Financial Crime World

Bank Compliance Procedures in Malta Come Under Scrutiny

In recent times, the authorities of Malta have introduced new rules governing bank compliance procedures, aimed at ensuring that financial institutions on the island adhere to stringent regulations. This article delves into the changes made to the Financial Institutions Act (Cap 376) and the introduction of several Financial Institutions Rules (FIRs).

Background

According to Article 13(2) of the Financial Institutions Act (Cap 376), the competent authority has the power to make and amend Financial Institutions Rules as required for carrying out provisions of the Act. This provision enables the authorities to update regulations to ensure compliance with European Union directives.

EU Directives and Regulations

The changes aim to transpose locally part of the requirements of two key EU directives:

  • EU Payment Services Directive 2007/64/EC: regulates payment services and sets standards for financial institutions that provide these services.
  • EU Electronic Money Institutions Directive 2009/110/EC: deals with the taking up, pursuit, and prudential supervision of electronic money institutions.

New Rules

FIR/03, a new rule, specifically addresses the taking up, pursuit, and prudential supervision of financial institutions authorized to issue electronic money. This rule reflects changes made in May 2010 and June 2011 to the Financial Institutions Act (Cap 376), aimed at bringing Malta’s regulations in line with European Union directives.

Updated References

References to Directives 2006/48/EC and 2006/49/EC have been updated to:

  • Directive 2013/36/EU (the CRDIV): sets out capital requirements for credit institutions.
  • Regulation (EU) No 575/2013 (the CRR): regulates prudential requirements of credit institutions and investment firms.

Financial Institutions Rules

Several Financial Institutions Rules (FIRs) have been introduced, including:

  • FIR/01/2011: deals with the taking up, pursuit, and prudential supervision of credit institutions.
  • FIR/02/2011: addresses the minimum capital requirements for credit institutions.
  • FIR/03/2011: specifically addresses the taking up, pursuit, and prudential supervision of financial institutions authorized to issue electronic money.
  • FIR/04/2015: sets out additional requirements for financial institutions.

Strengthening Bank Compliance Procedures

The updates aim to strengthen bank compliance procedures in Malta, providing a framework for financial institutions to operate within. The changes demonstrate the island nation’s commitment to ensuring that its banking sector meets international standards and regulations.