FSAP: Ongoing Country Participation and Tentative Schedule for Future ParticipationLegislation & Regulation
The legislative and tax framework is in line with main EU directives
It is securely placed and is supported by the two major Maltese political parties
Malta maintains high regulatory and anti-money laundering standards
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Banking Act
Insurance Business Act
Investment Services Act
Financial Markets Act
Professional Secrecy Act
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Two types of persons who can commit money laundering offences:
(a) Person carrying on relevant financial business
Banks
Persons carrying on investment business under the Investment Services Act
Stockbrokers
Evidence of identification
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OECD – Organisation for Economic
Co-operation and Development (2000)
EU Peer Review (2002)
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International Evaluation
“Malta embraces international tax standards for transparency and exchange of information and has joined OECD member countries in committing to eliminate harmful tax practices.”
(OECD Official News Release, June 2000)
“ a comprehensive and robust legal framework and a particularly well-regulated financial sector”
(Report of the Council of Europe Money-laundering Committee, April 2003)
“Malta’s financial system appears to be healthy and well supervised …. Malta has a comprehensive legal framework and strongly adheres to most of the international standards and codes…. The authorities have undertaken major efforts in strengthening the supervisory framework”
(International Monetary Fund, Financial System Stability Assessment (FSSA), September 2003)
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to regulate, monitor and supervise financial services in Malta;
 
 
 
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to investigate allegations of practices and activities detrimental to investors, and generally to keep under review trading practices relating to the provision of financial services and to seek to identify and to take measures to suppress and prevent any practices or transactions which may be unfair, harmful or otherwise detrimental to consumers of financial services;
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Functions – Board of Governors
Board of Governors composed of seven members including the Chairman. Chairman and Governors appointed for a period of up to five years and their appointment may be renewed for further periods of up to five years;
Board of Governors sets policy;
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Responsible for licensing, monitoring and supervising all activities related to financial services
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management of the Authority
Chief Operations Officer - Board of Development and Resources
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130 people are currently working at MFSA
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services
CBM = Central Bank of Malta
MFSA
Entity Scope of Agreement:
CESR The MFSA forms part of the CESR Multilateral MoU as from 1st May 2004
The MFSA is from 1st May 2004 also a member of CEIOPS and CEBS.
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Entity Scope of Agreement:
Fiduciary Services (2004)
Isle of Man FSC Banking, Investment Services and
Corporate Services Providers (2004)
Exchange of Letters with the Swiss Federal Banking Commission (SFBC)
MOU being negotiated with Bermuda, Jersey
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Entity Scope of Agreement:
CMVM [PT] Securities (2004)
Slovakia
MOUs being negotiated with Austria, Estonia and Ireland
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Consumer Complaints Manager.
(appointed January, 2002).
Functions:
… to promote the general interests and legitimate expectations of consumers of financial services, and to promote fair competition practices and consumer choice in financial services; ...
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Invest Wisely! It’s Your Money!
Teaching your children how to save and spend
Top 10 Finance hints for young adults
6 booklets for the better understanding of insurance
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Formal Complaints Reviewed
63
9
151
33
287
19
90%
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Consumer Protection
Protection Schemes:
Investor Compensation Scheme – a rescue fund for private consumers of failed investment intermediaries, which are licensed by the MFSA.
Depositor Compensation Scheme – a rescue fund for private depositors of failed banks or other credit institutions, which are licensed by the MFSA.
