On the 2 July 2021, the Malta Financial Services Authority (the "MFSA") issued a notice aimed particularly at those CSPs registered before the amendments were introduced by Act L of 2020 and the updated CSP rules, both of which came into force on 16 March 2021. All existing CSPs are required to comply with the updated CSP rules, following the 6-month transitory period granted on 16 March 2021.
New Capital Requirements
Following the circularissued by the MFSA to all previously registered CSPs earlier this year, allocating new classifications, such CSPs must ensure they are aligned with the new requirements under Rule R2-2.12 by 16 September 2021.
CSPs classified as:
- Class A: minimum share capital of €10,000 fully paid up, and to be maintained throughout its authorisation;
- Class B: minimum share capital is of €15,000 fully paid up, and to be maintained throughout its authorisation, and to also have adequate Professional Indemnity Insurance cover in place; and
- Class C: minimum share capital of €25,000 fully paid up and to be maintained throughout its authorisation, and to also have adequate Professional Indemnity Insurance cover.
Approval for any increases in share capital, amendments to the Memorandum and Articles of Association, as well as confirmation that share capital has been increased, must reach the Authority no later than 15th September 2021.
Individual CSPs are requested to provide the Authority with a bank statement confirming the capital investment.
Professional Indemnity Insurance Requirements
Likewise, confirmation that Professional Indemnity Insurance cover has been obtained.
Risk Management Function for Class C CSPs
Designated Class C CSPs must ensure that they comply with the new requirement relating to a Risk Management Compliance Function under Rule R3-7.1 by 16 September 2021. As a result, Class C CSPs must submit a proposal relating to the individual who will have the management function.
If the CSP intends to request a derogation from having a risk management Circular function which does not operate independently, provided that this does not create conflict of interest, then such CSPs are required to apply for such a derogation through the official notification form issued by the Authority for this purpose as communicated in the dated 1 June 2021.
Essentially, 16 September 2021 is a key date for all authorised CSPs and the Authority is emphasizing the importance to comply with the new requirements and the updated CSP rules. Failure to abide by the requirements following the expiration of the transitory period will be considered a breach of the CSP rules.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.