Malta: Strengthening Financial Institutions Regulatory Compliance
The Central Bank of Malta has been taking steps to strengthen financial institutions regulatory compliance in the country, ensuring that licensed institutions adhere to necessary legal requirements.
Amendments to the Central Bank Act
The bank’s Act, originally published in 1967, has undergone several amendments to keep pace with technological innovations and changes in the payment services industry. One of the key changes is the introduction of new terminology such as:
- Payment Applications: Enables the bank to regulate new payment solutions introduced by market players.
- Payment Card Schemes: Regulates payment card transactions and ensures compliance with legal requirements.
- Payment Transactions: Covers all types of payment transactions, ensuring regulatory compliance.
Enhancing Regulatory Oversight
The amended Act gives the Central Bank the power to:
- Review rules and procedures of each service provided by licensed institutions
- Ensure alignment with bank competencies and organization
- Restrict or suspend services if they breach local or European legislation
Promoting Electronic Payments
Malta’s payments landscape is characterized by a high usage of paper-based instruments, but there is a shift towards electronic modes of payment. To promote this shift, the Central Bank has issued several directives:
- Directive No. 1: Payment Services: Regulates provision and use of payment services
- Directive No. 2: Payment and Securities Settlement Systems: Ensures compliance with relevant regulations
- Directive No. 6: TARGET System: Regulates new generation Trans-European Automated Real-Time Gross Settlement Express Transfer System
Reporting Requirements and Risk Management
The bank has also issued guidelines for:
- Reporting Major Incidents: Ensuring prompt reporting of significant incidents affecting payment services
- ICT and Security Risk Management: Ensuring compliance with relevant regulations
Payment Systems Approval
Directive No. 13 sets out the parameters and applicable terms and conditions for the approval of payment systems prior to commencement of operations.
Key Takeaways
The Central Bank’s efforts aim to ensure that financial institutions in Malta comply with relevant regulations, promote a stable and efficient payments landscape, and foster growth through electronic modes of payment.
Conclusion
The Central Bank of Malta is committed to strengthening financial institutions regulatory compliance, promoting a shift towards electronic payments, and ensuring the stability and efficiency of the country’s payments landscape.