FINANCIAL INSTITUTIONS ACT

CHAPTER 376

FINANCIAL INSTITUTIONS ACT

To regulate the business of financial institutions.

15th November, 1994

ACT XXII of 1994 as amended by Acts XXIV and XXV of 1995, XVII of

2002, IV of 2003, XIII of 2004 and XII of 2006; Legal Notice 425 of 2007;

and Acts II of 2010, X of 2011, XX of 2013, XI of 2014, LII of 2016, XXVI

of 2019, LXII , LXXI of 2021 and LXXII of 2021 and XI of 2025.

PRELIMINARY

The short title of this Act is the Financial Institutions Act.

Substituted by

II. 2010.35;

(Article 2)

X. 2011.62;

XXVI.2019.74.

ACTIVITIES OF FINANCIAL INSTITUTIONS

1. Lending (including personal credits, mortgage credits, factoring with or

without recourse, financing of commercial transactions including forfaiting);

2. Financial leasing;

3. Venture or risk capital;

4. Payment services set out in the Second Schedule;

5. Issuing and administering other means of payment (travellers cheques and

bankers’ drafts and similar instruments) in so far as this activity is not covered by

point 4 above;

6. Guarantees and commitments;

7. Trading for own account or for account of customers in

(a) money market instruments (cheques, bills, Certificates of deposit and

similar instruments);

(b) foreign exchange;

(c) financial futures and options;

(d) exchange and interest rate instruments;

(e) transferable securities;

8. Underwriting share issues and participation in such issues;

9. Money broking;

10. Issuing of electronic money as defined in the Third Schedule.

FINANCIAL INSTITUTIONS

(1) In this Act, unless the context otherwise requires

"account information service" means an online service

to provide consolidated information on one or more payment

accounts held by the payment service user with either another

payment service provider or with more than one payment

service provider;

"account information service provider" means a

payment service provider that has been registered in accordance

with this Act or that holds an equivalent registration in another

country in terms of the Payment Services Directive to provide

solely account information services;

"account servicing payment service provider" means a

payment service provider providing and maintaining a payment

account for a payer;

"acquiring of payment transactions" means a payment

service provided by a payment service provider contracting

with a payee to accept and process payment transactions that

result in a transfer of funds to the payee;

"agent" means a person who acts on behalf of a financial

institution in providing those services listed under the First

Schedule, other than issuing electronic money;

"alternative investment fund" shall have the same

meaning as assigned to it in the Investment Services Act

(Notified CISs) Regulations;

"alternative investment fund manager" shall have the

same meaning as assigned to it in the Investment Services Act

(Notified CISs) Regulations;

FINANCIAL INSTITUTIONS

"Arbiter" means the Arbiter for Financial Services

appointed under article 14 of the Arbiter for Financial

Services Act;

"authentication" means a procedure which allows the

payment service provider to verify the identity of a payment

service user or the validity of the use of a specific payment

instrument, including the use of the user’s personalised security

credentials;

"average outstanding electronic money" means the

average total amount of financial liabilities related to the

electronic money in issue at the end of each calendar day over

the preceding six calendar months, calculated on the first

calendar day of each calendar month, and applied for that

calendar month;

"body corporate" means a body of persons having a

legal personality distinct from that of its members;

"branch" means a place of business other than the head

office which is a part of a financial institution not having a legal

personality and which carries out directly some or all of the

transactions as licensed or registered, inherent in the business

of a financial institution; all the places of business set up in

Malta by a financial institution with a head office in another

Member State shall be regarded as a single branch;

"Central Bank" means the Central Bank of Malta as

defined by the Central Bank of Malta Act;

"close links" shall have the same meaning as that

assigned to it in paragraph (38) of Article 4(1) of the CRR;

"Commission Delegated Regulation (EU) No. 241/

2014" means Commission Delegated Regulation (EU) No. 241/

2014 of 7 January 2014 supplementing Regulation (EU) No.

575/2013 of the European Parliament and of the Council with

regard to regulatory technical standards for Own Funds

requirements for institutions, as may be amended from time to

time;

"Common Equity Tier 1 capital" shall have the same

meaning as that assigned to it in Article 50 of the CRR;

"company" means a limited liability company

constituted in Malta in accordance with the Companies Act or

any law which may from time to time be in force;

"competent authority" means the Malta Financial

Services Authority established by the Malta Financial Services

Authority Act;

"consumer" means a natural person who in payment

service contracts covered by the provisions of the Payment

Services Directive, as transposed in directives issued by the

Central Bank under the Central Bank of Malta Act, is acting

for purposes other than his or her trade, business or profession;

"control" in relation to a body corporate means the

power to determine in any manner the financial and operating

policies of the body corporate;

"controller" means a person who alone or together with

others exercises control in relation to a body corporate;

" CRD" means Directive 2013/36/EU of the European

Parliament and of the Council of 26 June 2013 on access to the

activity of credit institutions and the prudential supervision of

credit institutions, amending Directive 2002/87/EC and

repealing Directives 2006/48/EC and 2006/49/EC, as may be

amended from time to time, and includes any implementing

measures, implementing technical standards, regulatory

technical standards and similar measures that have been or may

be issued thereunder;

"credit facility" means the lending of a sum of money

by way of an advance, overdraft or loan, or any other line of

credit, including discounting of bills of exchange and

promissory notes, guarantees, indemnities, acceptances, bills of

exchange endorsed pour aval and financial leasing;

"credit institution" shall have the same meaning as that

assigned to it in the Banking Act;

"credit transfer" means a payment service for crediting

a payee’s payment account with a payment transaction or a

series of payment transactions from a payer’s payment account

by the payment service provider that holds the payer’s payment

account, based on an instruction given by the payer;

"CRR" means Regulation (EU) No. 575/2013 of the

European Parliament and of the Council of 26 June 2013 on

prudential requirements for credit institutions and amending

Regulation (EU) No. 648/2012, as may be amended from time

to time, and includes any implementing measures,

implementing technical standards, regulatory technical

standards and similar measures that have been or may be issued

thereunder;

FINANCIAL INSTITUTIONS

"digital content" means goods or services which are

produced and supplied in digital form, the use or consumption

of which is restricted to a technical device and that do not

include in any way the use or consumption of physical goods or

services;

"Directive 86/635/EEC" means Council Directive 86/

635/EEC of 8 December 1986 on the annual accounts and

consolidated accounts of banks and other financial institutions,

as amended from time to time, and includes any implementing

measures, implementing technical standards, regulatory

technical standards and similar measures that have been or may

be issued thereunder;

"Directive 2002/21/EC" means Directive 2002/21/EC

of the European Parliament and of the Council of 7 March 2002

on a common regulatory framework for electronic

communications networks and services, as may be amended

from time to time, and includes any implementing measures,

implementing technical standards, regulatory technical

standards and similar measures that have been or may be issued

thereunder;

"Directive 2004/39/EC" means Directive 2004/39/EC

of the European Parliament and of the Council of 21 April 2004

on markets in financial instruments amending Council

Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/

EC of the European Parliament and of the Council and

repealing Council Directive 93/22/EEC, as may be amended

from time to time, and includes any implementing measures,

implementing technical standards, regulatory technical

standards and similar measures that have been or may be issued

thereunder;

"Directive 2008/48/EC" means Directive 2008/48/EC

of the European Parliament and of the Council of 23 April 2008

on credit agreements for consumers and repealing Council

Directive 87/102/EEC, as amended from time to time, and

includes any implementing measures, implementing technical

standards, regulatory technical standards and similar measures

that have been or may be issued thereunder;

"Directive 2013/34/EU" means Directive 2013/34/EU

of the European Parliament and of the Council of 26 June 2013

on the annual financial statements, consolidated financial

statements and related reports of certain types of undertakings,

amending Directive 2006/43/EC of the European Parliament

and of the Council and repealing Council Directives 78/660/

EEC and 83/349/EEC, as may be amended from time to time,

and includes any implementing measures, implementing

technical standards, regulatory technical standards and similar

measures that have been or may be issued thereunder;

"Directive (EU) 2015/849" means Directive (EU)

2015/849 of the European Parliament and of the Council of 20

May 2015 on the prevention of the use of the financial system

for the purposes of money laundering or terrorist financing,

amending Regulation (EU) No. 648/2012 of the European

Parliament and of the Council, and repealing Directive 2005/

60/EC of the European Parliament and of the Council and

Commission Directive 2006/70/EC, as amended from time to

time, and includes any implementing measures, implementing

technical standards, regulatory technical standards and similar

measures that have been or may be issued thereunder;

"director" includes an individual occupying the position

of director of a company, by whatever name he may be called,

empowered to carry out substantially the same functions in

relation to the direction of the company as those carried out by

a director; and in respect of a company registered or

incorporated outside Malta, includes a member of

a local board or agent or representative of that company;

"direct debit" means a payment service for debiting a

payer’s payment account, where a payment transaction is

initiated by the payee on the basis of the consent given by the

payer to the payee, to the payee’s payment service provider, or

to the payer’s own payment service provider;

"DORA Regulation" means Regulation (EU) 2022/2554

of the European Parliament and of the Council of 14 December

2022 on digital operational resilience for the financial sector

and amending Regulations (EC) No. 1060/2009, (EU) No. 648/

2012, (EU) No. 600/2014, (EU) No. 909/2014 and (EU) 2016/

1011, as may be amended from time to time, and includes any

binding legal instruments, guidelines and other measures that

have been or may be issued thereunder;

"EBA" means the European Banking Authority

established by Regulation (EU) No. 1093/2010 of the European

Parliament and of the Council of 24 November 2010

establishing a European Supervisory Authority (European

Banking Authority), amending Decision No. 716/2009/EC and

repealing Commission Decision 2009/78/EC, as may be

amended from time to time;

"EEA State" means a State which is a contracting party

to the agreement on the European Economic Area signed at

Oporto on the 2nd May, 1992 as amended by the Protocol

FINANCIAL INSTITUTIONS

signed at Brussels on the 17th March, 1993, and as amended by

any subsequent acts;

"electronic communications network" means a network

as defined in paragraph (a) of Article 2 of Directive 2002/21/

EC;

"electronic communications service" means a service as

defined in paragraph (c) of Article 2 of Directive 2002/21/EC;

"electronic money" means electronically, including

magnetically, stored monetary value as represented by a claim

on the issuer which is issued on receipt of funds for the purpose

of making payment transactions and that is accepted by a

person other than the financial institutions that issued the

electronic money;

"Electronic Money Directive" means Directive 2009/

110/EC of the European Parliament and of the Council of 16

September 2009 on the taking up, pursuit and prudential

supervision of the business of electronic money institutions

amending Directives 2005/60/EC and 2006/48/EC and

repealing Directive 2000/46/EC, as may be amended from time

to time, and includes any implementing measures,

implementing technical standards, regulatory technical

standards and similar measures that have been or may be issued

thereunder;

"electronic money institution" means a financial

institution that has been licensed in accordance with this Act

and authorised to issue electronic money or that holds an

equivalent authorisation in another country in terms of the

Electronic Money Directive to issue electronic money;

"equity release financial products" means products

consisting of equity release credit agreements where the

creditor

(a)

grants on loan a lump sum, periodic

payments or other forms of credit disbursement in return

for a sum deriving from the future sale of a residential

immovable property or a right relating to residential

immovable property; and

(b)

will not seek repayment of the credit until

the occurrence of the death of the consumer or his move to

long-term care or any one or more other specified life

events of the consumer as may be defined by the

competent authority, unless the consumer breaches his

contractual obligations which allows the creditor to

terminate the credit agreement

Provided that the creditor cannot commence

proceedings, judicial or otherwise, for the sale or other

transfer of the property securing the equity release

financial product for a period of at least thirty six (36)

months from the death of the consumer or his move to

long-term care

Provided further that, in the case of a move

into long-term care, the creditor and the consumer may

agree to retain the equity release financial product even

after the lapse of such thirty six (36) month period, for so

long as such agreement subsists, until the death of the

consumer;

and any such other product as may be defined as an equity release

financial product by the competent authority from time to time;

"European regulatory authority" means a body that is in

another Member State and is empowered by law or regulation

to supervise payment institutions, electronic money institutions

and, or account information service providers;

"European right" means the right of establishment and,

or the freedom to provide services;

"EuSEF Regulation" means Regulation (EU) No. 346/

2013 of the European Parliament and of the Council of 17 April

2013 on European social entrepreneurship funds, as may be

amended from time to time, and includes any implementing

measures, implementing technical standards, regulatory

technical standards, guidelines and similar measures that have

been or may be issued thereunder;

"EuVECA Regulation" means Regulation (EU) No.

