Financial Crime World

Malta’s Compliance as a Service Provider: Ensuring Financial System Protection

The Malta Financial Services Authority (MFSA) has taken significant steps to protect the integrity of the financial sector by regulating Company Service Providers (CSPs). CSPs are entities or individuals that offer corporate services, including company formation, directorship, and registered office services.

The Importance of Compliance

As gatekeepers to the financial system, CSPs have a substantial impact on the overall financial sector. Their activities can range from setting up complex structures to providing business addresses for companies. To ensure an appropriate degree of protection for their clients, the MFSA closely monitors the supervision of registered CSPs and their compliance with applicable legislative frameworks.

Supervision and Compliance

The Authority adopts a risk-based approach in supervising CSPs, utilizing a risk monitoring system that assesses each provider’s level of risk based on data collected through offsite supervision and intelligence gathered. This risk score determines the type and frequency of supervision conducted by the MFSA.

  • On-site inspections are a key tool used by the Authority to ensure compliance.
  • These inspections can be comprehensive, reviewing all systems and procedures, or focused on specific areas.
  • The goal is to ensure that CSPs maintain high standards of conduct and comply with relevant regulations.

Legislation and Regulations

The legislation regulating CSPs in Malta aims to prevent the use of the financial system for money laundering and terrorist financing purposes. Company service providers are defined as natural or legal persons providing services such as company incorporation and other legal entity formation.

  • The MFSA has issued rules applicable to CSPs, including guidance notes, FAQs, and forms.
  • These regulations address requirements such as application processes, conduct of business, organization, and internal controls.
  • CSPs are legally bound to comply with these rules.

Recent Developments

The Authority has recently uploaded the Annual Compliance Return (ACR) for 2024 and issued a new circular explaining changes made to the ACR and file upload system. This move aims to ensure that CSPs remain compliant and adhere to regulatory requirements.

In conclusion, Malta’s compliance as a service provider is crucial in ensuring the integrity of the financial sector. The MFSA’s risk-based approach to supervision, on-site inspections, and regulations aim to prevent the misuse of the financial system for illegal activities. By staying up-to-date with recent developments and complying with applicable legislative frameworks, CSPs can maintain high standards of conduct and protect their clients’ interests.