Financial Crime World

Malta Financial Regulation Updates Bring New Clarity to Credit Institutions

The Maltese government has introduced a range of new and updated legislation aimed at strengthening financial stability by consolidating supervision of credit institutions and transposing key EU directives.

Consolidated Supervision of Credit Institutions

In February 2022, the Supervisory Consolidation (Credit Institutions) Regulations were published, establishing criteria for the Malta Financial Services Authority (MFSA) to act as the consolidated supervisor of credit institutions, separate from investment firms. This move has significant implications for banks that are supervised on a consolidated basis by the MFSA.

Updates to Capital Requirements Regulation

Amendments have been made to the Capital Requirements Regulation (CRR) Implementing and Transitional Provisions Regulations to cater for applicable options and discretions emanating from CRR II, as well as clarification changes.

Changes to Recovery and Resolution Regulations

The ranking of creditors vis-à-vis credit institutions has been shifted to the Recovery and Resolution Regulations. Article 29A of the Banking Act has been repealed and new provisions incorporated in regulation 108.

New Banking Rules

New banking rules have been published, including updates to:

  • Supervisory Review Process of Credit Institutions: Provides guidelines for credit institutions on how to prepare for supervisory reviews.
  • Outsourcing by Credit Institutions: Regulates the outsourcing of activities and functions by credit institutions.
  • Capital Buffers of Credit Institutions: Sets out requirements for the calculation and maintenance of capital buffers by credit institutions.
  • Remuneration Policies and Practices: Establishes guidelines for remuneration policies and practices in credit institutions.
  • Internal Governance of Credit Institutions: Provides guidance on the internal governance framework of credit institutions.
  • Financial Holding Companies and Mixed Financial Holding Companies: Regulates the operation of financial holding companies and mixed financial holding companies.
  • Stress Testing Requirements of Credit Institutions: Sets out requirements for stress testing by credit institutions.

Guidance and Forms

The MFSA has also published guidance on:

  • Technology Arrangements, ICT and Security Risk Management: Provides guidance on technology arrangements, ICT systems, and security risk management in credit institutions.
  • New Application Forms and Declaration Forms: New application forms and declaration forms have been introduced for financial holding companies and mixed financial holding companies.

Quotes

“These updates are designed to enhance the stability and resilience of Malta’s financial system,” said an MFSA spokesperson. “We believe that they will provide greater clarity and consistency for credit institutions operating in Malta.”

Resources

For a comprehensive list of updated banking rules, circulars, and further information, credit institutions can visit the MFSA website.