345/2013 of the European Parliament and of the Council of 17

April 2013 on European venture capital funds, as may be

amended from time to time, and includes any implementing

measures, implementing technical standards, regulatory

technical standards, guidelines and similar measures that have

been or may be issued thereunder;

"financial institution" means any person who regularly

or habitually undertakes the carrying out of any activity listed

in the First Schedule for the account and at the risk of the

person carrying out the activity and who is licensed or

registered under this Act

Provided that any person offering equity release

financial products shall be considered a financial institution

irrespective of whether such equity release financial products are

offered on a regular or habitual basis, or otherwise;

FINANCIAL INSTITUTIONS

"Financial Institutions Rules" means a Rule issued by

the competent authority to regulate financial institutions in

terms of the powers under this Act, and "Rule" shall be read

accordingly;

"Financial Services Tribunal" or "Tribunal" means the

Financial Services Tribunal established under the Malta

Financial Services Authority Act;

"framework contract" means a payment service contract

which governs the future execution of individual and successive

payment transactions and that may contain the obligation and

conditions for setting up a payment account;

"fund manager" shall have the same meaning as

assigned to it in the Investment Services Act (Notified CISs)

Regulations;

"funding of terrorism" has the same meaning as that

assigned to it by the Prevention of Money Laundering Act, as

may be amended from time to time;

"funds" means banknotes and coins, scriptural money

and electronic money;

"group" means a group of undertakings which are linked

to each other by a relationship referred to in Article 22(1), (2)

or (7) of Directive 2013/34/EU or undertakings as defined in

Articles 4, 5, 6 and 7 of Commission Delegated Regulation

(EU) No. 241/2014 that are linked to each other by a

relationship referred to in Article 10(1) or in Article 113(6) or

(7) of the CRR;

"holding company" or "parent company" has the same

meaning as that assigned to the term "parent company" in the

Companies Act;

"home Member State" means either of the following

(a)

the Member State in which the registered

office of the payment service provider is situated; or

(b)

if the payment service provider has no

registered office under its national law, the Member

State in which its head office is situated;

"host Member State" means the Member State other than

the home Member State in which a payment service provider

has an agent or a branch, or provides payment services;

"initial capital" means paid up capital and reserves as

defined in a Financial Institutions Rule;

"issuing of payment instruments" means a payment

service by a payment service provider contracting to provide a

payer with a payment instrument to initiate and process the

payer’s payment transactions;

"licence" means a licence granted under this Act to

provide any of the activities listed in the First Schedule;

"loan acquisition" means the acquisition of one (1) or

more loans or portfolios of loans which give rise to a direct

legal relationship between the acquirer as lender and the

borrower or borrowers;

"Member State" means a Member State of the European

Union and includes an EEA State;

"the Minister" means the Minister responsible for the

regulation of Financial Services;

"money laundering" has the same meaning as that

assigned to it by the Prevention of Money Laundering Act, as

may be amended from time to time;

"money remittance" means a payment service where

funds are received from a payer without any payment accounts

being created in the name of the payer or the payee, for the sole

purpose of transferring a corresponding amount to a payee or to

another payment service provider acting on behalf of the payee

and, or where such funds are received on behalf of and made

available to the payee;

"officer", in relation to a company, includes a director,

partner, manager or company secretary or any person

effectively acting in such capacity whether formally appointed

or not;

"outsourcing" means the use of a third party (the

outsourcing service provider) by a financial institution to

perform activities and, or operational functions that would

normally be undertaken by the financial institution;

"outsourcing service provider" means a supplier of

goods, services or facilities, and which may be an affiliated

entity within a corporate group or an entity that is external to

the group;

"overseas regulatory authority" means an authority that

in a country or territory outside Malta exercises any function

corresponding to the functions of the competent authority under

this Act;

FINANCIAL INSTITUTIONS

"own funds" means funds as defined in paragraph 118 of

Article 4(1) of the CRR where at least 75% of the Tier 1 capital

is in the form of Common Equity Tier 1 capital as referred to in

Article 50 of that Regulation and Tier 2 capital is equal to or

less than one third of Tier 1 capital;

"PAD" means Directive 2014/92/EU of the European

Parliament and of the Council of 23 July 2014 on the

comparability of fees related to payment accounts, payment

account switching and access to payment accounts with basic

features, as may be amended from time to time and including

any implementing measures, implementing technical standards,

regulatory technical standards and similar measures that have

been or may be issued thereunder;

"payee" means a person who is the intended recipient of

funds that have been the subject of a payment transaction;

"payer" means a person who holds a payment account

and allows a payment order from that payment account or

where there is no payment account, a person who gives a

payment order;

"payment account" means an account held in the name

of one or more payment service users which is used for the

execution of payment transactions;

"payment initiation service" means a service to initiate a

payment order at the request of the payment service user with

respect to a payment account held at another payment service

provider;

"payment initiation service provider" means a payment

service provider that has been licensed under this Act or that

holds an equivalent authorisation in another country in terms of

the Payment Services Directive to provide payment initiation

services;

"payment institution" means a company that has been

licensed in accordance with this Act or that holds an equivalent

authorisation in another country in terms of the Payment

Services Directive to provide and execute payment services

throughout the European Union;

"payment instrument" means any personalised device

and, or set of procedures agreed between the payment service

user and the payment service provider and used in order to

initiate a payment order;

"payment order" means an instruction by a payer or

payee to his payment service provider requesting the execution

of a payment transaction;

"payment service" means any business activity set out in

paragraph 2 of the Second Schedule;

"Payment Services Directive" means Directive (EU)

2015/2366 of the European Parliament and of the Council of 25

November 2015 on payment services in the internal market,

amending Directives 2002/65/EC, 2009/110/EC and 2013/36/

EU and Regulation (EU) No. 1093/2010, and repealing

Directive 2007/64/EC, as may be amended from time to time

and includes any implementing measures, implementing

technical standards, regulatory technical standards and similar

measures that have been or may be issued thereunder;

"payment service provider" means

(a)

credit institutions, including branches

thereof as defined in article 2(1) of the Banking Act

where such branches are located in the European Union,

irrespective of whether the head offices of those

branches are located within the European Union or, in

accordance with Article 47 of the CRD and national law,

if they are located outside the European Union;

(b)

electronic money institutions, being

companies that have been granted authorisation under

Title II of the Electronic Money Directive to issue

electronic money, including branches thereof, in

accordance with Article 8 of that Directive and national

law, where such branches are located within the

European Union and their head offices are located

outside the European Union, in so far as the payment

services provided by those branches are linked to the

issuance of electronic money;

(c)

post office giro institutions that are entitled

under national law of any Member State to provide

payment services;

(d)

payment institutions;

(e)

account information service providers;

(f)

the ECB and national central banks when

not acting in their capacity as monetary authority or

other public authorities; or

(g)

Member States or their regional or local

authorities when not acting in their capacity as public

authorities;

FINANCIAL INSTITUTIONS

"payment service user" means a person making use of a

payment service in the capacity of payer, payee or both;

"payment system" means a funds transfer system with

formal and standardised arrangements and common rules for

the processing, clearing and, or settlement of payment

transactions;

"payment transaction" means an act, initiated by the

payer or on his behalf by the payee, of placing, transferring, or

withdrawing funds, irrespective of any underlying obligations

between the payer and the payee;

"personalised security credentials" means personalised

features provided by the payment service provider to a payment

service user for the purposes of authentication;

"professional investor fund" shall have the same

meaning as assigned to it in the Investment Services Act

(Notified CISs) Regulations;

"qualifying shareholding" shall have the same meaning

as that assigned to it in paragraph (36) of Article 4(1) of the

CRR

Provided that, in determining whether the criteria

for a qualifying shareholding are fulfilled, the voting rights

referred to in Articles 9 and 10 of Directive 2004/109/EC of

the European Parliament and of the Council of 15 December

2004 on the harmonisation of transparency requirements in

relation to information about issuers whose securities are

admitted to trading on a regulated market and amending

Directive 2001/34/EC, and the conditions regarding

aggregation thereof set out in Article 12(4) and (5) of that

Directive, shall be taken into account

Provided further that, in determining whether the

criteria for a qualifying shareholding are fulfilled, the

competent authority shall not take into account voting rights or

shares which investment firms or credit institutions may hold as

a result of providing the underwriting of financial instruments

or placing of financial instruments on a firm commitment basis

in terms of paragraph 6 of Section A of Annex 1 to Directive

2004/39/EC, provided that those rights are not exercised or

otherwise used to intervene in the management of the issuer and

are disposed of within one year of acquisition;

"receivables financing" means factoring, with or without

recourse and, or forfaiting;

"reconstruction" has the same meaning as that assigned

to it by the Companies Act;

"registration" means a registration granted under this

Act to provide solely account information services in terms of

this Act;

"Regulation (EC) No. 1606/2002" means Regulation

(EC) No. 1606/2002 of the European Parliament and of the

Council of 19 July 2002 on the application of international

accounting standards, as may be amended from time to time,

and includes any implementing measures, implementing

technical standards, regulatory technical standards and similar

measures that have been or may be issued thereunder;

"Regulation (EU) No. 1093/2010" means Regulation

(EU) No. 1093/2010 of the European Parliament and of the

Council of 24 November 2010, establishing a European

Supervisory Authority (European Banking Authority),

amending Decision No. 716/2009/EC and repealing

Commission Decision 2009/78/EC, as may be amended from

time to time, and includes any implementing measures,

implementing technical standards, regulatory technical

standards and similar measures that have been or may be issued

thereunder;

"Regulation (EU) No. 1093/2010" means Regulation

(EU) 2015/847 of the European Parliament and of the Council

of 20 May 2015 on information accompanying transfers of

funds and repealing Regulation (EC) No. 1781/2006, as may be

amended from time to time, and includes any implementing

measures, implementing technical standards, regulatory

technical standards and similar measures that have been or may

be issued thereunder;

"subsidiary" shall have the same meaning as that

assigned to "subsidiary undertaking" in the Companies Act;

"third country" means a country that is not a Member

State or an EEA State;

"Tier 1 capital" shall have the same meaning as that

assigned to in Article 25 of the CRR;

"Tier 2 capital" shall have the same meaning as that

assigned to it in Article 71 of the CRR;

"trade bills" means bills of exchange and promissory

notes.

(2)

In case of any conflict between the English and the Maltese

FINANCIAL INSTITUTIONS

texts of this Act, the English text shall prevail.

(3) The provisions of this Act shall be without prejudice to the

provisions of Directive 2008/48/EC as transposed in the Consumer

Credit Regulations, other relevant European Union law or national

measures regarding conditions for granting credit to consumers not

harmonised by the Payment Services Directive that comply with

European Union Law.

LICENSING AND REGISTRATION REQUIREMENTS.

Added by

II. 2010.36.

FINANCIAL INSTITUTIONS CARRYING OUT

Amended by

PAYMENT SERVICES

X. 2011.63;

XXVI.2019.75;

LXXI.2021.75.

Objective

The purpose of this Schedule is to set out the regulatory framework under which

payment services as referred to in the First Schedule, may be carried out.

Interpretation

1. Deleted by XXVI.2019.75.

List of Activities

2. The following activities shall be considered as payment services

(a) services enabling cash to be placed on a payment account as well as all the

operations required for operating a payment account;

(b) services enabling cash withdrawals from a payment account as well as all the

operations required for operating a payment account;

(c) execution of payment transactions, including transfers of funds on a payment

account with the user’s payment service provider or with another payment

service provider

(i)

execution of direct debits, including one-off direct debits;

(ii)

execution of payment transactions through a payment card or

a similar device;

(iii)

execution of credit transfers, including standing orders;

(d) execution of payment transactions where the funds are covered by a credit

line for a payment service user

(i)

execution of direct debits, including one-off direct debits;

(ii)

execution of payment transactions through a payment card or

a similar device;

(iii)

execution of credit transfers, including standing orders;

(e) issuing of payment instruments and, or acquiring of payment transactions;

(f)

money remittance;

(g) payment initiation services; and

(h) account information services.

3. Apart from the provision of payment services, payment institutions may

engage in the following activities

(a) The provision of operational and closely related ancillary services such

FINANCIAL INSTITUTIONS

as ensuring execution of payment transactions, foreign exchange

services strictly in relation to payment services, safekeeping activities,

and storage and processing of data;

(b) The operation of payment systems, without prejudice to Article 35 of

the Payment Services Directive as transposed in a directive issued by

the Central Bank under the Central Bank of Malta Act;

(c) Without prejudice to any applicable European Union or national law,

and without prejudice to the provisions of article 5(6), business

activities other than the provision of payment services;

(d) Payment institutions may grant credit related to payment services

referred to in paragraph (2)(d) or (e) of this Schedule only if the following

requirements are met

(i)

the credit is ancillary and granted exclusively in connection with the

execution of a transaction;

(ii) notwithstanding national rules on providing credit by credit cards,

the credit granted in connection with a payment and executed with the act shall be

repaid within a short period which shall in no case exceed twelve months;

(iii) such credit is not granted from the funds received or held for the

purpose of executing a payment transaction; and

(iv) the own funds of the payment institution are at all times and, to the

satisfaction of the competent authority, appropriate in view of the overall amount

of credit granted.

4. When payment institutions engage in the provision of one or more payment

services, they may only hold payment accounts used exclusively for payment

transactions.

5. Any funds received by payment institutions from payment service users with a

view to the provision of payment services shall not constitute a deposit or other

repayable funds within the meaning of article 2 of the Banking Act, or electronic money

within the meaning of article 2.

FINANCIAL INSTITUTIONS

(1)

No activities listed under the First Schedule of this

Act, other than account information services, shall be transacted

regularly or habitually, in or from Malta, except by a company that is

in possession of a licence granted under this Act by the competent

authority

Provided that the activities listed under the First Schedule of

this Act, other than account information services, may also be

transacted in or from Malta, by a legal person that is in possession of

an authorisation granted by another Member State under the Payment

Services Directive or the Electronic Money Directive, in exercise of

its European rights and in accordance with the provisions of the

Payment Services Directive and the Electronic Money Directive.

(1A) No account information services shall be transacted

regularly or habitually in or from Malta, except by a natural person or

a company in possession of a registration granted under this Act by the

competent authority

Provided that account information services may also be

transacted in or from Malta, by a natural or legal person in possession

of a registration granted by another Member State under the Payment

Services Directive, in exercise of its European rights and in

accordance with the provisions of the Payment Services Directive

Provided further that a financial institution licensed in terms

of article 4(1) shall not require a registration in accordance with this

sub-article, in order to provide account information services.

(2)

For the purposes of sub-article (1) and subject to the

provisions of sub-article (3), a person shall not be deemed to be a

financial institution by reason of the fact that the person either

(a) belongs to a group and provides any of the activities

listed in the First Schedule, except for activities 4 and,

or 10 thereof, to companies which are not banks or

financial institutions and that belong to the same

group;

(b) is an undertaking and provides any of the activities

listed in the First Schedule, except for activities 4 and,

or 10 thereof, to other undertakings, which are not

banks or financial institutions, and all such

undertakings are controlled directly or indirectly by

the same person;

(c) is an undertaking and provides any of the activities

listed in the First Schedule, except for activities 4 and,

or 10 thereof, to a person which is not a bank or

financial institution, that directly or indirectly controls

it; or

(d) draws and issues trade bills in the normal course of

business under hire purchase agreements, or under

sales on credit where trade bills are drawn in respect of

the price due

Provided that for the purposes of this sub-article, a

person shall be deemed to control an undertaking if

such person

(i)

is a "parent company" as defined in article

2(2)(a) of the Companies Act; or

(ii)

has all of the following characteristics

(aa) power over the undertaking, based

on the current ability to direct the relevant

activities which significantly affect returns;

(bb) exposure, or right to variable

returns from its involvement with the

undertaking; and

(cc) the ability to use its power over the

undertaking to affect the amount of the person’s

returns.

For the purposes of this sub-article

"person" means a natural person or an undertaking; and

"undertaking" means a body corporate or incorporate

which carries on a trade or business.

