis created by Covid-19, businesses will still have to continue changing, adapting and making tough decisions to get themselves back on track and to continue surviving and growing back to what they previously were.

You will not be able to cling onto how you did things in the past. Flexibility and adaptability are key words that will become part of everyday language; others, no less important will be Leadership, Communication, Planning, Understanding and Compassion.


Effective leadership is vital in any business, however the need for it now will be even more so to get your business back on track.

  • Some questions you should be asking yourself as you start exiting from the difficult times that the crisis has created include – Are my managers equipped with the required skills to lead the team through these difficult times and beyond? Are we conducting regular management meetings to give them advice on what message needs to be conveyed to their employees?
  • It is important that during this period a consistent message is being given to employees, so your management team needs to know what to say and how to deal with difficult conversations with employees, as many of their employees will be feeling concerned and apprehensive about the future of the business, their jobs and their income.
  • To help your managers to lead employees effectively out of the crisis it is important not to stop leadership training for your managers (although many companies may already have done this). Now is the time to ramp up training to ensure your managers have the right tools and knowledge to lead employees back into the workplace and have everyone moving and working together to get the business back on track, avoiding as much unnecessary confusion and anxiety as possible during the journey.
  • Make the most of web-based and on-line training courses that have emerged during the crisis; these can be anything from short YouTube videos through to 4 or 5-day diploma courses on a wide and ever-expanding range of subjects. Many of these have the added attraction of being free, and they can be studied at home.
  • Finally, different situations bring forward different skills and abilities in individuals; day-to-day work does not always give people the opportunity to shine. So, stop and think, has anyone emerged during the crisis as a potential leader, who appears comfortable in his/her ‘new role’ which they have evolved into due to circumstances? Take note of this and take steps to develop them further in their leadership skills, to allow you to truly strengthen your leadership team, and come out of the crisis ahead of the competition.

We at Embark can help you be different in these circumstances and make the most out of what opportunities are presented through promoting and supporting leadership qualities. Please do contact us. We are here to deliver value.


No Ordinary Crisis

This is not a crisis like any other. More than ever, it needs senior level people on boards of companies to have good strategic foresight, who do not just think about keeping their organisations afloat but have the capability of developing and assessing long-term prospects.

As a first, they need a quicker adoption of digitalisation initiatives and new technologies. The planet is having a crash course in e-commerce, digital payments and remote working. Organisations need to keep riding this wave.

Secondly, they need to observe emerging trends in supply chains and ensure that they have adequate logistical arrangements in place to react quickly to shifting patterns of consumption without undue delays and costs.

Thirdly, they need to ensure that staff morale and wellbeing is kept at acceptable healthy levels. Our people require and deserve significant investment in terms of ensuring that they are rehabilitated to different patterns of doing things whilst at the same time emerging from the crisis healthier and empowered more than ever before.

This is not a crisis like any other. It will offer opportunities like we have not been able to tap before.

Embark on a journey with us. We can assist.

Enterprise Risk Management

Enterprise Risk Management (ERM) includes methods and processes that should be adopted by any organisation not merely to mitigate risk, but to promote and support effective risk management to add value within an organisation. Accountants should become the risk experts in managing risk in line with the organisation’s objectives.

A Risk Management Challenge for the Profession

A 2017 survey of IFAC member organizations on managing risk implied that:

  1. Accountants do manage to get the required risk management knowledge and skills from their preliminary professional training.
  2. ERM is not always viewed as a fundamental expertise for professional accountants.

From Mitigating Risk to Managing Uncertainty

ERM must be viewed as preventative approach rather than a reactive one where it involves getting a good grasp of the past, present and future possibilities. It requires the identification, assessment, and treatment of uncertainty and the risks/opportunities that are brought about into a way that correspond to the organisation’s goals.

The CFO and Finance Function Role in Risk Management

The involvement of the CFO and the finance function role in relation to risk management is expanding merely because such uncertainties and complexities present in the business environment must be addressed by top level management.

The traditional involvement of CFOs in risk management include:

  1. Supervising financial and compliance risks
  2. Evaluating opportunities and risks and present them to the board
  3. Guiding the overall organisation risk culture

Moreover, the professional accountant’s role involves:

  1. Financial and non-financial propositions of potential investment opportunities and alternative courses of actions
  2. Forecasting and including key variables (such as risk) whilst developing different scenarios of a project.
  3. Recognising and classifying risks through sensitivity testing and scenario modelling.
  4. Independent directors – participating in audit committees paying attention on risks around financial reporting
  5. Internal audit – deliver assurance to the board on the effectiveness of risk management
  6. Treasury – evaluate and manage risks and rewards relating to financial risk, foreign exchange, commodity price, interest rate and liquidity risk.

Recommendations for CFOs and Finance Functions

For CFOs and finance functions to play a more innovative and principal role in risk management, they must consider enhancing their input to ERM in three crucial ways:

  1. Relating risk management to value creation and preservation
  2. Driving insights and enabling decisions
  3. Enabling integration and interconnectivity

Recommendations for the Professional Accountant Skillset

Our team can support your finance people develop the above skillset through dedicated training, devise and implement transformation plans putting risk management a constant high on the agenda. Please feel free to contact us.

Changing the companies through digitalisation – Artificial Intelligence

Companies which are part of today’s business environment are required to undergo changes almost constantly if they are to remain competitive. While Artificial Intelligence (AI) may be an unclear motto in tech to many, there is no doubt that recent AI and machine learning depends heavily on the huge amount of information.

Artificial Intelligence helps finding explanations to complex business problems in a more human-like way. This is similar to adopting characteristics from human intelligence and executing them as algorithms in a computer friendly way. Machine learning is a form of AI which mines data for patterns that can be used to make predictions.

Companies or industries applying AI, will become more diverse as they will be driven by the ability to analyse data through multiple features, fraud exposure, and supreme customer relationship management. This will help them gain a competitive advantage.

Industry leaders predict the emergence of a new era of automation. Artificial intelligence is quickly automating routine intellectual processes. These already play a vital role in many industries like retail, hospitality, financial firms etc.

AI helps build a service, attracts customers, gather data, and let computers learn from this data, all on a scale that human labour cannot imitate; from Siri to self-driving vehicles.

For instance, Amazon continuously works towards analysing the internal processes in order to improve their efficiency. The firm’s latest algorithmic project is Amazon Go, a cashier less grocery store. Hundreds of cameras surround the stores and watch shoppers from above, converting visual data into a 3D profile which is used to track hands as they pick a product. The system sees which items the customers pick up and bills them to their Amazon account when they leave the store.

Recently, the emerging type of technology invested in is the ROBOTS. Hilton Hotel are a clear example of this. They are passionate about taking care of their guests, providing them with more choices and flexibility through effective use of technology. Hilton works in partnership with a technology company IBM, to test out a concierge experience with its customers. It is called “Connie”, a robot for the hospitality market. Its use is to interact with guests and delight them by responding to their questions in a friendly and informative manner.


We are witnessing a business phase where massive technology-driven alterations are helping us to address a number of challenges in attaining optimum growth and the AI technology, has extremely strong evolving implications.

Our team is ready to assist you in reengineering key processes with particular emphasis placed on digitalising as much as possible these same processes with a view to create value not only within the organisation but also to enhance the customer experience. Contact us today.

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.