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Investment Services Act
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Licence Holders
Category 1(a & b) - Provide any investment service but do not hold or control clients' money or assets nor deal for their own account or underwrite (excludes fund management companies)
Category 2 - Provide any investment service and hold or control clients' money or assets, but do not deal for their own account or underwrite (includes stockbrokers)
Category 3 - Provide any investment service, hold and control clients' money or assets and deal for their own account and underwrite
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Need not issue prospectus but offering document will be required
Not subject to any restrictions on investment or borrowing powers
Authorised investors (assets in excess of $1m)
Nominee investor allowed but must be known to manager
Custodian need not be in Malta but if manager is also external PIF must appoint a "judicial representative"
Licensing in 7 working days
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Listing agreement with the Malta Stock Exchange
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Fund satisfies the MSE that it is suitable for listing
Produces a certificate of compliance from the exchange where it has a primary listing
Submits any documentation previously filed with the exchange where it has a primary listing
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Special Funds Act
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The Banking Act
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Capital Adequacy
Consolidated Supervision
Provisions for non-bank financial institutions undertake financial activities except for deposit taking, investment services and insurance. These are subject to the general regulatory framework applicable for banks but specific regulatory conditions and capital requirements depend on the activities that are undertaken by the particular non-bank financial institution. Licensable activities under the Act include:
Lending, trading for their own account or on behalf of customers
Financial Leasing
Money transmission services
Issuing and administering means of payment (such as credit cards, travellers’ cheques and bankers’ draft)
Guarantees and commitments
eMoney Institutions
Regulatory requirements included in the Banking Directive issued in terms of the Banking Act 1994 is modeled on EU Directive 2000/46/EC on the Taking up Pursuit of and Prudential Supervision of Electronic Money Institutions.
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Insurance Legislation
modeled on European Union rules (particularly with regards to solvency margin and technical provision requirements) and provides for passporting of products and services in relation to the EU single market by Malta-based intermediaries;
continuance of companies provisions apply to all insurance companies, insurance managers and insurance brokers;
Protected Cell Company provisions apply to insurance companies, insurance managers and insurance brokers;
Application determined within 6 months of submission of complete information - 3 months in the case of affiliated insurance;
Insurance licence holder to meet following criteria on an ongoing basis:
a) Fit and proper persons
b) Sound and prudent management
c) Financial soundness
An insurance company registered in Malta whose business is restricted to insuring risks originating with shareholders or connected undertakings or entities including:
- parent companies;
control in AIC ;
associations insuring risks related with their trade.
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provide a regulatory framework tailor-made for such companies
AICs are exempt from a number of provisions of the Insurance Business Act
Material Exemptions
Protection and Compensation Fund
Document Duty chargeable on contracts of insurance in so far as concerns contracts relating to a risk situated outside Malta
Other features
Protected Cell Companies
Trusts and Trustees Act
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Regime for Trustees
The relationship whereby a person holds assets for another, in the name of the former, is defined as a trust relationship and is covered by the Act.
Regulations apply to trustees in the holding of all types of assets and not only shares in Maltese companies
Any person who acts as a trustee in Malta needs a licence if he is remunerated, holds himself out to provide such services or is a company. All trustees will be “subject persons” under the Prevention of Money Laundering legislation
Private trustees (non-remunerated, non-corporate and not holding themselves out as such) will not need a licence.
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Registration of Trusts
The regulation will focus on trustees and not on trusts which are not entities but assets under administration. All laws to apply to beneficiary and if not declared for the purposes of any law, then the law will apply to the trustee.
Ring fencing to non-residents is eliminated and anyone can form trusts for any property.
Principle of transparency introduced. Confidentiality provisions eliminated and trustees subject only to limits of Professional Secrecy Act.
Duty to report suspicion of money laundering. “Know your client” obligations and clear record keeping obligations on the part of trustees.
MFSA will not hold but will have access to records in cases to be defined by the law particularly in case of irregularities.
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Inexpensive and modern office developments with capacity
Good telecommunications infrastructure
English is the spoken and written language of business
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Free market for labour;
Availability of multilingual administrative and clerical staff.
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Our people are our greatest intellectual capital
Strong commitment to high standards of education - based on the UK system - people are Malta’s prime asset. The total number of graduates in Malta is 24,335 which is 6% of the Maltese population
8,000 students the ancient University of Malta - large numbers graduate in law, economics, management, accountancy etc and many with specialist IT training, plus numerous vocational training programmes
Many professionals and graduates obtain postgraduate training and work experience in the European Union particularly the UK
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Legal Services
Malta is a civil law jurisdiction – derived from Roman Law and Napoleonic Codes, however, under the British rule (1800 – 1964) Malta enacting business legislation (ex. Company law, financial law, public law) based on English law principles. The underlying principal is that commercial usage and practice overrides conflict with Maltese Civil Code where commercial matters are concerned.
Legal framework is therefore flexible, versatile and able to relate to different legal systems.
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Next Step
If you want to shed more light on international business opportunities …….
…visit Malta and explore the opportunities first-hand
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