(2A) Sub-article (1) shall not apply to persons that carry out any

of the following activities

(a) payment transactions effected exclusively in cash

directly by the payer to the payee, without any

intermediary intervention;

(b) payment transactions effected by the payer to the

payee through a commercial agent authorised by

means of an agreement to negotiate or conclude the

sale or purchase of goods or services, exclusively on

behalf of the payer or the payee;

(c) professional physical transport of banknotes and coins,

FINANCIAL INSTITUTIONS

including their collection, processing and delivery;

(d) payment transactions consisting of the non-

professional cash collection and delivery within the

framework of a non-profit or charitable activity;

(e) services where cash is provided by the payee to the

payer as part of a payment transaction following an

explicit request by the payment service user just prior

to the execution of the payment transaction, by means

of a payment for the purchase of goods or services;

(f)

(deleted by Act. LXXI.2021.68);

(g) (deleted by Act. LXXI.2021.68);

(h) payment transactions carried out within a payment or

securities settlement system between settlement

agents, central counter-parties, clearing houses and, or

central banks and other participants of the system and

payment service providers, without prejudice to

Article 35 of the Payment Services Directive, as

transposed in directives issued by the Central Bank

under the Central Bank of Malta Act;

(i)

payment transactions related to securities asset

servicing including dividends, income or other

distributions, redemption or sale carried out by

persons referred to in paragraph (h), by investment

firms, credit institutions, collective investment

undertakings, or asset management companies

providing investment services and, or any other

entities allowed to have the custody of financial

instruments;

(j)

services provided by technical service providers that

support the provision of payment services, without

them entering at any time into possession of the funds

to be transferred, including processing and storage of

data, trust and privacy protection services, data and

entity authentication, information and communication

technology (ICT) and communication network

provision, provision and maintenance of terminals and

devices used for payment services, with the exclusion

of payment initiation services and account information

services;

(k) services based on specific payment instruments that

can be used only in a limited way, provided they meet

one of the following conditions

(i)

instruments allowing the holder to acquire

goods or services only in the premises of the issuer, or

within a limited network of service providers under a

direct commercial agreement with a professional issuer;

(ii)

instruments that can be used only to

acquire a very limited range of goods or services;

FINANCIAL INSTITUTIONS

(iii) instruments valid only in a single Member

Sate provided at the request of an undertaking or a

public sector entity and regulated by a national or

regional public authority for specific social or tax

purposes, to acquire specific goods or services from

suppliers having a commercial agreement with the

issuer

Provided that service providers carrying

out either of the activities referred to in sub-paragraphs

(i) and (ii) or both, for which the total value of payment

transactions executed over the preceding twelve months

exceeds the amount of one million euro (€1,000,000),

shall send an annual notification to the competent

authority containing a description of the services

offered, specifying under which exclusion referred to in

sub-paragraphs (i) and (ii) the activity is considered to

be carried out

Provided further that, on the basis of such

a notification, the competent authority shall take a duly

motivated decision on the basis of criteria referred to in

this paragraph where the activity does not qualify as a

limited network, and shall inform the service provider

accordingly;

(l)

payment transactions by a provider of electronic

communication networks or services, provided in

addition to electronic communication services for a

subscriber to the network or service

(i)

for purchase of digital content and voice-

based services regardless of the device used for the

purchase or consumption of the digital content and

charged to the related bill; or

(ii)

performed from or by means of an

electronic device and charged to the related bill within

the framework of a charitable activity, or for the

purchase of tickets

Provided that the value of any single

payment transaction referred to in sub-paragraphs (i) and

(ii) does not exceed fifty euro (€50), and

- the cumulative value of payment

transactions for an individual subscriber does not

exceed three hundred euro (€300) per month; or

- where a subscriber pre-funds its account

with

the

provider

of

the

electronic

FINANCIAL INSTITUTIONS

communications network or service, the

cumulative value of payment transactions does

not exceed three hundred euro (€300) per month

Provided further that service providers

carrying out an activity referred to in this paragraph shall

send a notification to the competent authority and

provide the competent authority with an annual audit

opinion, testifying that the activity complies with the

limits set out in this paragraph;

(m) payment transactions carried out between payment

service providers, their agents or branches for their

own account;

(n) payment transactions and related services between a

parent undertaking and its subsidiary, or between

subsidiaries of the same parent undertaking, without

any intermediary intervention by a payment service

provider, other than an undertaking belonging to the

same group; and, or

(o) cash withdrawal services offered by means of ATM by

providers, acting on behalf of one or more card issuers,

that are not a party to the framework contract with the

customer withdrawing money from a payment account,

on condition that those providers do not conduct other

payment services as referred to in the Second

Schedule

Provided that any person providing such cash

withdrawal service shall abide by any requirements, as may be

specified in a directive issued by the Central Bank under the

Central Bank of Malta Act, transposing Article 3(o) of the

Payment Services Directive.

(3)

In the event of reasonable doubt as to whether an activity

constitutes the business of a financial institution, or whether the

business of a financial institution is being transacted or otherwise in or

from Malta by any person, the matter shall be conclusively determined

by the competent authority.

(3A) (a)

A person that is neither a payment service provider,

nor is explicitly excluded from the scope of this Act, shall be

prohibited from providing payment services.

(b) Notwithstanding paragraph (a) of this sub-article, the

competent authority shall inform the EBA of the

services notified pursuant to paragraphs (k) and (l) of

sub-article (2A), stating under which exclusion the

activity is carried out.

(c) The description of the activity notified under

paragraphs (k) and (l) of sub-article (2A) shall be made

publicly available in the public register referred to in

article 8D and the electronic central register

developed, operated and maintained by the EBA in

accordance with Article 15 of the Payment Services

Directive.

(4)

The granting of a licence or registration, as applicable, shall

be subject to fees as may be prescribed in accordance with the

provisions of article 12.

(5)

A licensed or registered financial institution may not take

deposits or other repayable funds from the public within the meaning

of the Banking Act.

(6) Where a person is already licensed under the Banking Act or

the Investment Services Act to carry out an activity listed in the First

Schedule, such person shall not require a licence or registration for

such an activity under this Act.

(7) An alternative investment fund notified by an alternative

investment fund manager in accordance with the provisions of the

Investment Services Act (Notified CISs) Regulations, in so far that

such alternative investment fund is performing the activity of

(a)

lending by virtue of loan acquisition as specified

in Investment Services Rules issued in accordance with the

Investment Services Act; or

(b)

receivables financing,

shall not require a licence for such an activity under this Act.

(8)

When performing the activities of loan origination, loan

acquisition and, or receivables financing as part of its exposure to

those assets that fall within the definition "qualifying investments" in

the EuSEF Regulation or the EuVECA Regulation, as the case may be,

an alternative investment fund or a professional investor fund notified

to the competent authority in accordance with the Investment

Services Act (Notified CISs) Regulations, shall not require a licence

under this Act in those circumstances where the alternative investment

fund manager of such alternative investment fund or the fund manager

of the said professional investor fund, chooses

(a)

to establish the alternative investment fund or

the professional investor fund as a European social

entrepreneurship fund in accordance with the EuSEF

Regulation, and therefore uses the designation "EuSEF" in

relation to the marketing of the qualifying social

entrepreneurship fund in the European Union; or

(b)

to establish the alternative investment fund or

the professional investor fund as a European venture capital

fund in terms of the EuVECA Regulation, and therefore uses

the designation "EuVECA" in relation to the marketing of the

FINANCIAL INSTITUTIONS

qualifying venture capital fund in the European Union

Provided that for purposes of this sub-article "loan origination"

shall be deemed to be referring to the direct origination of loans.

(1)

Notwithstanding the provisions of article 3, any

entity, whether established or operating in Malta or otherwise, carrying

out the activity of financial leasing in or from Malta, and all related

transactions involving

(a) an aircraft registered or to be registered in the National

Aircraft Register as defined in the Aircraft

Registration Act or registered in any other jurisdiction

whatsoever and any aircraft engine; or

(b) a ship registered or to be registered in the register as

defined in the Merchant Shipping Act or registered in

any other jurisdiction whatsoever,

shall not require a licence from the competent authority for the

purposes of this Act, where

(i)

such entity is owned and controlled, or is a

subsidiary of, or exclusively funded by; and

(ii)

any relevant financial leasing transaction,

or the relevant underlying asset, being an aircraft, an

aircraft engine, or a ship, is exclusively financed by

persons or entities as described in Annex II to Directive

2014/65/EU of the European Parliament and of the

Council of 15 May 2014 on markets in financial

instruments, or persons or entities who are recognised as

eligible counter-parties in accordance with Article 30 of

such Directive 2014/65/EU

Provided that in the interpretation and

application of sub-paragraphs (i) and (ii) and in order to

ensure compliance with their requirements, where the

ownership of such entity as described in sub-paragraph

(i), or of the entity financing the transaction indicated in

sub-paragraph (ii), or its underlying assets is vested in a

trustee, or is otherwise held by another intermediary on a

fiduciary basis, the criteria described in Annex II of

Directive 2014/65/EU shall apply by reference to the

beneficial interests involved, and not to the said trustee

or intermediary.

(2) The provisions of this article shall only apply to an entity

where the business of such entity is limited to the financial leasing of

aircrafts, aircraft engines, or ships as described in sub-article (1) and to

activities that are ancillary thereto, to the exclusion of other types of

assets and activities otherwise falling within the purposes of this Act.

Added by

X. 2011.64.

(Article 2)

Amended by

XXVI.2019.76;

FINANCIAL INSTITUTIONS ISSUING

LXXI.2021.76.

ELECTRONIC MONEY

Objective

The purpose of this Schedule is to set out the activities that may be undertaken by

financial institutions that issue electronic money in terms of this Act.

Interpretation

1. Deleted by XXVI.2019.76.

Activities

2. In addition to issuing electronic money, electronic money institutions may

also engage in any of the following activities

(a) the provision of payment services listed in paragraph 2 of the Second

Schedule;

(b) the granting of credit related to payment services referred to in paragraph

2(d) or (e) of the Second Schedule, where the conditions laid down in

paragraph 3(d) of the Second Schedule are met;

(c) the provision of operational services and closely related ancillary

services in respect of the issuing of electronic money or to the provision

of payment services referred to in point (a);

(d) the operation of payment systems as defined in the Second Schedule;

(e) business activities other than the issuance of electronic money, having

regard to the applicable law regulating such activities.

Credit referred to in point (b) above shall not be granted from the funds received

in exchange of electronic money and held in accordance with safeguarding

requirements prescribed.

(1) Any company with the intention of transacting,

regularly or habitually, activities listed under the First Schedule of

this Act in or from Malta, other than account information services,

shall before regularly or habitually transacting any such activities,

apply in writing to the competent authority for a licence under this

Act

Provided that a legal person that is in possession of an

authorisation granted by another Member State under the Payment

Services Directive or the Electronic Money Directive, may exercise

its European rights in accordance with the provisions of the Payment

Services Directive and the Electronic Money Directive.

(1A) Any natural person or company with the intention of

transacting, regularly or habitually, account information services shall,

before regularly or habitually transacting any such services, apply in

writing to the competent authority for a registration under this Act

Provided that a natural or legal person that is in possession

of a registration granted by another Member State under the Payment

Services Directive, may exercise its European rights in accordance

with the provisions of the Payment Services Directive.

(2)

All applications for a licence or registration, as applicable,

shall be in such form and accompanied by such information and shall

conform to such conditions as shall be prescribed from time to time by

any Financial Institutions Rule, and an application may only be

withdrawn by written notice given to the competent authority at a time

before the licence or registration being applied for has been granted or

refused.

(3)

The competent authority shall have the power to require any

person to provide such information as it shall deem necessary, for the

purposes of determining an application for a licence or a registration,

as applicable.

(4)

The competent authority shall only grant a licence or a

registration if the information and evidence accompanying the

application complies with all the requirements set out in the Financial

Institutions Rule referred to in sub-article (2) and if the competent

authority’s overall assessment is favourable, after having scrutinised

the application.

(5)

The competent authority may, where relevant, before

granting a licence or a registration, consult the Central Bank or other

relevant public authorities.

(6) A licence to provide payment services or to issue electronic

money and a registration to provide account information services, shall

be valid in all Member States and shall allow the payment institution,

the electronic money institution, or the account information service

FINANCIAL INSTITUTIONS

provider concerned, to provide the services that are covered by the

licence or registration throughout the European Union, pursuant to a

European right.

(1)

No company shall be granted a licence in terms of

this Act unless

(a) its initial capital whether in euro or in any other

currency acceptable to the competent authority are

equal to such amount, as may be established by the

competent authority in any Financial Institutions Rule

and as may be appropriate for the activities to be

undertaken by the applicant;

(b) there are at least two individuals, or any other number

of individuals as may be otherwise determined by the

competent authority, who will effectively direct the

business of the financial institution from Malta;

(c) the competent authority is satisfied that the company

has sound and prudent management and has robust

governance arrangements that include a clear

organisational structure with well defined, transparent

and consistent lines of responsibility, effective

procedures to identify, manage, monitor and report the

risks to which it is or might be exposed, and adequate

internal control mechanisms, including sound

administrative and accounting procedures

Provided that such arrangements, procedures and

mechanisms shall be comprehensive and proportionate

to the nature, scale and complexity of the services

provided by the company, as may be determined by the

competent authority from time to time and, or as may

be specified by a Financial Institutions Rule;

(d) the competent authority is satisfied that taking into

account the need to ensure the sound and prudent

management of the company, shareholders having a

qualifying holding, controllers and all persons who

will effectively direct the business of the financial

institution are suitable persons to ensure its sound and

prudent management;

(e) the competent authority is satisfied that, where there

are close links between the company and another

person or persons, such links do not prevent it from the

effective exercise of its supervisory functions;

(f)

the competent authority is satisfied that where there

are close links between the company and another

person or persons, the laws, regulations or

administrative provisions of a third country governing

one or more persons with which the company has close

links, or difficulties involved in the enforcement of

those laws, regulations or administrative provisions,

do not prevent the effective exercise of its supervisory

functions; and

(g) it satisfies any other conditions for the granting of a

licence, as may be specified in a Financial Institutions

Rule

Provided that the company shall, after being

licensed under this Act, inform the competent authority

forthwith of any change in circumstances concerning the

application and shall be further required to provide the

competent authority with information necessary to monitor

compliance with the conditions referred to in this sub-article on

a continuous basis.

(1A) No natural person or company shall be granted a registration

to carry out account information services unless

(a) the competent authority is satisfied, where applicable,

that qualifying shareholders, controllers and all

persons who effectively direct the business of the

account information service provider are suitable

persons to ensure its sound and prudent management;

(b) the competent authority is satisfied that the natural

person or company has sound and prudent

management and has robust governance arrangements

that include a clear organisational structure with well

defined, transparent and consistent lines of

responsibility, effective procedures to identify,

manage, monitor and report the risks to which it is or

might be exposed, and adequate internal control

mechanisms, including sound administrative and

accounting procedures

Provided that such arrangements, procedures and

mechanisms shall be comprehensive and proportionate to the

nature, scale and complexity of the services provided by the

natural person or company, as may be determined by the

competent authority from time to time and, or as may be

specified by a Financial Institutions Rule;

(c) the competent authority is satisfied that where there

are close links between the natural persons or the

company and another person or persons, such links do

not prevent it from the effective exercise of its

supervisory functions;

(d) the competent authority is satisfied that where there

are close links between the natural person or the

company and another person or persons, the laws,

regulations or administrative provisions of a third

country governing one or more persons with which the

company has close links, or difficulties involved in the

enforcement of those laws, regulations or

administrative provisions, do not prevent the effective

exercise of its supervisory functions; and

FINANCIAL INSTITUTIONS

(e) the natural person or company satisfies any other

conditions for the granting of a registration as may be

specified in a Financial Institutions Rule

Provided that the natural person or company

shall, after being registered under this Act, inform the

competent authority forthwith of any change in circumstances

concerning the application, and shall be further required to

provide the competent authority with information necessary to

monitor compliance with the conditions referred to in this sub-

article on a continuous basis.

