Financial Crime World

Here is the converted article in Markdown format:

Ultimate Beneficial Owner: A Key Component of Malta’s Financial Services Regulation

In a bid to maintain transparency and integrity within Malta’s financial services sector, the Malta Financial Services Authority (MFSA) has implemented rigorous checks to ensure that applicants are fit and proper to carry out their proposed roles. At the heart of this process is the concept of the Ultimate Beneficial Owner (UBO).

Fit-and-Proper Checks

Prior to granting a licence, the MFSA conducts thorough assessments of an applicant’s competence and integrity. This includes verifying personal information through third-party sources, examining regulatory histories in Malta and abroad, and exchanging intelligence reports from specialized agencies.

Pre-Authorisation Stage

Once both assessments are satisfied, the MFSA proceeds to the pre-authorisation stage. At this point, an in-principle decision is made, coupled with a list of conditions that must be met for authorisation. The applicant must address matters such as:

  • Company incorporation and capitalization
  • Confirm its ability to comply with the conditions

Post-Authorisation Stage

Following authorisation, the MFSA monitors compliance with post-authorisation requirements, initiates supervisory processes, and handles any changes to the initial authorisation. It is the responsibility of the authorised person to report any difficulties encountered in implementing these requirements.

Legislation and Jurisdiction

The Malta Financial Services Authority Act serves as the source of the MFSA’s jurisdiction. Sector-pecific laws, such as Chapter 476 (Prevention of Financial Markets Abuse Act), also grant the MFSA certain powers.

Principal Laws and Rules

Financial services firms and their associated persons must comply with relevant domestic Maltese law and EU legislation. Key sector-specific laws include:

  • Banking Act
  • Insurance Business Act
  • Investment Services Act
  • Conduct of Business Rulebook (transposing main EU directives)

Scope of Regulation

Regulated entities must adhere to central areas of regulation, including:

  • Governance
  • Own funds
  • Liquidity
  • Internal organisation

The MFSA sets out detailed requirements for licence holders, including:

  • Management and control structures
  • Regulatory capital requirements
  • Corporate governance arrangements

Additional Requirements

Financial services firms and authorised persons may also be subject to rules and regulations imposed by self-regulatory bodies, designated professional bodies, or other financial services organisations. These requirements vary depending on the specific firm or body in question.

By prioritizing transparency and integrity through the UBO concept, Malta’s financial services sector can maintain a strong reputation for stability and trustworthiness, attracting investment and fostering economic growth.