Financial Crime World

Malta Financial Services Authority’s Authorisation Process: A Robust Assessment of Regulatory Standards

The Malta Financial Services Authority (MFSA) has established a comprehensive authorisation process for financial services firms looking to operate in the country. The process involves a thorough assessment of regulatory standards, ensuring that applicants meet the necessary criteria before being granted an authorisation.

Fit-and-Proper Checks

Applicants undergo rigorous fit-and-proper checks, which include:

  • Third-party verification of personal information
  • Examination of regulatory history in Malta and foreign jurisdictions
  • Exchange of information through close collaboration with foreign regulators
  • Intelligence reports from specialized sources

These checks ensure that applicants have a clean regulatory record and are capable of providing financial services.

Pre-Authorisation Stage

Once the fit-and-proper checks are satisfied, the MFSA proceeds to the pre-authorisation stage. At this stage:

  • The applicant is notified of an in-principle decision granted by the MFSA
  • A list of conditions to which the authorisation will be subject is provided
  • The applicant must address matters such as:
    • Incorporation and capitalization of the company
    • Confirmation that the company will comply with the conditions of authorisation

Authorisation

If the pre-authorisation requirements are fulfilled, the MFSA grants authorisation through:

  • Issuance of an authorisation letter
  • Certificate of authorisation
  • The authorized person is responsible for adhering to post-authorization requirements and ongoing internal monitoring.

Post-Authorisation Stage

During the post-authorisation stage, the MFSA monitors whether the post-authorisation requirements are being satisfied and initiates supervisory processes. Any changes to the initial authorisation granted by the MFSA must be communicated to the authority as soon as possible.

Legislation

The Malta Financial Services Authority Act is the source of the MFSA’s jurisdiction, while other sector-specific laws grant the authority certain powers. The main legislative acts include:

  • Chapter 371 (Banking Act)
  • Chapter 376 (Financial Institutions Act)
  • Others

Scope of Regulation

Regulated financial services providers are subject to various areas of regulation, including:

  • Governance
  • Own funds
  • Liquidity
  • Internal organisation
  • More

The MFSA also publishes detailed sector-specific rules and standard licensing conditions that are binding on financial services firms and their associated persons.

Additional Requirements

Financial services firms and authorized persons may be subject to additional requirements imposed by:

  • Self-regulatory bodies
  • Designated professional bodies
  • Other financial services organizations

These requirements vary depending on the specific firm and body in question.

The MFSA’s authorisation process is designed to ensure a robust assessment of regulatory standards, providing a clear and transparent framework for financial services firms seeking to operate in Malta.