(1B) A natural person or a company who applies for a licence or a

registration as applicable in terms of this article, to provide payment

initiation services and, or account information services, shall as a

condition for the granting of its licence or registration, as applicable,

also be required to hold a professional indemnity insurance covering

the territories in which it offers services, or some other comparable

guarantee against liability. With respect to an applicant who intends to

provide payment initiation services, the required professional

indemnity insurance or other comparable guarantee against liability,

shall be required to ensure that it can cover its liabilities as specified in

Articles 73, 89, 90 and 92 of the Payment Services Directive, as

transposed in directives issued by the Central Bank under the Central

Bank of Malta Act. With respect to an applicant who intends to

provide account information services, the required professional

indemnity insurance or other comparable guarantee against its liability

shall be required vis-à-vis the account servicing payment service

provider or the payment service user resulting from the unauthorised

or fraudulent access to, or the unauthorised or fraudulent use of

payment account information

Provided that the amount of the professional indemnity

insurance or other comparable guarantee referred to in this sub-article

shall be calculated in accordance with the method as may be

established in a Financial Institutions Rule

Provided further that any information required by the

competent authority in order to calculate the amount of the

professional indemnity insurance or other comparable guarantee

required in terms of this sub-article shall be provided to the competent

authority in terms of a Financial Institutions Rule.

(1C) Financial institutions required to hold a professional

indemnity insurance or other comparable guarantee in accordance with

sub-article (1B) shall review, and if necessary recalculate, the

minimum monetary amount of their professional indemnity insurance

or other comparable guarantee at least on an annual basis and as may

be established in a Financial Institutions Rule.

(2)

The competent authority shall determine each application

for a licence or a registration within three months of receipt of the

application or, in the event that the application does not comply with

article 4(2) or additional information is required, within three months

of compliance with the said sub-article or the submission of the

information required, as the case may be, whichever is the later.

(3)

The competent authority may grant or refuse to grant a

licence or a registration applied for under this Act, and where it refuses

an application, it shall inform the applicant in writing with the reasons

for the refusal.

(4)

(a)

In granting a licence or a registration, the competent

authority may subject a financial institution to such conditions as it

may deem appropriate and having granted a licence, it may, from time

to time, vary or revoke any condition so imposed or impose new

conditions.

(b)

For the better carrying out of the provisions of this

Act, the competent authority may, from time to time, issue and publish

Financial Institutions Rules in terms of article 13.

(5)

Where the competent authority for any reason fails to

determine an application for a licence or a registration within the time

prescribed under sub-article (2), such fact shall be deemed to

constitute a refusal to grant a licence or a registration, as applicable.

(6)

Where a licensed or registered financial institution provides

any of the services referred to in the First Schedule and at the same

time intends to engage in activities other than those listed in the First

Schedule, it shall not do so without the prior consent of the competent

authority. The competent authority may require the establishment of a

separate entity for the carrying out of the business for which the

financial institution is licensed or registered, where the activities in

which the financial institution is engaged or intends to engage and that

are not listed in the First Schedule, impair or are likely to impair, either

the financial soundness of the financial institution or the ability of the

competent authority to monitor the financial institution’s compliance

with all obligations set out in this Act and any regulations and, or

Rules issued thereunder.

(7)

A financial institution licensed or registered in Malta shall

have its head office and its registered office in Malta and shall carry

out at least part of its licensable and, or registrable activities in Malta

Provided that where a registered account information service

provider is a natural person, such a natural person shall have its

contact address in Malta.

FINANCIAL INSTITUTIONS

(1)

Without prejudice to the minimum level of the capital

requirements as may be set out in a Financial Institutions Rule, the

own funds of a financial institution, other than an account information

service provider, shall not fall below the amount of initial capital as

may be set out in a Financial Institutions Rule, or the amount of own

funds as calculated in accordance with a Financial Institutions Rule

issued by the competent authority, whichever is the higher.

(2)

Notwithstanding the initial capital requirements, financial

institutions providing any of the services listed in the Second or the

Third Schedule, except for payment initiation services and account

information services, shall hold at all times own funds calculated in

accordance with one or more, where applicable, of the methods as may

be set out in a Financial Institutions Rule.

(2A) Where a payment institution or an electronic money

institution belongs to the same group as another payment institution,

electronic money institution, credit institution, investment firm, asset

management company or insurance undertaking, or where a payment

institution or an electronic money institution carries out activities

other than providing payment services or issuing electronic money, as

applicable, the multiple use of elements eligible for own funds shall be

prohibited.

(2B) In the event that the conditions set out in Article 7 of the

CRR are satisfied, the competent authority may choose not to apply

sub-article (2) to payment institutions or electronic money institutions

that are included in the consolidated supervision of the parent credit

institutions pursuant to the CRD.

(3)

Where the amount of own funds of a financial institution,

other than an account information service provider, falls below the

amount established under sub-articles (1) and (2), the competent

authority shall require the financial institution to take the necessary

measures to restore the level of own funds within such period as the

competent authority may determine

Provided that if the level of own funds of a financial

institution, other than an account information service provider, is not

restored within the determined period, the competent authority may, in

addition to the power to impose an administrative penalty, exercise any

of the powers granted to it under the provisions of article 6.

(1) The competent authority may withdraw, suspend or

restrict a licence or registration issued to a financial institution

where

(a) the financial institution expressly renounces the

licence or registration;

(b) the financial institution does not commence business

pursuant to the licence or registration as applicable,

within twelve months of its issue, or any later date as

may be specified by the competent authority, or has

ceased to engage in business for more than six months,

or for such other period of time as may be determined

by the competent authority;

(c) (i) the financial institution has obtained the licence or

registration through false statements or any other

irregular means; or

(ii)

where

any

document

or

information

accompanying an application for a licence or a

registration or any information given in

connection therewith is false in any material

particular; or

(iii) where the financial institution conceals from, or

fails to notify or submit to the competent

authority, any document or information or

change therein, which it was its duty to reveal or

notify under this Act and any regulations and, or

Rules issued thereunder;

(d) the financial institution no longer fulfils the conditions

required for the granting of the licence or registration,

or any conditions stipulated in any Financial

Institutions Rule, or fails to inform the competent

authority on major developments in this respect;

(e) the financial institution is declared bankrupt or goes

into liquidation, or enters into a composition with its

creditors or is otherwise dissolved;

(f)

the financial institution has ceased to operate as a

result of a merger with another financial institution;

(g) the financial institution is a branch of an institution

incorporated outside Malta, and the overseas

regulatory authority in the country of incorporation

withdrew the authorisation or registration of the

institution;

(h) the financial institution would constitute a threat to the

stability of the payment system by continuing its

payment services or electronic money;

(i)

the financial institution fails or is likely to fail to

comply with any of the provisions of this Act and any

regulations or Financial Institutions Rules issued

thereunder or with the conditions under which the

licence or registration is granted or any directive as

may be issued by the Authority;

(j)

the financial institution has insufficient assets to cover

its liabilities; or

(k) the competent authority considers that, by reason of the

manner in which the financial institution is conducting or

proposes to conduct its affairs, or for any other reason,

these would constitute a threat to the stability or integrity

of the financial system.

FINANCIAL INSTITUTIONS

(2) Where the competent authority withdraws, suspends or

restricts a licence or registration, it shall inform the financial

institution of the reasons for the withdrawal, suspension or restriction

of the licence or registration.

(3)

Deleted by XXVI.2019.27.

(4) Restrictions of a licence or a registration issued to a

financial institution, that are imposed by the competent authority

pursuant to sub-article (1), shall be such restrictions as the

competent authority shall consider appropriate for the proper

compliance by the financial institution with the provisions of this

Act and any regulations and, or Rules issued thereunder, in addition

to the conditions, if any, of its licence or registration and the

protection of the integrity of the country’s financial system, and

may include

(a) the requirement that the financial institution be

prohibited from undertaking any transaction or

transactions or any activity listed in the First Schedule;

or

(b) the requirement that the financial institution be

permitted to undertake any transaction or transactions

or any activity listed in the First Schedule only upon

such terms and conditions, as the competent authority

may prescribe.

(5) The competent authority shall have the power to vary or

remove any restrictions imposed under this article.

(5A) Where the competent authority varies or removes any

restrictions imposed under this article, it shall inform the financial

institution of the reasons for the variation or removal of any such

restrictions.

(6) A licence granted to a branch of an institution incorporated

outside Malta may only be withdrawn after consultation with the

overseas regulatory authority of the country of incorporation, unless

the competent authority decides that the matter is urgent, or that there

are circumstances which make such prior consultation inappropriate.

(7) Upon the restriction or withdrawal of a licence or a

registration of a financial institution incorporated in Malta, the

competent authority shall inform the overseas regulatory authorities of

the country in which the financial institution or its subsidiaries are

carrying on any activity under the First Schedule or any other activity

as the competent authority may deem complementary to the

institution’s activities in Malta.

(8) Where the competent authority is satisfied that the

circumstances so warrant, it may at any time make public any

restriction imposed under this article.

(9) The competent authority shall publish any withdrawal or

suspension of a licence or registration, including those in the public

register referred to in article 8D, and in the electronic central register

developed, operated and maintained by the EBA in accordance with

Article 15 of the Payment Services Directive.

(1)Where the competent authority proposes

(a) to vary any condition to which the licence or

registration is subject, or to impose a condition

thereon; or

(b) to withdraw, suspend or restrict, a licence or

registration or to vary any restriction thereon,

it shall serve written notice of its intention on the financial institution

and shall specify the grounds upon which the competent authority

intends to take such action.

(2)

Every notice given under sub-article (1) shall state that the

financial institution concerned may, within such reasonable period

after service thereof as may be stated in the notice, being a period of

not less than forty-eight hours and not more than thirty days, make

representations in writing to the competent authority giving reasons

why such action should not be taken, and the competent authority shall

consider any such representations before arriving to a final decision.

(3)

Unless the competent authority considers that the matter is

urgent, it shall not impose or vary any restriction or condition, or

withdraw or suspend a licence or a registration before the expiry of the

period as set out in sub-article (2).

(4) The competent authority shall, as soon as practicable, notify its

final decision in writing to any financial institutions to whom notice

has been served under sub-article (1).

A financial institution licensed or registered under this Act

shall provide the competent authority with particulars of any changes

in the information provided under this Act and any regulations and, or

Rules issued thereunder, as soon as such financial institution becomes

aware of such change.

(1)

Without prejudice to any of the powers conferred

under this Act, the competent authority may, in order to carry out the

functions and duties prescribed by the Malta Financial Services

Authority Act and by this Act and any regulations and, or Rules issued

thereunder, whenever it deems necessary, give by notice in writing

such directives as it may deem appropriate in the circumstances.

(2)

Any person to whom a notice is given in accordance with

sub-article (1) shall comply therewith and give effect to any such

directive within the time and in the manner stated in the directive.

(3)

The power to give directives under this article shall include

the power to vary, alter, add or withdraw any directive, as well as the

power to issue new or further directives.

(4)

Where the competent authority is satisfied that the

circumstances so warrant, it may at any time make public any directive

it has given under any of the provisions of this article.

FINANCIAL INSTITUTIONS

A financial institution licensed or registered under this Act

shall provide its customers or potential customers, including in any

form or medium of marketing activity or communication disseminated

to the public by means of all types of media, with a statement of the

fact that the financial institution is licensed or registered, as

applicable, by the competent authority, together with the address of the

competent authority.

OBLIGATIONS OF FINANCIAL AND OTHER INSTITUTIONS

(1) A financial institution, other than those exercising a

European right, shall inform the competent authority in writing, before

opening a new branch in Malta.

(2) A financial institution intending to open a branch or an office

outside Malta to provide any of the activities listed in the First

Schedule, with the exception of activities 4 or 10 thereof, and a

financial institution intending to open a branch or office in a third

country in order to provide any of the activities listed in the First

Schedule, shall require the prior written approval of the competent

authority.

(2A) A financial institution intending to provide the activities

listed in the Second or Third Schedules in another Member State in

exercise of a European right, shall inform the competent authority in

accordance with the procedure set out in Article 28 of the Payment

Services Directive.

(2B) A financial institution intending to set up or acquire a

subsidiary in or outside Malta shall require the prior written approval

of the competent authority.

(3)

Deleted by XXVI.2019.32.

(4)

Deleted by XXVI.2019.32.

(5)

Deleted by XXVI.2019.32.

(6) Deleted by XXVI.2019.32.

(7) Financial institutions shall ensure that branches acting on their

behalf inform their customers and potential customers of this fact.

(1)

A financial institution intending to provide any of the

activities referred to in the Schedules to this Act through an agent or,

in the case of an electronic money institution intending to appoint a

d i s t r i b ut o r to di s tr i b u t e or r e d e e m e l e c t r o ni c m o n e y, sh a ll

communicate the following information to the competent authority

(a) the name and address of the agent and, or distributor;

(b) a description of the internal control mechanisms that

will be used by the agent in order to comply with the

obligations in relation to money laundering and the

funding of terrorism under any anti-money laundering

and combating the funding of terrorism legislation;

(c) the identity of directors and persons responsible for

the management of the agent to be used in the

provision of the activities referred to in the Schedules

to this Act, and for agents other than payment service

providers, evidence that they are fit and proper

persons;

(d) the activities referred to in the Schedules to this Act

that are carried out by the financial institution and for

which the agent is mandated; and

(e) where applicable, the unique identification code or

number of the agent or distributor

Provided that a person who is appointed as agent of a

financial institution shall only act as agent in respect

of those activities for which the financial institution to

which he will act as agent, is licensed or registered

under this Act.

(1A) In the event of material changes to the particulars

communicated to the competent authority at the initial notification

pursuant to paragraph (b) of sub-article (1), the financial institution

concerned shall provide the competent authority with the updated

information without delay.

(2)

An electronic money institution shall not issue electronic

money through agents

Provided that an electronic money institution may, subject

to such conditions as may be established by the competent authority,

distribute and redeem electronic money through distributors.

(3)

The competent authority may subject the person who will be

appointed as agent to any of the obligations imposed on the financial

institution under this Act.

(4)

The competent authority shall, within two months of receipt

of the information referred to in sub-article (1), communicate to the

financial institution whether the agent has been entered in the public

register referred to in article 8D

Provided that, if the competent authority is not satisfied that

the information provided is correct, it shall take further action to verify

the information before entering the agent in the register

Provided further that, if after taking action to verify the

information, the competent authority is not satisfied that the

information provided pursuant to sub-article (1) is correct, it shall

refuse to enter the agent in the public register referred to in article 8D

and shall inform the financial institution without undue delay.

