Beneficial Ownership: A Crucial Aspect of Malta’s Financial Services Regulation

The Malta Financial Services Authority (MFSA) has implemented a robust authorisation process to ensure that financial services providers are fit and proper to operate in the Maltese market. As part of this process, beneficial ownership checks are carried out to verify an applicant’s competence and integrity.

Fit-and-Proper Checks

The MFSA conducts thorough fit-and-proper checks on applicants, including:

• Third-party verification of personal information
• Regulatory history reviews
• Intelligence reports from specialized sources

This comprehensive assessment ensures that applicants meet the required standards for financial services provision in Malta.

Pre-Authorisation Stage

Once both assessments are satisfied, the applicant is notified of an in-principle decision granted by the MFSA, accompanied by a list of conditions to which the authorisation will be subject. At this stage, the applicant must:

• Address incorporation and capitalization of the company
• Confirm that it will comply with the conditions of authorisation

Authorisation Stage

Upon fulfilling pre-authorization requirements, the MFSA grants authorisation through the issuance of an authorisation letter and a certificate of authorisation. The authorised person is responsible for:

• Adhering to post-authorisation requirements
• Ongoing internal monitoring
• Reporting any difficulties encountered in implementing these requirements

Post-Authorisation Stage

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.

Legislation and Regulatory Framework

The Malta Financial Services Authority Act is the primary source of the MFSA’s jurisdiction, while sector-specific laws grant the authority certain powers. The Conduct of Business Rulebook transposes EU directives on conduct of business, and the MFSA publishes:

• Detailed sector-specific rules
• Standard licensing conditions binding on financial services firms

Scope of Regulation

Regulated entities must adhere to central areas of regulation outlined in main legislative acts and MFSA rules, including:

• Governance requirements
• Own funds requirements
• Liquidity requirements
• Internal organisation requirements for licence holders

Additional Requirements

Financial services firms and authorised persons may also be subject to rules and regulations imposed by:

• Self-regulatory bodies
• Designated professional bodies
• Other financial services organizations

The MFSA’s rigorous authorisation process ensures that only suitable entities are granted a license to operate in the Maltese market. Beneficial ownership checks are a critical aspect of this process, providing assurance that individuals involved with the applicant entity meet the required standards for financial services provision.