by , on Oct 25, 2019 04:01:20 PM

Company Service Providers (CSPs) are crucial within the financial services industry in Malta since they serve as gatekeepers for the Malta Financial Services Authority (MFSA) when encountering persons seeking to carry out business activities in Malta. Such CSPs ensure that only persons who are considered fit and proper are encouraged to entering the financial system. The MFSA has launced a Consultation document proposing various reforms to the CSP Framework and its main take-aways are outlined hereunder. 

Summary of Pertinent Changes

The MFSA’s Consultation Document proposes revisiting the regulatory framework for CSPs extending its scope to eliminate any existing supervisory gaps and harmonise market entry requirements. All persons providing CSP services shall require authorisation to do so. Moreover, the said document outlines several novel requirements imposed by the MFSA aimed to ultimately raise raise standards for CSPs .

Hereunder please find outlined a summary of the pertinent changes being proposed in the MFSA’s Consultation Document. 

1. CSPs shall assume the general role of gatekeepers to Malta’s financial sector;
2. Entities seeking the provision of guidance on and the submission of applications for licensing, registration, recognition or for any authorization that is required to be issued by the MFSA must be channeled through a CSP.
3. CSP licenses are to be re-shuffled into three new classes (A,B and C) and have enhanced corporate capital requirements which ought to be fully paid up and maintained at all times:Class A: License holders authorized to provide the following services to third parties: 1. Formation of companies or other legal entities and/or 2. Provision of a registered office, a business correspondence or administrative address and other related services for a company, a partnership or any other legal entity (EUR 30,000)

   Class B: License holders authorized to provide any CSP service but not the provision of professional assistance in the submission of applications for licensing/authorization (EUR 50,000 + mandatory PII)

   Class C: Any CSP service (Eur 150,000 + mandatory PII)

4. Removal of the exemption pertaining to advocates/notaries/accountants and inclusion of a clause denoting that a CSP must be a legal person;
5. Enhanced competence assessments: Designated persons, MLRO, Compliance officers, board of directors shall be subject to examination by the MFSA which is of a documentary (via presentation of educational certificates/experience) and oral (via an interview); and
6. For the provisions of services pertaining to the submission of applications for licensing, registration, recognition or for any authorization that is required to be issued by the MFSA, CSPs shall conduct fitness and properness assessments prior to on-boarding.

Conclusion

The above-mentioned points are in no way exhaustive, but provide a brief overview of what is to be expected for CSPs should this Consultation Document be followed through. Interestingly, there is no mention of transitory provisions outlining how entities/ individuals operating a business today shall blend into the new regime over time.