(4A) An agent may only commence providing the relevant

activities upon entry in the public register referred to in article 8D.

FINANCIAL INSTITUTIONS

(4B) Where a payment institution or an electronic money

institution intends to provide payment services in another Member

State by engaging an agent or establishing a branch, it shall also follow

the procedures set out in Article 28 of the Payment Services

Directive.

(5)

Where a financial institution licensed or holding an

equivalent authorisation in another Member State carries out the

activities listed in any of the Schedules in Malta through a branch or

by engaging an agent or distributor, the financial institution shall

follow the procedures established in any Financial Institutions Rule

Provided that if the competent authority has reasonable

grounds to suspect that, through such branch, agent or distributor,

money laundering or the funding of terrorism is being or has been

committed or attempted, or that the engagement of such branch or

agent could increase the risk of money laundering or the funding of

terrorism, it shall inform the Member State in which the financial

institution is established, and may refuse to register the branch or

agent, or may withdraw the registration of the branch or agent.

(6)

Financial institutions shall, without undue delay and in

accordance with the procedure provided for in sub-articles (4) and

(4A), communicate to the competent authority any changes regarding

the use of agents or distributors, including additional agents or

distributors.

(7)

A financial institution intending to provide its activities

through an agent in a third country shall require the prior written

approval of the competent authority.

(8) Financial institutions shall ensure that agents or distributors

acting on their behalf inform their customers and potential customers

of this fact.

(1)

Where a financial institution intends to outsource

operational functions of its services it shall inform the competent

authority accordingly

Provided that the outsourcing of important operational

functions, including ICT systems, shall not be undertaken in such a

way as to impair materially the quality of the financial institution’s

internal control and the competent authority’s ability to monitor and

retrace the financial institution’s compliance with all of the obligations

established in this Act and any regulations and, or Rules made

thereunder.

(2)

For the purpose of sub-article (1), an operational function

shall be regarded as important if a defect or failure in its performance

would materially impair the continuing compliance of a financial

institution with the requirements of its licence or registration, its other

obligations under this Act or any regulations and, or Rules issued

thereunder, its financial performance, or the soundness or continuity of

its services

Provided that financial institutions that outsource important

operational functions shall comply with the following conditions

(a) the outsourcing shall not result in the delegation by

senior management of its responsibility;

(b) the relationship and obligations of the financial

institution towards any person making use of its

services under this Act and any regulations and, or

Rules issued thereunder shall not be altered;

(c) the conditions with which the financial institution

must comply with in order to be licensed and remain

so in accordance with this Act and any of the

regulations and, or Rules issued thereunder shall not

be undermined; and

(d) none of the other conditions subject to which the

financial institution’s licence or registration was

granted shall be removed or modified.

(2A) Financial institutions shall, without undue delay,

communicate to the competent authority any changes regarding the use

of entities to which activities are outsourced.

(3) The competent authority may issue a Financial Institutions

Rule, laying down the requirements for outsourcing service providers

and the provision of such outsourced services.

(1) Where financial institutions rely on third parties for the

performance of operational functions, those financial institutions

shall take reasonable steps to ensure that the requirements of this

Act and any regulations and, or Rules issued thereunder are

complied with.

(2) Financial institutions shall remain fully liable for any acts of

their employees, or any agent, branch or entity to whom or to which

activities may have been outsourced.

(1)

The competent authority shall establish and maintain

a public register in which the following are entered

(a) financial institutions licensed or registered in terms of

this Act;

(b) agents of financial institutions in Malta or in another

Member State;

(c) branches of financial institutions, established in or

outside Malta, if those branches provide services in

another Member State;

(d) branches in Malta of payment institutions authorised

in another Member State;

FINANCIAL INSTITUTIONS

(e) branches in Malta of account information service

providers authorised in another Member State;

(f)

account information service providers registered under

this Act exercising their European right to provide

services in another Member State;

(g) account information service providers authorised in

another Member State exercising their European right

to provide services in Malta;

(h) the institutions referred to in paragraphs (4) to (23) of

Article 2(5) of the CRD that are entitled under national

law to provide payment services;

(i)

branches in Malta of electronic money institutions

authorised in another Member State;

(j)

payment institutions and electronic money institutions

licensed under this Act exercising their European right

to provide services in another Member State;

(k) payment institutions and electronic money institutions

authorised in another Member State exercising their

European right to provide services in Malta;

(l)

service providers carrying out services based on

specific payment instruments that can be used only in

a limited way, provided they satisfy any of the

following conditions

(i)

instruments allowing the holder to acquire

goods or services only in the premises of the issuer, or

within a limited network of service providers under

direct commercial agreement with a professional issuer;

(ii)

instruments that can be used only to

acquire a very limited range of goods or services; and

(m) service providers carrying out payment transactions by

a provider of electronic communication networks or

services provided in addition to electronic

communication services for a subscriber to the

network or service

(i)

for the purchase of digital content and

voice-based services, regardless of the device used for

the purchase or consumption of the digital content and

charged to the related bill; or

(ii)

performed from or by means of an

electronic device and charged to the related bill within

the framework of a charitable activity, or for the

purchase of tickets.

(2)

The register referred to in sub-article (1) shall identify the

services for which the financial institution is licensed or registered and

it shall be publicly available for consultation, accessible online and

updated without delay.

(3)

Payment institutions shall be listed in the register separately

from account information service providers.

(4)

The competent authority shall enter in the public register

any withdrawal of a licence or registration.

(5)

The competent authority shall notify the EBA of the reasons

for the withdrawal of any licence or registration.

(6)

The competent authority shall, without delay, notify the

EBA of the information entered in the public register.

(7) The competent authority shall be responsible for the accuracy

of the information specified in sub-article (6) and for keeping that

information updated.

(1)

In the assessment of an application for the opening of

a branch by an electronic money institution having its head office

outside the European Union, the competent authority may not apply

provisions which result in more favourable treatment than that

accorded to an electronic money institution having its head office

within the European Union.

(2) The competent authority shall notify the European

Commission of all authorisations for branches of electronic money

institutions having their head office outside the European Union as

stated in sub-article (1).

(1) Electronic money institutions shall issue electronic

money at par value on the receipt of funds.

(2)

Upon request by the electronic money holder, electronic

money institutions shall redeem at any moment and at par value the

monetary value of the electronic money held without delay.

(3) For the better carrying out of the provisions of this article and

to bette transpose the provisions of the Electronic Money Directive,

the competent authority may, from time to time, issue, amend or

revoke Financial Institutions Rules that shall be binding on electronic

money institutions as specified therein.

Without prejudice to any anti-money laundering or combating

the funding of terrorism legislation, or other relevant European Union

Law, financial institutions other than account information service

providers, shall keep all appropriate records for the purposes of this

Act and any regulations and, or Rules issued thereunder for at least

five years.

FINANCIAL INSTITUTIONS

(1) If

(a) any person takes or intends to take any action to

acquire or dispose, directly or indirectly, of a

qualifying shareholding in a financial institution, or to

further increase or reduce, directly or indirectly, such

qualifying shareholding so that the proportion of the

voting rights, or of the share capital held by that

person in that financial institution reaches, exceeds or

falls below twenty per centum, thirty per centum or

fifty per centum, or so that the financial institution

becomes or ceases to be the subsidiary of such person;

or

(b) any financial institution takes or intends to take action

to sell or dispose of its business or any significant part

thereof, merge with any other company, undergo any

reconstruction or vary its nominal or issued share

capital, or effect any material change in voting rights,

without obtaining the prior approval of the competent authority or, if after

having obtained such approval it subsequently appears to the competent

authority that any of these actions, or the influence exercised by the per-

son who intends to take such action, is operating or is likely to operate to

the detriment of the prudent and sound management of the financial in-

stitution, without prejudice to the provisions of article 22, the competent

authority shall express its opposition and shall have the power to take ap-

propriate measures to rectify the situation.

(1A) The appropriate measures referred to in sub-article (1) may

include

(i)

restraining the person or financial

institution from taking or continuing the action;

(ii)

declaring the action to be null and void;

(iii) requiring the person or financial institution

to take such steps as may be necessary to restore the

position existing immediately before the action was

taken;

(iv) restraining the person or financial

institution from exercising any rights which the action

would, if lawful, have conferred upon them, including

the right to receive any payment or to exercise any

voting rights attached to the shares acquired;

(v)

restraining the person or financial

institution from taking any similar action, or any other

action within the categories set out in paragraphs (a) and

(b) of sub-article (1); and, or

(vi) suspending the exercise of the voting

rights attached to the shares held by the shareholders or

members of the financial institution in question.

(2)

If as a result of an acquisition of shares in a financial

institution, the financial institution in which a person proposes to

acquire the shareholding would become a subsidiary or be subject to

the control of the person acquiring those shares, it shall be within the

discretion of the competent authority to consider whether any request

made by such person for the approval of the competent authority under

the provisions of this article constitutes a request to apply for a licence

to conduct the business of a financial institution under the provisions

of this Act and any regulations and, or Rules issued thereunder.

(3)

Sub-article (1) shall apply whether or not any of the relevant

shares are listed on a regulated market in terms of the Financial

Markets Act, or on an equivalent market in a third country.

(4)

(a)

Where a person intends to take any action as set out

in sub-article (1)(a) or (b), such person shall notify the competent

authority in writing of any such decision in advance, indicating the

size of the intended shareholding and providing any relevant

information as and in the manner that the competent authority may, by

a Financial Institutions Rule, require, including the form in which such

notification shall be made and the criteria adopted by the competent

authority in determining whether such person is a suitable person.

(b)

Where the qualifying shareholding is acquired

despite the opposition of the competent authority, the said authority

shall, regardless of any other administrative penalty or other

supervisory measure that may be adopted, provide for the suspension

of the exercise of the voting rights of the acquirer, the nullity of the

votes cast, or the possibility of annulling those votes.

(c)

Where a person fails to comply with the obligation to

provide prior information in accordance with paragraph (a) of this sub-

article, the competent authority shall have the power to take

appropriate measures in accordance with sub-article (1A).

(5)

(a)

A financial institution shall notify to the competent

authority, in writing, the full particulars of any person who is proposed

to become a controller or director of the financial institution or any

person who is proposed to cease to be a controller or director of the

financial institution.

(b)

If the competent authority is of the opinion that any

person who is or is proposed to become a controller or director of a

financial institution is not a suitable person to be a controller or

director, the competent authority may make an order requiring such a

person to cease to be a controller or director, or restraining such a

person from becoming a controller or director.

FINANCIAL INSTITUTIONS

(6) The competent authority may also issue, amend or revoke any

Financial Institutions Rule as may be required in order to better

implement the provisions of this article.

(1) Without prejudice to the provisions of paragraph 3(d) of

the Second Schedule, a financial institution shall not -

(a) grant any credit facility against the security of its own

shares or against any other securities issued by the

financial institution itself or against any shares or any

other securities of another body corporate in which the

financial institution has control;

(b) grant or permit to be outstanding credit facilities or

extend other services under terms and conditions more

favourable than the financial institution would have

otherwise applied -

(i)

to any one of its directors or their spouses

whether jointly or severally as well as with third

parties

Provided that, in any case where unsecured

credit facilities are granted, these shall not in the

aggregate exceed the sum of twenty-three

thousand and two hundred and ninety-three euro

and seventy-three cents (€23,293.73);

(ii) to any person in whom or in which the financial

institution or any one or more of its directors is

interested as a director, partner, manager, agent

or member or to any person of whom or of which

any one or more of the financial institution's

directors is a guarantor;

(iii) to any body of persons in which the financial

institution or any one or more of its directors

jointly or severally maintains control, not being

itself a financial institution or the parent

undertaking of the financial institution, a

subsidiary of this parent undertaking or a

subsidiary of the financial institution;

and where the competent authority has reason to

believe that such favourable terms and conditions have

been applied, it shall have the power to require the

financial institution to rectify the position and if the

financial institution fails to take the necessary action

to rectify the position as required, the competent

authority shall take such measures as it deems

appropriate until the position is rectified;

(c) grant to or permit to be outstanding in respect of any

officer, other than a director, or any employee,

unsecured credit facilities which in the aggregate

exceed twelve months’ emoluments of such officer or

employee.

(2) In sub-article (1)(b) and (c) the expression "unsecured

credit facilities" shall mean credit facilities made without security

or, in respect of any credit facility made with security, any part

thereof which at any time exceeds the market value of the assets

constituting that security, or where the competent authority is

satisfied that there is no established market value, on the basis of a

valuation approved by the competent authority itself.

The granting of interest or of any other benefit related to the

length of time during which an electronic money institution holds

electronic money shall be prohibited.

(1)

A payment institution providing payment services as

referred to in paragraphs 2(a) to (f) of the Second Schedule and an

electronic money institution shall safeguard all funds received from

any person making use of its services, or received through another

payment service provider for the execution of payment transactions, or

in exchange for electronic money that has been issued.

(2) For the better carrying out of the provisions of this Act on

safeguarding requirements, the competent authority may, from time to

time, issue, amend or revoke any Financial Institutions Rule which

shall be binding on financial institutions as specified therein.

Notwithstanding any investigation provided for in this

Act

(a)

where a financial institution considers that it has

failed to comply with, or that it is likely to fail to comply with

any of the provisions of this Act and any regulations and, or

Financial Institutions Rules issued thereunder, or with the

conditions under which the licence or registration was granted,

it shall forthwith inform the competent authority and the

Central Bank in writing;

(b)

where the competent authority becomes aware

that a financial institution has failed to comply with, or that it is

likely to fail to comply with any of the provisions of this Act

and any regulations and, or Financial Institutions Rules issued

thereunder, or with the conditions under which the licence or

registration was granted, it shall forthwith inform the Central

Bank in writing;

(c)

where the Central Bank becomes aware that a

financial institution has failed to comply with, or that it is likely

to fail to comply with, any of the provisions of this Act and any

regulations and, or Financial Institutions Rules issued

thereunder, or with the conditions under which the licence or

registration was granted, it shall forthwith inform the competent

authority in writing.

FINANCIAL INSTITUTIONS

(1) Without prejudice to the application of Chapter II of the

DORA Regulation, payment institutions, electronic money

institutions and account information service providers shall

establish a framework with appropriate mitigation measures and

control mechanisms to manage the operational and security risks

relating to the payment services they provide. As part of that

framework, payment institutions, electronic money institutions and

account information service providers, shall establish and maintain

effective incident management procedures, including for the

detection and classification of major operational and security

incidents.

(2)

Payment institutions, electronic money institutions and

account information service providers shall provide to the Central

Bank, on an annual basis or at shorter intervals as may be determined

by the competent authority in co-operation with the Central Bank, an

updated and comprehensive assessment of the operational and security

risks relating to the payment services they provide, and on the

adequacy of the mitigation measures and control mechanisms

implemented in response to those risks.

