Wide-ranging exchange control liberalisation now effective

The exchange control liberalisation measures envisioned in November’s budget came into effect yesterday. The measures are aimed at further relaxing the limits on certain types of current payments which are still subject to quantitative controls.

Within this scope, fund investment schemes (SICAVs) which collect funds in Maltese liri from residents with the specific aim of investing such funds in Maltese-lira denominated securities on the local market are permitted to invest up to a maximum of 10 per cent of their shareholders’ funds in foreign assets. Previously, the limit stood at five per cent.

Meanwhile, the limit that a Maltese resident is allowed to retain in a foreign currency current (demand) account with local credit institutions has been upped from the present limit of Lm10,00 to Lm15,000. These accounts can be credited with foreign currency that residents are exempt from surrendering to an authorised dealer and funds converted from Maltese Liri, which would then form part of the annual Lm50,000 investment allowance. They may be debited with payments in foreign currency related to balance-of-payments current account transactions.

The foreign portfolio investment allowance for a Maltese resident person has now been raised from Lm30,000 to Lm50,000 per year, while the amount of foreign currency that a resident is exempted from surrendering to an authorised dealer has been increased from the present Lm10, 000 to Lm15, 000.

Another important measure introduced yesterday relates to the aggregate amount that corporate bodies and local retail outlets are permitted to maintain in foreign currency deposits - demand, savings or time - with local banks has been raised from the present limit of Lm10, 000 to Lm15,000. These accounts may only be credited with foreign currency earnings generated through their business activities. They may be debited with payments in foreign currency related to balance-of-payments current account transactions.

Locally registered fund management companies are also now permitted to seek a listing for their collective investment schemes on recognised international capital markets. Meanwhile, locally-registered financial and non-financial companies are permitted to seek a listing for their bonds and related securities on recognised international money/capital markets as long as the securities to be listed have a maturity period of at least one year.

Meanwhile, the granting of guarantees by a resident for a non-resident has also been completely liberalised. However, any requests for payment by the resident as a result of the calling in of the guarantee by the non-resident will have to be supported by documentary evidence showing that a legally binding guarantee document already exists.

All restrictions on the physical transfer overseas of certificates and other instruments denoting title to shares or securities have also been removed.

In order to strengthen the existing measures aimed at combating money laundering or other criminal activities such as the channelling of funds for terrorist activities, any person who carries into, or out of, Malta an amount of foreign currency notes in excess of Lm5,000 will be obliged to fill in a form with details of the foreign currency amounts being carried.

Travel allowance for individuals has been raised from Lm10,000 per person per trip to Lm15,000, while requests for travel funds exceeding Lm15,000 will be permitted as long as details of the transaction are given by the remitter on the relevant Central Bank form.

In the same vein, the purchase of foreign currency for export by residents who intend travelling overseas to make payments for merchandise imports has also been raised from Lm50,000 to Lm100,000.

Real estate investment by Maltese residents overseas has been completely liberalised.

It should be noted that that the Central Bank and authorised dealers will approve or effect the all transactions listed above only after the requested documentation is provided to them as evidence of the purpose of the payment.