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Fit-and-Proper Checks Key to Malta’s Authorisation Process

The Malta Financial Services Authority (MFSA) has outlined its rigorous authorisation process for financial services providers, which involves a series of strict checks and requirements.

Fit-and-Propert Checks

As part of the process, applicants undergo fit-and-proper checks, which involve:

  • Third-party verification of personal information
  • Assessments of their regulatory history in both Malta and foreign jurisdictions
  • Exchange of information with foreign regulators to ensure compliance with international standards

Once the initial assessment is complete, applicants are notified of an in-principle decision by the MFSA, along with a list of conditions that must be met before formal authorisation can be granted.

Pre-Authorisation Requirements

At this stage, applicants must:

  • Demonstrate their ability to comply with regulatory requirements
    • Incorporation and capitalization of the company
  • Confirm that they will adhere to the conditions of authorisation

Once all pre-authorisation requirements have been satisfied, the MFSA grants authorisation through the issuance of an authorisation letter and certificate. The authority then monitors compliance with post-authorisation requirements and initiates supervisory processes as needed.

Legislation Underpinning Authorisation Process

The MFSA’s jurisdiction is derived from:

  • Malta Financial Services Authority Act
  • Sector-specific laws that grant the authority powers to regulate financial services firms and their associated persons

Key legislation governing the activities of financial services firms includes:

  • Banking Act
  • Financial Institutions Act
  • Insurance Business Act
  • Investment Services Act
  • Conduct of Business Rulebook (transposes EU directives on conduct of business)

Scope of Regulation

The MFSA regulates a wide range of financial services providers and products, including:

  • Banks
  • Insurance companies
  • Investment firms
  • Virtual financial assets

To operate in Malta, financial services firms must:

  • Adhere to regulatory criteria
  • Obtain a valid licence
  • Meet detailed requirements for governance, own funds, liquidity, and internal organisation

Additional Requirements

Financial services firms may also be subject to additional requirements imposed by:

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

In addition to complying with MFSA regulations, firms must have:

  • Clear and transparent corporate governance arrangements in place
  • Internal independent control systems to ensure proper management of business