(3)

The competent authority shall co-operate with the Central

Bank in the assessment and processing of documents referred to in

sub-article (2).

(4) The competent authority may issue, amend or revoke

Financial Institutions Rules as may be required in order to better

implement the provisions of this article.

(1) Deleted by XI.2025.40.

(2)

Deleted by XI.2025.40.

(3)

Deleted by XI.2025.40.

(4)

Deleted by XI.2025.40.

(5)

Deleted by XI.2025.40.

(6)

Payment institutions, electronic money institutions and

account information service providers shall, at least on an annual

basis, provide to the Central Bank statistical data on fraud relating to

different means of payment.

(7) The competent authority may issue, amend or revoke any

Financial Institutions Rule, as may be required, in order to better

implement the provisions of this article.

REGULATORY AND INVESTIGATORY POWERS

(1)The Minister, acting on the advice of the competent

authority, may make regulations to give effect to the provisions of this

Act, and without prejudice to the generality of the foregoing may, by

such regulations, in particular, do any of the following

(a) amend any of the Schedules to this Act;

(b) exempt any person from any one or more provisions of this

Act, including an exemption from requiring a licence or a

registration under this Act, subject to such variations,

additions, adaptations and modifications as may be

prescribed and subject to such conditions or other

requirements, including other forms of authorisation and

notification procedures, as may be prescribed;

(c) transpose, implement and give effect to the requirements

of the Electronic Money Directive and the Payment

Services Directive

Provided that, when any of the options referred to in

Article 107(1) of the Payment Services Directive are

made use of, the Minister shall inform the European

Commission of the use of any such options as well as of

any subsequent changes thereof;

(d)

transpose, implement and give effect to the provisions,

requirements, obligations and commitments relating to the

regulation of payment institutions and electronic money

institutions arising out of membership in, affiliation or

relationship with international or regional organisations, or

groupings of countries, or arising out of any treaty,

convention or other international agreement whether

bilateral, regional or multilateral to which Malta is a party;

(e) provide that any other law or any provision thereof, shall

not apply to matters falling under the regulations and in

particular, may exempt activities as may be designated

from the application of any article or provision of the Civil

Code;

(f)

transpose, implement and, or give effect to the

requirements of the PAD, and in so doing may also

establish or maintain measures alternative to those referred

to in Article 10(2) to (6) of the PAD

Provided that

(i)

it is clearly in the interest of the consumer;

(ii)

there is no additional burden for the

consumer; and

(iii) the switching as defined in Article 2(18) of

the PAD is completed within, as a maximum, the same

overall time frame as that indicated in Article 10(2) to (6)

of the PAD;

FINANCIAL INSTITUTIONS

(g) set up a specific mechanism to ensure that consumers who

do not have a payment account as defined in Article 2(3) of

the PAD in their territory, and who have been denied

access to such a payment account for which a fee is

charged by credit institutions, will have effective access to

a payment account with basic features in terms of the

PAD, free of charge;

(h) transpose, implement and, or give effect to the provisions

and requirements of Directives, Regulations and any other

legislative measures of the European Union requiring

transposition and, or implementation as they may be

amended from time to time, including any implementing

measures that have been or may be issued thereunder and

relating, but not limited to licence holders as may be

specified therein; any such regulations strictly related to

transposition or implementation as aforesaid, may contain

provisions which are inconsistent with the provisions of

this Act or any other law, and for this purpose may provide

that any provision in this Act or in any other law shall not

apply to matters falling under the regulations and in case of

such inconsistency, the provisions in any such regulations

shall prevail;

(i)

regulate products and services offered by financial

institutions;

(j)

impose such fees and charges in respect of any

request, application or other matter that may be submitted to the

competent authority under this Act, including the fees and

charges in respect of any permission, licence, authorisation,

exemption or other benefit, as well as any fees and charges in

respect of the competent authority’s regulatory, supervisory or

investigative functions under this Act or any regulations made

or Rules issued thereunder.

(2)

Regulations made under this article may be made subject to

such exemptions or conditions as may be specified therein, may make

different provisions for different cases, circumstances or purposes and

may give to the competent authority such powers of adaptation of the

regulations as may be specified.

(3) Where regulations have been issued in terms of this article the

competent authority may issue, amend or revoke any Financial

Institutions Rule within the meaning of this Act to better carry out and

implement the provisions of the regulations.

Regulations made under this Act and any amendment or

revocation of such may be made in the English language only.

(1) It shall be the duty of the competent authority to carry

out the functions assigned to it by this Act and any regulations and,

or Rules issued thereunder and to ensure that financial institutions

carrying out business in or from Malta comply with this Act, any

regulations and, or Rules issued thereunder and with the conditions

of their licence or registration. In carrying out such functions, the

competent authority shall ensure that the controls exercised for

checking continued compliance in terms of this Act, and any

regulations and, or Rules issued thereunder are proportionate,

adequate and responsive to the risks to which financial institutions

are exposed. The said functions consist, inter alia , of the

following

(a) to require the financial institution, in terms of article

14, to provide any information needed to monitor

compliance specifying the purpose of the request as

appropriate and the time limit by which the

information is to be provided;

(b) to carry out on-site inspections at the financial

institution, at any agent or branch thereof providing

services under the responsibility of the financial

institution, or at any entity to which activities are

outsourced;

(c) to withdraw, suspend or restrict any licence or

registration pursuant to article 6; and

(d) to issue non-binding recommendations and guidelines,

Rules within the meaning of this article and binding

administrative provisions in terms of this Act and any

regulations and, or Rules issued thereunder.

(1A) Notwithstanding the requirements of article 5A(1), (2A)

and (2) and Articles 7 and 9 of the Payment Services Directive, the

competent authority may take steps as referred to in sub-article (1)

to ensure sufficient capital for the activities carried out by a

financial institution and, or to ensure compliance with Article

5(1B), in particular where the activities of a financial institution

other than those listed in the Schedules impair or are likely to

impair the financial soundness of the financial institution

concerned.

(1B) Without prejudice to the procedures for the withdrawal of a

licence or a registration, or to article 22, or to national provisions of

criminal law and to any other power granted to the competent

authority under the provisions of this Act and any regulations and, or

Rules issued thereunder or under the provisions of the Malta Financial

Services Authority Act, where the competent authority is satisfied

that a financial institution’s conduct amounts to a breach of any of the

provisions of this Act or any regulations and, or Rules issued

thereunder, or of any directive, restriction and, or suspension imposed,

or of any other request or order made by the competent authority

pursuant to the provisions of this Act or any regulations and, or Rules

issued thereunder, or the Malta Financial Services Authority Act, or a

licence condition, or a condition required for the granting of a licence

FINANCIAL INSTITUTIONS

or a registration; the competent authority may adopt or impose on any

such financial institution and, or on those who effectively control the

business of such financial institution, any measures as it may deem

appropriate aimed specifically at ending observed breaches or the

causes of such breaches.

(1C) The competent authority shall possess all powers and

adequate resources necessary for the performance of its duties and

shall guarantee independence from economic bodies and avoid

conflicts of interest.

(2) The competent authority may issue, amend or revoke any

Financial Institutions Rule as may be required for carrying into effect

any of the provisions of this Act and any regulations and, or Financial

Institution Rules issued thereunder. The said Rules may establish

additional requirements and conditions in relation to activities of

financial institutions, the conduct of their business, their relations with

customers, the public and other parties, their responsibilities to the

competent authority, reporting requirements and any other matters, as

the competent authority may consider appropriate.

(2A) The competent authority may issue, amend or revoke any

Financial Institutions Rule as may be required for the purpose of

implementing any guidelines, recommendations, decisions,

opinions or any other instrument issued by the EBA, as may be

required.

(2B) A Financial Institutions Rule shall be binding on financial

institutions and others as may be specified therein.

(3) A Financial Institutions Rule and any amendment or

revocation thereof shall be officially communicated to all financial

institutions and the competent authority shall make copies thereof

available to the public, upon request.

(4) Financial Institutions Rules made under this Act may

provide for different regulatory requirements to be applicable to

different classes of financial institutions, licensed under this Act, to

ensure that business is conducted in a prudent manner.

(5)

Deleted by XXVI.2019.47.

(6) The competent authority shall, as soon as possible, notify

the European Commission that it has been designated in part, to

ensure and monitor the effective compliance with the Payment

Services Directive. The competent authority shall inform the

European Commission of the provisions of the Payment Services

Directive for which it is responsible. The competent authority that

has been designated in part, to ensure and monitor effective

compliance with the Payment Services Directive, shall immediately

notify the European Commission of any subsequent change

concerning its designation and competence.

(7) Nothing in this Act shall be taken to imply that the

competent authority is required to supervise activities of financial

institutions other than for the provision of the services listed in the

Schedules to this Act.

(8) The powers, functions and duties conferred upon the

competent authority in this Act and any regulations and, or Rules

issued thereunder transposing Title II of the Payment Services

Directive, shall be vested in the competent authority when the

competent authority is the home Member State.

(9) The competent authority shall ensure that financial

institutions do not derogate to the detriment of their customers,

from the provisions of this Act and any regulations and, or Rules

issued thereunder, except where explicitly provided for therein

Provided that financial institutions may, without prejudice to

article 10, decide to grant more favourable terms to their customers.

Any measure taken by the competent authority, or by the

competent authority in collaboration with the Central Bank as

applicable, pursuant to the European Passport Rights for Financial

Institutions Regulations and article 23(1) involving administrative

penalties or restrictions on the exercise of a European right shall be

properly justified and communicated to the payment institution, the

electronic money institution or the account information service

provider concerned

Provided that article 25(2) and the European Passport

Rights for Financial Institutions Regulations shall be without

prejudice to the obligations of the Financial Intelligence Analysis

Unit established in terms of the Prevention of Money Laundering

Act and the obligations of those authorities in other Member States

which, under Directive (EU) 2015/849 and Regulation (EU) 2015/

847, in particular under Article 48(1) of Directive (EU) 2015/849

and Article 22(1) of Regulation (EU) 2015/847, are responsible for

supervising or monitoring compliance with the requirements laid

down in those instruments.

(1) A financial institution shall submit to the competent

authority such information and documentation as the competent

authority may require either on a periodic and, or on an ad hoc basis,

in the discharge of its duties under this Act and any regulations and, or

Rules issued thereunder or any other law, and the competent authority

may enquire into and ask for clarification of any information

submitted.

(2) All periodic information and documentation required under

sub-article (1) shall be submitted in such form and at such periods as

the competent authority may from time to time prescribe by any

Financial Institutions Rules and, or at such periods as the competent

authority may require in writing.

(3)

Deleted by XXVI.2019.49.

(4) The provisions of this article shall also apply to all branches,

agencies or offices in Malta of a financial institution which is not

incorporated in Malta.

(5) A financial institution shall submit to the Central Bank such

information as the said Bank may require in the discharge of its duties

and the Central Bank may enquire into and ask for clarifications on

FINANCIAL INSTITUTIONS

any information so submitted.

(6) The competent authority may, by notice in writing, require

a financial institution or any of its officers to do all or any of the

following

(a) to furnish to the competent authority, at such time and

place and in such form as it may specify, such

information and documentation as it may require and

of such description as may be so specified in the

notice;

(b) to furnish to the competent authority any information

or documentation aforesaid verified in such manner as

it may specify; and, or

(c) to attend before the competent authority, or before a

person appointed by it, at such time and place as it

may specify, to answer questions and provide

information and documentation as the competent

authority may reasonably require, for the performance

of its functions under this Act and any regulations and,

or Rules issued thereunder.

(7) The competent authority may retain copies of any documents

submitted in terms of this article.

(8) Where the person required to provide information or

documentation under this article does not have the relevant

information or documentation, he shall disclose to the competent

authority where, to the best of his knowledge, that information or

documentation is, and the competent authority may require any

person, whether indicated as aforesaid or not, who appears to it to

be in possession of that information or documentation, to provide

it.

(9) A statement made and documentation provided in

pursuance of any requirement under this article may be used in

evidence against the person making the statement or providing the

documentation as well as against any person to whom they relate.

(10) Where the competent authority has appointed a person

under sub-article (6)(c), such person shall, for the purposes of

carrying out his functions under his appointment, have all the

powers conferred on the competent authority by this article and a

requirement made by him shall be deemed to be and have the same

force and effect as a requirement of the competent authority.

(11) The competent authority may require a person it has

appointed under sub-article (6)(c) to submit a report in such form

as it may specify.

(12) The competent authority may also exercise the powers

conferred by sub-articles (1) and (6) in relation to any person who

is or has at any relevant time been -

(a) a holding company, subsidiary or a company which is

a connected person of that financial institution;

(b) a subsidiary or a company which is a connected person

of a holding company of that financial institution;

(c) a holding company of a subsidiary of that financial

institution;

(d) a controller of that financial institution;

(e) a qualifying shareholder of that financial institution; or

(f)

an agent appointed in terms of article 8A.

(13) The competent authority may also exercise its powers under

this article where it has reasonable grounds for suspecting that a

person is guilty of committing any offence under this Act or any

regulations and Rules issued thereunder.

(1) The competent authority may, whenever it deems

necessary or expedient, appoint an inspector or inspectors to

investigate and report on the affairs, nature, conduct or state of a

financial institution’s business or any particular aspect of it, or to

report on the ownership or control of the financial institution.

(2) An inspector appointed under sub-article (1) -

(a) may also, if he thinks it necessary or expedient for the

purposes of that investigation, investigate the affairs of

any other person as prescribed under article 14(12);

(b) shall have and may exercise all the powers conferred

on the competent authority by article 14, and any

requirement made by him shall be deemed to be and

have the same force and effect as a requirement of the

competent authority;

(c) may, and if so directed by the competent authority

shall, make interim reports and on the conclusion of

his investigation shall make a final report to the

competent authority.

(3) The competent authority shall have the power to order that

all expenses of, and incidental to, an investigation pursuant to this

article be paid by the persons or financial institution concerned.

(4) Any investigation being carried out pursuant to sub-articles

(1) and (2) shall be notified in writing to the person under

investigation.

(5) It shall be the duty of every person who is or was an officer,

employee, agent, or auditor of a person under investigation in terms

of this Act and any regulations and, or Rules issued thereunder, or

any person appointed to draw up a report in respect of that person

under this Act and any regulations and, or Rules issued thereunder

and any person who has a qualifying shareholding in, or is a

controller the said person under investigation

(a) to produce to the inspector or inspectors appointed

under sub-article (1), within such time and at such

place as may be required by the inspector or inspectors

concerned, all the documents relating to the person

under investigation which are in his custody or power;

(b) to attend before the inspector or inspectors at such

FINANCIAL INSTITUTIONS

time and place as the inspector or inspectors may

require; and, or

(c) otherwise to give to the inspector or inspectors all

assistance in connection with the investigation which

he is reasonably able to give, and the inspector or

inspectors concerned may retain copies of or extracts

from, any documents produced to them under

paragraph (a).

