Financial Crime World

Here is the converted article in Markdown format:

Financial Institution Licensing Requirements

Malta’s Financial Services Authority (MFSA) has strict regulations in place for financial institutions seeking to operate in the country. To qualify for a license, companies must meet certain minimum requirements and undergo rigorous scrutiny by the MFSA.

Credit Institutions

To obtain a credit institution license under the Banking Act, a company must have an initial capital of at least €5 million and be managed by at least two individuals effectively directing the business. The MFSA must also be satisfied that the company’s shareholders and directors are suitable persons who can ensure sound and prudent management.

  • Initial capital requirement: €5 million
  • Management requirements: At least two individuals with effective direction

Financial Institutions

Under the Financial Institutions Act, no financial institution may operate regularly or habitually in Malta without a license granted by the MFSA. However, certain exemptions apply, including for entities providing services to companies within the same group.

  • Exemptions: Entities providing services to companies within the same group

Investment Services

The Investment Services Act requires investment service providers to obtain a valid investment services license from the MFSA. Companies must submit an application outlining their proposed services and operations, and satisfy capital requirements and governance standards.

  • Capital requirements
  • Governance standards

Regulatory Authorities

The MFSA has broad powers under the Malta Financial Services Authority Act to regulate, monitor, and supervise financial services in Malta. The Financial Intelligence Analysis Unit (FIAU) is responsible for monitoring anti-money laundering compliance, while sector-specific rule books issued by the MFSA govern the business and conduct of licensed entities.

  • MFSA: Regulator of financial services
  • FIAU: Responsible for monitoring anti-money laundering compliance

Principal Laws and Regulations

The principal Maltese laws governing credit institutions are:

  • Banking Act
  • Subsidiary legislation
  • Banking Rules

Financial institutions are regulated under the Financial Institutions Act, subsidiary legislation, and the Financial Institutions Rules. Investment services firms operate under the Investment Services Act, subsidiary legislation, and rules applicable to license holders.

Scope of Regulation

The regulatory framework for credit institutions, financial institutions, and investment services firms covers:

  • Authorisation
  • Licensing
  • Operation
  • Conduct supervision
  • Prudential supervision
  • Fitness and properness of shareholders and directors
  • Capital requirements
  • Market stability
  • Prevention of market abuse

Additional Requirements

While there is no parallel self-regulatory framework in Malta, sector-specific organisations such as the Malta College of Stockbrokers and the Malta Bankers Association promote the interests of financial institutions and assist operators within the sector.

Effective Date

The information above is accurate as of May 30, 2021.