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Malta’s Financial Institutions Must Comply with Strict Regulatory Framework

Overview Establishing a financial institution in Malta requires a thorough understanding of the country’s regulatory framework, which is overseen by the Malta Financial Services Authority (MFSA).

Application and Licensing Process for Credit and Financial Institutions

To begin with, applicants must submit a Statement of Intent to the MFSA, outlining their proposed organisational structure, business model, and contact details. The MFSA may request additional information and a preliminary meeting before granting its no objection to proceed with the application.

Pre-Authorisation Stage

  • Submission of a detailed application form
  • Payment of an application fee
  • Completion checks by the MFSA
  • Quality review of the application and provision of feedback to the applicant

Decision-Making Body

Once the application is finalised, it is submitted to the decision-making body for approval or rejection. If approved, the applicant will be issued with a pre-authorisation letter and must satisfy certain requirements before being granted an authorisation letter and certificate.

Post-Authorisation Requirements

  • Satisfying specific conditions prior to commencing business operations
  • Ongoing supervision by the Banking Supervision Unit
  • Credit and financial institutions in Malta are required to publish annual reports and submit regulatory returns at specified intervals.

Fees and Monitoring

The MFSA charges various fees for application, processing, and licensing, as well as an annual supervision fee based on deposit liabilities or total assets. The authority monitors compliance with reporting requirements, including:

  • Financial statements
  • Liquidity
  • Credit and country risk exposures
  • Own funds
  • Solvency ratio
  • Large exposure
  • ICT risk assessment
  • Fraud reporting
  • Capital adequacy

Conclusion

Establishing a financial institution in Malta requires a rigorous process of application, licensing, and ongoing supervision. Compliance with regulatory requirements is crucial to ensuring the stability of the financial sector and protecting investors.