(6) An inspector exercising powers by virtue of an appointment

under this article shall, if so required, produce evidence of his

authority.

(7)

No person shall

(a) without any lawful excuse fail to produce any

document which it is his duty to produce under sub-

article (5);

(b) without any lawful excuse fail to attend before an

inspector or inspectors appointed under sub-article (1),

when required to do so; or

(c) without any lawful excuse fail to answer any question

which is put to him by an inspector or inspectors

appointed under sub-article (1) with respect to any

person who is under investigation.

(8) A statement made by a person in compliance with a

requirement imposed by virtue of this article may be used as evidence

against him.

(1)

Any officer, employee or agent of the competent

authority, or an inspector appointed under article 15(1), may on

producing evidence of his authority, if required to do so, enter into

premises occupied by a person on whom a notice has been served

under article 14, or whose affairs are being investigated under article

15, for the purpose of obtaining the information or documents required

by that notice, or otherwise for the purpose of the investigation, and of

exercising any of the powers conferred by the said articles.

(2) Where any officer, employee or agent of the competent

authority, or an inspector appointed under article 15(1), has

reasonable cause to believe that if such notice as is referred to in

sub-article (1) were served it would not be complied with, or that

any documents to which it could relate would be r em oved,

tampered with or destroyed, such person may on producing

evidence of his authority, if required to do so, enter into any

premises referred to in sub-article (1) for the purpose of obtaining

any information or documents specified in the authority, being

information or documents that could have been required under such

notice, as is referred to in sub-article (1).

(3) For the purposes of any action taken under the provisions of

this article, the competent authority may request the assistance of

the Commissioner of Police, who may for such purpose exercise

such powers as are vested in him for the prevention of criminal

offences and the enforcement of law and order

Provided that where an entry as is mentioned in this article

involves premises that are occupied for the purpose of habitation, such

entry shall be carried out in the presence of an officer of the Police of a

rank not below that of inspector and shall not take place between nine

in the evening and five in the morning.

(1)

Where the competent authority has reasonable

grounds for suspecting that a person has contravened or has failed to

comply with any of the provisions of this Act and any regulations and,

or Rules issued thereunder, it may, by notice in writing, require that

person or any other person

(a) to provide at such place as may be specified in the

notice, and either forthwith or at such time as may be

so specified, such information as it may reasonably

require for the purpose of investigating the suspected

contravention or failure to comply;

(b) to produce, at such place as may be specified in the

notice, and either forthwith or at such time as may be

so specified, such documents or documents of such

description as may be specified therein, which it may

reasonably require for that purpose; and, or

(c) to attend at such place and time as may be specified in

the notice and answer questions relevant for

determining whether such a contravention or failure to

comply has occurred.

(2)

The competent authority or their duly authorised officer,

employee or agent may retain copies of or extracts from any

documents submitted in terms of this article.

(3)

Any officer, employee or agent of the competent authority

may between five o’clock in the morning and nine o’clock at night, on

producing, if required, evidence of his authority, enter into any

premises occupied by a person on whom a notice has been served

under sub-article (1), for the purpose of obtaining the information or

the documents required by the notice, asking the questions referred to

in paragraph (c) of sub-article (1) and, or exercising the powers

conferred by sub-article (2).

(4)

No person shall without any lawful excuse fail to comply

with a requirement imposed on him under this article or intentionally

obstruct a person in the exercise of the rights conferred by sub-article

(3).

(5) A statement made by a person in compliance with a

requirement imposed by virtue of this article may be used as evidence

against him.

FINANCIAL INSTITUTIONS

No person who knows or suspects that an investigation is

being or is likely to be carried out under this Act, or an investigation is

being or is likely to be carried out into the suspected commission of

any breach under this Act and any regulations and, or Rules issued

thereunder may falsify, conceal, destroy or otherwise dispose of, or

cause or permit the falsification, concealment, destruction or disposal

of documents that he knows or suspects are, or would be relevant to

such an investigation, unless he proves that he had no intention of

concealing facts disclosed by such documents from persons carrying

out such an investigation.

(1)

If, whether from any report made under article 14 or

15 or otherwise, it appears to the competent authority that any of the

circumstances indicated in article 6(1) apply, the competent authority

may, without prejudice to the powers of the said authority to impose

restrictions, or to withdraw or suspend a licence or a registration under

the provisions of article 6(1)

(a) require the financial institution forthwith to take such

steps as the competent authority may consider

necessary to remedy or rectify the matter;

(b) appoint a competent person to advise the financial

institution in the proper conduct of its business;

(c) appoint a competent person to take charge of the assets

of the financial institution or any portion of them for

the purpose of safeguarding the interests of the

integrity of the financial system in Malta;

(d) appoint a competent person to take over the business

of the financial institution, either to carry on that

business, or to carry out such other function or

functions in respect of such business or part thereof, as

the competent authority may direct;

(e) require the financial institution to wind up its business

or to wind up its business in Malta;

(f)

appoint a competent person to act as liquidator for the

purpose of winding up the affairs of the financial

institution; and, or

(g) determine the remuneration to be paid by the financial

institution to any competent person appointed under

this sub-article.

(2)

Upon receipt of a report or information otherwise received

as is mentioned in sub-article (1), the competent authority shall inform

the Central Bank.

(3)

Where a competent person is appointed by the competent

authority

(a) under sub-article (1)(b), the financial institution shall

act in accordance with the advice given by such

person, unless and until the competent authority

otherwise directs;

(b) under sub-article (1)(c), the financial institution shall

deliver to such person all the assets of which he is

placed in charge, and all the powers, functions and

duties of the financial institution in respect of those

assets, whether exercisable by the company in the

general meeting or by the board of directors, or by any

other person, including the legal and judicial

representation of the financial institution, shall be

exercisable by and vested in him to the exclusion of

the financial institution; and, or

(c) under sub-article (1)(d), the financial institution shall

submit its business to the control of such person and

shall provide him with such facilities as he may

require in order to carry on that business, or to carry

out the functions assigned to him under that paragraph,

and all the powers, functions and duties of the

financial institution, whether exercisable by the

company in the general meeting or by the board of

directors, or by any other person, including the legal

and judicial representation of the financial institution

in all matters shall be exercisable by and vested in

him, to the exclusion of any other person.

(4)

Where a person is appointed under sub-article (1)(c) or (d)

(a) any function, power or duty exercisable by any other

person, including the curator of a bankrupt, or any

other person appointed by or under any other law and

relating to any assets or business of which the person

appointed under either of the paragraphs aforesaid is

placed in charge or in control, shall unless or until the

competent authority otherwise directs, or an express

provision of the law specifically provides otherwise,

cease to be so exercisable;

(b) the person appointed under either of the paragraphs

aforesaid shall in respect of such property,

partnerships, firms or other business as the competent

authority may specify, and in which the financial

institution has an interest, whether directly or

indirectly, including any interest arising from

advances or loans made, or credit facilities given, or

any liability undertaken, have such powers, functions

and duties, including legal and judicial representation,

as the competent authority may direct, and any such

power, function or duty shall be exercisable by and

vested in such person, to the exclusion of any other

person

Provided that

(i)

the competent authority shall have the

power to direct that all or any of the powers, functions or

duties aforesaid should be exercisable by any other

FINANCIAL INSTITUTIONS

person, and in any such case, with effect from such date

or dates as the competent authority may specify and

unless and until the competent authority otherwise

directs, the powers, functions and duties to which the

direction of the competent authority applies shall be

exercisable by and vested in such other person appointed

for the purpose, to the exclusion of all others;

(ii)

where the competent authority is of the

opinion that the financial institution has ceased to have

any interest as aforesaid, it shall direct that any powers,

functions and duties exercisable under this paragraph

shall cease to be so exercisable, but any such direction

shall not affect anything done, or omitted to be done by

virtue or by reason of any of the aforesaid powers,

functions or duties;

(iii) the person appointed under either of the

paragraphs aforesaid shall have the power to require any

other person to provide him with such facilities as he

may deem necessary to carry out any of the powers,

functions or duties under this article;

(iv) the provision of law relating to bankruptcy

and in particular Part III of the Commercial Code shall

cease to apply to, and shall cease to operate in respect of

any property, partnership, firm or other business

specified by the competent authority under paragraph

(b), unless and until, or except to the extent that the

competent authority otherwise directs; and in any such

case the person appointed as aforesaid shall, subject to

any directions of the competent authority given in the

interest of the creditors, act as if those provisions did not

exist and as if any declaration of bankruptcy had not

been made;

(v)

any person appointed by the competent

authority under any of the provisions of this article shall

submit six monthly reports of his activities and annual

accounts of all transactions carried out by him in the

performance of his functions, audited by an independent

auditor, to the Minister who will place such reports and

accounts on the Table of the House of Representatives

within fifteen days.

(5)

Where a person is appointed under sub-article (1)(f), such

person shall be the liquidator of the company for all purposes of law to

the exclusion of any other person.

(6)

The

provisions

of

this

article

shall

have

effect

notwithstanding any other provision of any enactment, and

notwithstanding any deed, contract, instrument or other document

whatsoever.

(7)

The foregoing provisions of this article vesting exclusive

powers of representation in a person appointed by the competent

authority thereunder shall apply also to any act or proceedings

commenced or instituted before such representation is vested as

aforesaid, and in respect of any such act or proceedings, any other

person acting or purporting to act, or in respect of whom action is

taken in that capacity shall cease to be a party to and shall be excluded

from any such act or proceedings.

(8) No person shall in any way obstruct a person appointed under

sub-article (1) in the performance of any of his functions, powers or

duties under this article.

ACCOUNTING, STATUTORY AUDIT AND AUDITORS

(1)

Directive 86/635/EEC, Directive 2013/34/EU and

Regulation (EC) No. 1606/2002 shall, mutatis mutandis, apply to

financial institutions.

(2)

Unless exempted under Directive 2013/34/EU and, where

applicable, D i r e c t i v e 8 6 / 6 3 5 / E E C , the annual accounts and

consolidated accounts of financial institutions shall be audited by

statutory auditors or audit firms within the meaning of Directive

2006/43/EC of the European Parliament and of the Council of 17 May

2006 on statutory audits of annual accounts and consolidated accounts,

amending Council Directives 78/660/EEC and 83/349/EEC and

repealing Council Directive 84/253/EEC, as amended from time to

time.

(3)

Payment institutions and electronic money institutions shall

provide to the competent authority separate accounting information for

payment services and for the activities referred to in paragraphs 3(a),

(b) and (c) of the Second Schedule, that shall be subject to an auditor’s

report, as may be stipulated in a Financial Institutions Rule.

(4)

The auditor’s report referred to in sub-article (3) shall be

prepared, where applicable, by the statutory auditors or an audit firm.

Every financial institution shall, not later than four months

from the closing of its financial year or at any other time as may be

authorised in writing by the competent authority

(a) forward to the competent authority, and

(b) make available to the public, in paper or in electronic

form,

a copy of its audited financial statements or consolidated financial

FINANCIAL INSTITUTIONS

statements, as may be applicable, drawn up and published in such

manner as may be specified in accordance with a Financial Institutions

Rule.

(1) (a) Every financial institution shall each year appoint an

approved statutory auditor or audit firm whose duty shall be to audit

the annual accounts and consolidated accounts of the financial

institution in accordance with article 17A.

(b) For the purpose of this article an approved auditor

shall be a person who is qualified to be an auditor in accordance

with the Companies Act

Provided that in the case of a financial institution not

incorporated in Malta the competent authority may grant exemption

from paragraph (b) subject that the same does not materially detract

from the main objects of this article.

(2) If a financial institution fails to appoint an auditor under

sub-article (1) or, at any time fails to fill any vacancy in the office

of an auditor, the competent authority shall have the power to

appoint an auditor for that institution and shall fix the remuneration

to be paid by that financial institution to such auditor.

(3) A financial institution shall forthwith give written notice to

the competent authority

(a) on the appointment of its auditors;

(b) if it proposes to give notice to its shareholders to -

(i)

replace its auditors at the expiration of their term

of office;

(ii) remove its auditors before the expiration of their

term of office;

(c) if the auditors cease to be auditors of the financial

institution for any reason other than those in paragraph

(b).

(4) The competent authority may require a financial institution

to change its appointed auditors where, in the competent authority’s

opinion, such auditors are considered unfit for this appointment, at

any time during their term of office.

(5) An auditor shall immediately inform the competent

authority in writing if

(a) he resigns;

(b) he does not seek to be re-appointed; or

(c) he decides to qualify the audit report.

(6) If, in his capacity as an auditor of a financial institution, or due

to a direct request by the competent authority under article 14 or 15, an

auditor becomes aware of any matter which relates to and may have a

serious adverse effect upon the stability and soundness of the financial

institution, or a branch or office in Malta of a financial institution not

incorporated in Malta, or the integrity of the financial system in Malta,

he shall immediately inform the competent authority through the

financial institution’s management, or if circumstances so warrant,

inform directly the competent authority.

(6A) In his capacity as an auditor of a financial institution, or

due to a direct request by the competent authority, an auditor shall

promptly notify the competent authority of any fact or decision

concerning that financial institution of which that auditor has

become aware while carrying out his tasks, that is liable to

(a) constitute a material breach of this Act and of any

regulations and, or Rules issued thereunder which set

out the licensing or registration conditions, or which

specifically govern the activities of financial

institutions;

(b) affect the ongoing functioning of the financial

institution; or

(c) lead to refusal to certify the accounts or to the

expression of reservations

Provided that an auditor shall also have the duty to

report any fact or decision of which that auditor

becomes aware in the course of carrying out his tasks,

in an undertaking having close links resulting from a

control relationship with the financial institution

within which he is carrying out that task

Provided further that the competent authority may

require the replacement of an auditor if that auditor

acts in breach of his obligations under this sub-article.

(6B) Any disclosure in good faith to the competent authority

pursuant to sub-article (6A) shall not constitute a breach of any

restriction on disclosure of information imposed by contract or by any

legislative, regulatory or administrative provision and shall not expose

such persons to any liability. Unless there are compelling reasons not

to do so, such disclosure shall be made simultaneously to the board of

directors of the financial institution.

(7) In so far as the provisions of this article are inconsistent

with the provisions of the Companies Act, the provisions of this

article shall prevail and the provisions of the said Act shall, to the

extent of the inconsistency, not apply to financial institutions.

