Beneficial Owner Checks: A Crucial Step in Malta’s Financial Regulation
The Malta Financial Services Authority (MFSA) has introduced a robust authorisation process for financial services firms, designed to ensure that applicants are fit and proper persons capable of carrying out their proposed role to an expected high standard. As part of this process, the MFSA conducts thorough checks on the applicant’s competence and integrity.
Fit-and-Proper Checks
The MFSA’s fit-and-proper checks involve a comprehensive review of the applicant’s personal information, regulatory history in Malta and foreign jurisdictions, as well as intelligence reports from specialized sources. This ensures that applicants are not only financially sound but also have a clean track record.
Pre-Authorisation Stage
Once the fit-and-proper checks have been satisfied, the MFSA proceeds to the pre-authorisation stage. At this point, the applicant is notified of an in-principle decision granted by the MFSA, along with a list of conditions that must be met for authorisation.
Post-Authorisation Stage
After formal authorisation has been granted, the MFSA monitors compliance with post-authorisation requirements and initiates supervisory processes as necessary. Any changes to the initial authorisation must be communicated to the MFSA promptly.
Responsibilities
Authorized persons are responsible for adhering to post-authorisation requirements and implementing relevant policies, procedures, and compliance monitoring programs. They must also report any difficulties encountered in implementing these requirements to the MFSA immediately.
Withdrawal of Application
In the event that an applicant fails to respond within four months of the MFSA’s communication, the authority may treat the application as withdrawn. If an application is considered withdrawn, the applicant would need to re-initiate the process through a new intention statement and application documentation, as well as payment of the prescribed application fee.
Legislation
The Malta Financial Services Authority Act is the source of the MFSA’s jurisdiction, with sector-specific laws also granting the authority certain powers. The Conduct of Business Rulebook transposes EU directives, while detailed sector-specific rules and standard licensing conditions are published by the MFSA.
Scope of Regulation
The main areas of regulation for financial services providers and products include:
- Governance
- Own funds
- Liquidity
- Internal organisation
- Capital requirements
Regulated entities must also have clear and transparent corporate governance arrangements in place.
Additional Requirements
Financial services firms and authorized persons may be subject to rules and regulations imposed by self-regulatory bodies, designated professional bodies, or other financial services organizations.
The MFSA’s rigorous authorisation process ensures that only fit and proper persons are granted licenses to provide financial services in Malta. This robust framework provides a high level of protection for investors and enhances confidence in the Maltese financial sector.