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16.02.2024 MFSA Shifts to Outcomes-Based Supervision in 2024
The Malta Financial Services Authority (MFSA) has disclosed its Supervisory Priorities for 2024, highlighting the implementation of an outcomes-based supervision strategy. This initiative will be piloted in the realms of digital finance regulation and trust beneficial ownership registration, aiming to evaluate license holders' performance against predefined outcomes while leveraging the existing risk-based approach.
CEO Kenneth Farrugia underscores the alignment of these priorities with strategic goals, aiming to establish clear regulatory objectives for sustained industry success. The priorities, echoing the 2023 Strategic Statement, emphasize agile regulation, sector resilience, good governance, innovation, and public engagement. Ongoing supervisory priorities include Governance, Risk & Compliance; Financial Crime Compliance; and Consumer Protection and Education, while additional focus is directed towards Resilience of Supervised Entities; Sustainable Finance; Digital Finance; and Cross-Border Supervision.
Christopher P. Buttigieg, Chief Officer Supervision, reinforces the MFSA's dedication to enhancing financial oversight, encompassing cross-border business surveillance. Having conducted over 900 risk-based supervisory engagements in 2023, the MFSA pledges to sustain these efforts in 2024, offering industry guidance and safeguarding consumer interests on a national scale.
06.02.2024 ESMA Issues Warning for People Posting Investment Recommendations on Social Media.
The European Securities and Markets Authority (ESMA) released a warning on February 6, 2024, in terms of the sharing of investment recommendation suggestions on social media. All market participants fall within the scope of this circular.
This action aims to increase awareness of the regulatory obligations outlined by MAR concerning the dissemination of investment recommendations via social media platforms and to caution against the potential risks of market manipulation associated with such postings. ESMA hopes to encourage honesty and transparency in online conversations about investments.
In the Warning, ESMA outlines the universal set of requirements that apply to anyone generating investment recommendations, namely:
• Provide identification details of the recommendation producers, including their names, job titles, and the date and time of the recommendation. • Ensure that investment recommendations are presented objectively, with factual information clearly differentiated from interpretations, estimates, and opinions. Verify the reliability of all information sources, clearly indicating any doubts. • Clearly disclose any conflicts of interest so that investors are fully aware of them.
Additionally, ESMA stipulates additional requirements that would pertain to "professionals" and "experts," namely, the obligation to disclose:
• A concise overview of the valuation basis/methodology and the underlying assumptions applied. • The investment duration along with a suitable risk advisory. • The intended frequency of recommendation updates. • Disclosure if the recommendation has been revised subsequent to disclosure to the issuer. • Declaration of net long or short positions exceeding 0.5% of the total issued share capital of the issuer.
Feel free to reach out should you require any clarification or assistance in identifying how this may impact you.
31.01.2024 FIAU Risk Evaluation Questionnaire (REQ)
The FIAU has issued the circular pertaining to the annual Risk Evaluation Questionnaire.
What does this mean for subject persons?
Subject Persons are required to fill in the REQ through CASPAR which will be available as of the 29th of February 2024 and are also required to update the subject person profile found on Caspar and would need to fill in the following details:
• Information on the subject person’s ownership and its structure;• Information on the group that the subject person makes part of (if applicable);• Details of shareholders, beneficial owners and directors of the subject person;• Information on the turnover and net asset values;• Information on the target markets;• Details of the subject person’s external auditor (if applicable); and• A copy of the subject person’s business risk assessment.
The deadlines for submission of the REQ 2024 are as follows:
Thursday 11th April 2024 | Thursday 18th April 2024 | Thursday 25th April 2024 |
Virtual Financial Assets Agents | Trustees and Fiduciaries | Credit institutions |
Virtual Financial Assets Service Providers | Company Service Providers | Financial Institutions |
Real Estate Agents | Accountants and Auditors | Investments Service and Securities Markets |
Notaries | Tax Advisors | Insurance and Pensions |
Gaming Operators | Advocates |
Get in touch if you need any assistance with the submission of the REQ and the revision of the Business Risk Assessment.
23.01.2024 Update to the MFSA's CSP Rulebook
Part 1 – Changes in relation to Regulatory Submissions:
1.1 Removal of Annual Self-Declaration: Under Threshold Class A and B CSPs no longer need to submit an annual self-declaration; this information will now be included in the updated ACR.
1.2 Removal of Certificate of Compliance: CSPs no longer have to submit a Certificate of Compliance; the ACR will now incorporate the required information.
1.3 Elimination of Solvency Statement: Individual CSPs are no longer required to submit a Statement of Solvency or a balance sheet; the ACR will include this information for supervisory purposes.
1.4 Elimination of Annual Financial Return: The ACR will now encompass the information previously included in the Annual Financial Return, streamlining the submission process.
1.5 Changes for CSPs Constituted as Partnerships: Warranted partnerships acting as Under Threshold Class A CSPs no longer need to submit audited financial statements. Other partnerships must submit an income statement, balance sheet, and explanatory notes (not requiring audit).
1.6 Timing of Submissions: A reminder for all CSPs to submit the ACR and accompanying documents annually through the Licence Holder portal within specified deadlines.
Part II – Other changes to the CSP Rulebook:
2.1 Time Frame for Evaluating Internal Controls: The requirement for CSPs to evaluate internal controls has been changed to an annual basis.
2.2 Voluntary Cancellation of Authorisation Process: Clarification on documents and processes for voluntary cancellation of CSP authorisation.