No duty, including professional secrecy, to which

(a) an auditor of a financial institution may be subject

shall be regarded as contravened by reason of his

communicating in good faith to the competent

authority, whether or not in response to a request from

it, any information or opinion on a matter of which the

auditor has become aware in his capacity as auditor of

that institution and that is relevant to any functions of

the competent authority under the provisions of this

Act, or is required to be communicated by virtue of

this Act and, or any regulations or Rules issued

thereunder; and

FINANCIAL INSTITUTIONS

(b) a person appointed to make a report under article 14 or

15 may be subject shall be regarded as contravened by

reason of communicating in good faith to the

competent authority any matter which relates to the

business or affairs of the financial institution in

relation to which the report is made.

CO-OPERATION AND SHARING OF INFORMATION

(1) Without prejudice to sub-article (1A) and on the basis of

international agreements or upon reciprocity agreements, the

competent authority may, in the case of a financial institution or

branch operating in Malta, which is totally or partially owned by a

foreign person, or in the case of a financial institution totally or

partially owned by Maltese residents that is operating abroad, share its

supervisory duties with an overseas regulatory authority.

(1A) The competent authority shall co-operate with European

regulatory authorities and, where appropriate with the ECB, the

Central Bank and the national central banks of the other Member

states, the EBA and other relevant authorities designated under

European Union, or national law applicable to payment service

providers.

(2) The competent authority may further exchange information

with the following

(a) overseas regulatory authorities responsible for the

licensing and, or registration, and for the supervision

of payment institutions, electronic money institutions

and, or account information service providers, solely

for their supervisory and regulatory purposes and, or

for such other purposes as may be specifically agreed

upon with the competent authority;

(b) the ECB, other Member States’ central banks and the

Central Bank, in their capacity as monetary and

oversight authorities and, where appropriate, other

public authorities responsible for overseeing payment

and settlement systems;

(c) other relevant authorities designated under the

Payment Services Directive, Directive 2015/849, and

other European Union law applicable to payment

service providers, such as laws applicable to money

laundering and funding of terrorism; and, or

(d) the EBA, in its capacity of contributing to the consistent

and coherent functioning of supervising mechanisms as

referred to in paragraph (a) of Article 1(5) of Regulation

(EU) No. 1093/2010.

(3) The competent authority may further, on the basis of

international agreements, or upon reciprocity agreements, disclose

information to the overseas regulatory authorities, in particular, in

the case of infringements or suspected infringements by an agent, a

branch, or an entity to which activities are outsourced

Provided that the competent authority may exchange

information and communicate with other overseas regulatory

authorities either upon their request or on its own initiative

Provided further that in the case of cross-border consumer

disputes, the competent authority may use any of its powers under this

article and shall co-operate and exchange information for the purpose

of investigating and resolving any such disputes.

(4) The competent authority shall notify the relevant European

regulatory authority whenever it intends to carry out an on-site

inspection in the territory of the latter

Provided that the competent authority may upon agreement

delegate to the relevant European regulatory authority the task of

carrying out on-site inspections of the institution concerned.

(5) The competent authority shall further, upon a request in

writing, disclose to the ECB and, or to the Central Bank any

information in the possession of or accessible to the competent

authority that is required for the discharge of the duties of the ECB

and, or the Central Bank under the law.

(6) A person appointed under article 14 or article 15 shall be

given access to any accounts, returns, or other information with

regard to any financial institution which are in the possession of the

competent authority.

(7) There shall be meetings held between a financial

institution, its appointed auditors and the competent authority on a

trilateral or bilateral basis as circumstances may warrant. These

meetings may be called by any of the parties concerned but shall

always be chaired by the competent authority.

(8) The competent authority and the Central Bank shall

periodically discuss matters of mutual interest regarding financial

institutions, and they shall at all times afford such co-operation to

each other as may be necessary for the discharge of their respective

duties.

(1)Where the competent authority considers that in a

particular matter, cross-border co-operation with European

regulatory authorities referred to in Articles 26, 28, 29, 30 or 31 of

the Payment Services Directive does not comply with the relevant

conditions set out in those provisions, it may refer the matter to the

EBA and request its assistance in accordance with Article 19 of

Regulation (EU) No. 1093/2010.

(2) Where the competent authority has referred the matter to the

EBA and requested its assistance in accordance with sub-article (1), or

where a European regulatory authority has referred a matter to the

EBA and requested its assistance in accordance with Article 27(1) of

the Payment Services Directive, it shall defer its decision pending

resolution by the EBA under Article 19 of Regulation (EU) No.

1093/2010.

FINANCIAL INSTITUTIONS

In ensuring and monitoring effective compliance with the

provisions of this Act and any regulations and, or Rules issued

thereunder transposing the P a y m e n t S e r v ic e s D ir e c t i ve , the

competent authority shall collaborate closely with the Central Bank

and with the Arbiter as may be required, in order to ensure that every

authority may discharge its respective duties effectively.

APPEALS, REMEDIES, DISQUALIFICATION AND

CONFIDENTIALITY

Any person who is aggrieved by a directive, decision and, or

measure taken by the competent authority pursuant to the Act and any

regulations or Rules issued thereunder, may appeal to the Tribunal

within such period and under such conditions as established under the

Malta Financial Services Authority Act.

(1)Any person who

(a) fails to comply with any directive issued by the

competent authority under this Act;

(b) without reasonable excuse alters, suppresses, conceals,

destroys or refuses to produce any document which he

is lawfully required to produce by any person under

this Act and any regulations and, or Rules issued

thereunder;

(c) furnishes information or makes a statement, promise

or forecast which he knows to be misleading, false or

deceptive, or dishonestly conceals any material facts;

(d) recklessly furnishes information or recklessly makes

(dishonestly or otherwise) a statement, promise or

forecast which is misleading, false or deceptive;

(e) fails to comply with any lawful order or requirement

of the Financial Services Tribunal; or

(f)

contravenes or fails to comply with any of the

provisions of articles 3(1), 3(1A), 9, 16A(4), 16B,

24A(b), 25(2) and (4),

shall be guilty of a criminal offence.

(2)

Deleted by XXVI.2019.64.

(3) Any person who is knowingly a party to, or procures or aids

and abets the commission of any offence under sub-article (1) shall

be guilty of an offence and shall be liable to the same penalties as

the principal offender.

(4) A person guilty of a criminal offence under the provisions of

this article shall be liable on conviction to a fine (multa) not exceeding

five hundred thousand euro (€500,000) or to a term of imprisonment

not exceeding three years, or to both such fine and imprisonment.

(5) No criminal proceedings for a criminal offence against this

Act shall be commenced without the consent of the Attorney General.

(6) The provisions of this Act shall not affect any criminal

proceedings that may be competent under any other law.

(1)Without prejudice to the procedures for the withdrawal,

suspension or restriction of a licence or a registration and to any

other power granted to the competent authority under the

provisions of this Act and any regulations and, or Rules issued

thereunder, or under the provisions of the Malta Financial Services

Authority Act, where any person fails to comply with any of the

conditions imposed in a licence and, or where the competent

authority is satisfied that a person’s conduct amounts to a breach of

any of the provisions of this Act and of any regulations and, or

Rules issued thereunder, the competent authority may, by notice in

writing and without recourse to a court hearing, impose on such

person an administrative penalty which may not exceed one

hundred and fifty thousand euro (€150,000) for each infringement

or failure to comply, as the case may be, aimed specifically at

ending such breaches or the causes of such breaches.

(1A) Any administrative penalty imposed by the competent

authority under sub-article (1) shall be effective, proportionate and

dissuasive, and shall be imposed in accordance with this article.

(1B) The Minister may, acting on the advice of the competent

authority, make regulations as shall be deemed appropriate to

provide for the establishment and imposition of administrative

penalties and other administrative measures on licence holders or

others as may be specified therein.

(2)

The imposition by the competent authority of an

administrative penalty in terms of this article shall be without

prejudice to any other consequence of the act or omission of the

offender under civil or criminal law

Provided that in all cases where the competent authority

imposes an administrative penalty in respect of anything done or

omitted to be done by any person, and such act or omission also

constitutes a criminal offence, no proceedings may be taken or

continued against the said person in respect of such criminal offence.

(3)

The provisions of article 16(4) of the Malta Financial

Services Authority Act shall, mutatis mutandis, apply with reference

to a "notice" therein being construed as a reference to a notice as

referred to in sub-article (1) of this article.

(4)

The competent authority may, unless such disclosure would

seriously jeopardise the financial markets, or cause disproportionate

damage to the parties involved, publish any administrative penalty

imposed in terms of this article and, or in terms of this Act

Provided that in cases where, in terms of article 21, an appeal

has been filed by the person on whom such administrative penalty or

penalties have been imposed, the competent authority shall, without

FINANCIAL INSTITUTIONS

undue delay, also publish on its official website and through any other

means it considers appropriate, information on the status of the appeal

and the outcome thereof.

No person

(a) who has been adjudged bankrupt, or has made a

composition with his creditors, or has been an officer

of a financial institution which has had its licence or

registration withdrawn under article 6(1) and who has

not been exempted in writing by the competent

authority from the provision of this article; or

(b) who is interdicted or incapacitated or who has been

involved in money laundering or found guilty of a

crime affecting public trust, theft, fraud, extortion or

of knowingly receiving property obtained by theft or

fraud,

shall act or continue to act as an officer of a financial institution.

Every officer of a financial institution shall take all

reasonable steps

(a) to secure compliance by the financial institution with

all of the provisions of this Act and any regulations

and, or Rules issued thereunder, and with the

conditions of its licence or registration; and

(b)

to ensure that no incorrect information is provided to

the competent authority either wilfully or as the result

of gross negligence.

(1) Nothing in this Act or any regulations and Rules

issued thereunder shall authorise the competent authority to

enquire or cause an enquiry to be made in a financial institution

into the affairs of any individual customer of a financial institution

except -

(a) for the purpose of ensuring compliance with any of the

provisions of this Act; or

(b) where it is believed that the customer’s exposure could

contribute a threat to the integrity of the country’s

financial system.

(2) No person, including past and present officers of a financial

institution or of a branch thereof, and agents of a financial

institution, shall disclose any information relating to the affairs of

that institution or of a customer of that institution which he has

acquired in the performance of his duties or in the exercise of his

functions under this Act and any regulations and, or Rules issued

thereunder except

(a) when authorised to do so under any of the provisions

of this Act;

(b) for the purpose of the performance of his duties or in

the exercise of his functions;

(c) when lawfully required to do so by any court or under

a provision of any law.

(3) Where an officer of a financial institution has reason to believe

that a transaction or a proposed transaction could involve money

laundering, or the funding of terrorism, he shall act in compliance with

the reporting and other obligations set out in any anti-money

laundering and combating the funding of terrorism legislation and

such disclosure shall not constitute a breach of confidentiality.

(4) Without prejudice to the provisions of article 20, persons

who work or who have worked for the competent authority, as well

as experts acting on behalf of the competent authority, without

prejudice to cases falling within the ambit of criminal law, are

bound by the duty of professional secrecy. The said persons and

experts shall not disclose information obtained from financial

institutions in the course of carrying out supervisory and other

duties and which is governed by the duty of professional secrecy,

unless such disclosure of information be done in summary or

collective form, so as not to enable the identity of the financial

institution, to whom such information relates, to be ascertained

Provided that the said officers, auditors or experts may divulge

such information, for the purpose of the performance of their duties, or

the exercise of their functions, or when lawfully required to do so by

any court or under a provision of any law.

(5) Notwithstanding the provisions of any other law, a financial

institution may, if circumstances so warrant, communicate any

information which is in its possession and which relates to the affairs

of a customer, to other members of the group of which that financial

institution forms part.

(6) For the purposes of sub-article (5), the term "group" shall

include any body corporate registered or operating in Malta or in a

foreign jurisdiction and forming part of the group, and that is further

licensed or otherwise authorised under the laws of Malta or of that

jurisdiction to carry out any activity equivalent to the business of

banking, or of the issuing of electronic money, or any of the activities

referred to in the First Schedule annexed to the Banking Act.

(7) Exchange of information on mutual or connected customers

between the financial institution, its holding company or its

subsidiaries where a credit facility has been or may be granted to

that customer shall not constitute a breach of confidentiality.

(8) Without prejudice to the provisions of article 20, any

exchange of information between the competent authority and any

European regulatory authority, the ECB, the Central Bank, national

central banks of other Member States, the EBA or any other

relevant authorities designated under European Union or national

law applicable to payment services providers in accordance with

article 20(1A) and (2) shall, in order to ensure the protection of

individual and business rights, also be subject to the obligation of

professional secrecy.

(9) The provisions of sub-articles (4) and (8) shall be applied

taking into account, mutatis mutandis, Articles 53 to 61 of the CRD.

FINANCIAL INSTITUTIONS

DATA PROTECTION

Deleted by XXVI.2019.70.

(1) Financial institutions may, when necessary to

safeguard the prevention, investigation and detection of payment

fraud, process personal data.

(2)

The provision of information to individuals about the

processing of personal data and the processing of such personal data

and any other processing of data for the purposes of this Act and any

regulations and, or Rules issued thereunder, shall be carried out in

accordance with any applicable data protection legislation.

(3)

Financial institutions shall only access, process and retain

personal data necessary for the provision of their services with the

explicit consent of those making use of their services.

MISCELLANEOUS

The objective of this Act is, in part, to implement the

provisions of the Payment Services Directive, in particular Titles I, II,

Chapter 4 of Title IV, Articles 95, 96, 100, 103 and 107 in part,

Articles 109, 111 and 115, and the Annexes thereof and of the

Electronic Money Directive and shall be interpreted and applied

accordingly.

(1)

Payment institutions that have been granted a licence

to provide payment services as referred to in paragraph (7) of the

Annex of Directive 2007/64/EC shall retain that licence for the

provision of those payment services which are considered to be

payment services as referred to in paragraph 2(c) of the Second

Schedule where, by 13 January 2020, the competent authority has

evidence that the requirements set out in paragraph (c) of Articles 7

and 9 of the Payment Services Directive are satisfied.

(2)

Legal persons that, before 12 January 2016, have performed

in Malta activities of payment initiation service providers and account

information service providers, shall, until eighteen months after the

date of entry into force of the regulatory technical standards referred to

in Article 98 of the Payment Services Directive, not be prohibited

from continuing to perform such activities in Malta in accordance with

the applicable regulatory framework.

(3)

Until individual account servicing payment service

providers comply with the regulatory technical standards referred to in

sub-article (2), account servicing payment service providers shall not

block or obstruct the use of payment initiation services or account

information services for the account that they are servicing.

(4) Financial institutions in possession of a licence on the entry

into force of this Act are required to include a statement that the

financial institution is licensed or registered, as applicable, by the

competent authority, together with the address of the competent

authority in any form or medium of marketing activity or

communication disseminated to the public, by any other means

considered appropriate within three months after the entry into force of

this article.

FINANCIAL INSTITUTIONS