We welcome this legislative initiative as Malta’s burgeoning financial services sector also requires effective and ongoing regulation of CSPs – prominent industry players in their own right. We think that the Act will contribute to maintain high qualitative standards throughout the sector and achieve a level playing field for all competitors, be they local or foreign CSPs operating from Malta. Apart from implementing the basic requirement of Directive 2005/60/EC of 26 October, 2005 (on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing; Article 36), this new Act goes substantially further and evidences in clear and unequivocal fashion the commitment of the Malta Financial Services Authority (“MFSA”) to properly regulate important facets of the financial services industry for the greater good. It is notable, for instance, that the Act applies also to individuals rendering directorship and company secretary services by way of business. This will naturally raise the bar for them, and will be instrumental in shaping a well-regulated pool of experienced and professional individuals able to command confidence in their abilities. The MFSA has also been given the teeth to effectively regulate, investigate, disqualify and direct CSPs in matters relating to their business.
The Act imposes for the first time a requirement to register a CSP with the MFSA. A CSP is defined as any natural or legal person resident or operating in or from Malta who by way of business:
- forms companies or other legal entities;
- acts (or arranges for another person to act) as a director or company secretary or a partner in a partnership; or
- provides a registered office, business or administrative address or other related services.
Since the services covered by the Act are in a number of cases offered by persons or entities already regulated by the MFSA, the Act says that any due diligence already carried out by the MFSA would be considered for the purposes of registration under the Act and we would therefore assume that, in such cases, the process would be fast tracked.
Lawyers, notaries, legal procurators and certified public accountants as well as persons or entities authorised under the Trusts and Trustees Act are not required to register with the MFSA. However, they are obliged to notify the FIAU that they are acting as CSPs by way of business.
On a practical level, this Act will affect a good number of CSPs and steps will have to be taken by them and related entities to ensure they register within the MFSA’s time-line, namely, 24 March, 2014. The MFSA is in turn obliged to process applications within six (6) months of receipt of all the documents it requires. Initial and annual fees will be charged.
The MFSA is expected to publish shortly a set of regulations that will prescribe the forms and more detailed rules applicable to CSPs.
A more detailed article on the Company Service Providers Act, 2013 has now been published and can be read by clicking here.