2.3 Notification Requirement for CSPs: Class A and Class C CSPs must notify the Authority if using an address different from their registered office address for services to clients.
2.4 Breaches Reporting: Clarification that breaches of regulations or the CSP Rulebook should be reported in the ACR.
2.5 Removal of Notification Requirement: The obligation to notify the Authority if the ACR submission will be delayed has been removed.
Note: The ACR template is being updated, and CSPs are advised not to download or complete it until the Authority confirms its readiness.
Part II – Other changes to the CSP Rulebook:
2.1 Time Frame for Evaluating Internal Controls: The requirement for CSPs to evaluate internal controls has been changed to an annual basis.
2.2 Voluntary Cancellation of Authorisation Process: Clarification on documents and processes for voluntary cancellation of CSP authorisation.
2.3 Notification Requirement for CSPs: Class A and Class C CSPs must notify the Authority if using an address different from their registered office address for services to clients.
2.4 Breaches Reporting: Clarification that breaches of regulations or the CSP Rulebook should be reported in the ACR.
2.5 Removal of Notification Requirement: The obligation to notify the Authority if the ACR submission will be delayed has been removed.
Note: The ACR template is being updated, and CSPs are advised not to download or complete it until the Authority confirms its readiness. If you require clarification or assistance to see how this impacts you, feel free to reach out.
1.1 Removal of Annual Self-Declaration: Under Threshold Class A and B CSPs no longer need to submit an annual self-declaration; this information will now be included in the updated ACR.
1.2 Removal of Certificate of Compliance: CSPs no longer have to submit a Certificate of Compliance; the ACR will now incorporate the required information.
1.3 Elimination of Solvency Statement: Individual CSPs are no longer required to submit a Statement of Solvency or a balance sheet; the ACR will include this information for supervisory purposes.
1.4 Elimination of Annual Financial Return: The ACR will now encompass the information previously included in the Annual Financial Return, streamlining the submission process.
1.5 Changes for CSPs Constituted as Partnerships: Warranted partnerships acting as Under Threshold Class A CSPs no longer need to submit audited financial statements. Other partnerships must submit an income statement, balance sheet, and explanatory notes (not requiring audit).
1.6 Timing of Submissions: A reminder for all CSPs to submit the ACR and accompanying documents annually through the Licence Holder portal within specified deadlines.
Part II – Other changes to the CSP Rulebook:
2.1 Time Frame for Evaluating Internal Controls: The requirement for CSPs to evaluate internal controls has been changed to an annual basis.
2.2 Voluntary Cancellation of Authorisation Process: Clarification on documents and processes for voluntary cancellation of CSP authorisation.
2.3 Notification Requirement for CSPs: Class A and Class C CSPs must notify the Authority if using an address different from their registered office address for services to clients.
2.4 Breaches Reporting: Clarification that breaches of regulations or the CSP Rulebook should be reported in the ACR.
2.5 Removal of Notification Requirement: The obligation to notify the Authority if the ACR submission will be delayed has been removed.
Note: The ACR template is being updated, and CSPs are advised not to download or complete it until the Authority confirms its readiness.
Part II – Other changes to the CSP Rulebook:
2.1 Time Frame for Evaluating Internal Controls: The requirement for CSPs to evaluate internal controls has been changed to an annual basis.
2.2 Voluntary Cancellation of Authorisation Process: Clarification on documents and processes for voluntary cancellation of CSP authorisation.
2.3 Notification Requirement for CSPs: Class A and Class C CSPs must notify the Authority if using an address different from their registered office address for services to clients.
2.4 Breaches Reporting: Clarification that breaches of regulations or the CSP Rulebook should be reported in the ACR.
2.5 Removal of Notification Requirement: The obligation to notify the Authority if the ACR submission will be delayed has been removed.
Note: The ACR template is being updated, and CSPs are advised not to download or complete it until the Authority confirms its readiness. If you require clarification or assistance to see how this impacts you, feel free to reach out.
18.01.2024 Publication of Malta's 2023 National Risk Assessment
The National Risk Assessment (NRA) for Malta in 2023 has been recently released, offering a thorough evaluation of the nation's susceptibility to risks related to money laundering, terrorist financing, proliferation financing, and targeted financial sanctions. What does this mean for subject persons? The 2023 National Risk Assessment (NRA) for Malta indicates an overall reduction in money laundering residual risk compared to the 2018 assessment, attributed to the successful implementation of mitigation measures by both authorities and the private sector. Positive developments are noted across various sectors, such as legal persons, trust and company service providers, banking, investment services, accountants and auditors, gaming, and virtual financial assets service providers. Despite improvements, certain sectors, including financial institutions, real estate agents, and dealers in high-value goods, still exhibit relatively higher susceptibility to money laundering risks. Identified higher risks involve proceeds from drug trafficking, foreign organized crime, and fraud, with specific money laundering typologies like cash abuse, use of Maltese companies with insufficient ties to Malta, complex corporate structures, and high-value property acquisitions posing increased residual risk. Residual risks associated with terrorism financing, proliferation financing, and targeted financial sanctions are determined to be at a moderate level. In light of the updated National Risk Assessment (NRA) publication, entities subject to regulation should consult the risks, associated mitigation measures, and recommendations outlined in the 2023 NRA. This is essential for updating their Business Risk Assessment (BRA) to accurately reflect the potential threats and vulnerabilities they face.
If you require clarification or assistance aligning your BRA with the NRA's findings and results, please feel free to reach out.