RESIDUAL BALANCES FUND ACT

CHAPTER 618

RESIDUAL BALANCES FUND ACT

AN ACT to provide for the establishment of a Residual Balances Fund and

a framework for action that shall be taken in respect of the residual balances of

a credit institution which meets the criteria set out in this Act in order to

facilitate the dissolution and winding up process of such a credit institution

whilst allowing for a controlled release of the residual balances transferred

from that credit institution that ensures the prevention of money laundering and

the funding of terrorism.

11th August, 2020

ACT XLVIII of 2020.

(1)

The short title of this Act is Residual Balances Fund

Act.

(2)

The principal purpose and object of this Act is to facilitate

the dissolution and winding up process of a credit institution which

meets the criteria set out in this Act whilst allowing for a controlled

release of the residual balances transferred from that credit institution

that ensures the prevention of money laundering and the funding of

terrorism.

(1)

In this Act, unless the context otherwise requires

"anti-money laundering and counter-funding of

terrorism laws" means the Prevention of Money Laundering

Act, the Prevention of Money Laundering and Funding of

Terrorism Regulations and procedures and guidance issued in

terms of such regulations and which impose obligations on

credit institutions;

"application" means the written application that shall be

submitted by a transferred depositor to the Fund for the release

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of transferred deposit liabilities due to that transferred depositor,

in accordance with the provisions of this Act and any regulations

issued thereunder;

"the Authority" means the Malta Financial Services

Authority established by the Malta Financial Services Authority

Act;

"business of banking" means the same as the meaning

assigned to it under the Banking Act;

"Central Bank" means the Central Bank of Malta as

defined in the Central Bank of Malta Act;

"compliance review" means a review process in relation

to the transferred deposit liabilities transferred by a particular

transferring institution, with the aim of ascertaining whether the

said transferred deposit liabilities can be released or otherwise

by the Fund in accordance with the provisions of this Act and

any regulations issued thereunder;

"confidential information" means any information falling

under article 24(1);

"credit institution" means an undertaking that carries on

the business of banking and which has been granted a licence

under the Banking Act. For the avoidance of any doubt, this

shall also include a credit institution which has been subject to a

restriction or withdrawal of its licence in terms of article 9 of the

Banking Act;

"deposit" means the same as the meaning assigned to it in

the Banking Act and shall include electronic money;

"deposit assets" means the liquid assets of a credit

institution which are equivalent to the deposit liabilities held by

the same credit institution as at the transfer date;

"deposit liabilities" means the amount repayable by the

credit institution to its depositors as at the transfer date;

"deposit liability portfolio" means a portfolio created by

the Fund in accordance with article 18;

"deposit liability transfer" means the requirement

imposed by the Authority, by means of deposit liability transfer

instrument and subject to such terms and conditions as may be

set out therein, on a solvent credit institution for it to transfer its

deposit liabilities and the corresponding deposit assets to the

Fund, together with all of the property or rights pertaining to

such deposit liabilities and deposit assets, if the Authority

determines that the transferring conditions are met;

"deposit liability transfer instrument" means the

instrument by means of which the Authority may impose a

deposit liability transfer subject to such terms and conditions as

may be set out in the deposit liability transfer instrument;

"depositor" means the holder or, in the case of a joint

account, each of the holders, of a deposit and, in the case of a

deceased depositor, the successor in title of such depositor such

as an heir or a legatee of a deposit;

"electronic money" means the same as the meaning

assigned to it in the Financial Institutions Act;

"FIAU" means the Financial Intelligence Analysis Unit

established under the Prevention of Money Laundering Act;

"the Fund" means the Residual Balances Fund

established by article 3;

"funding of terrorism" means the same as the meaning

assigned to it in the Prevention of Money Laundering Act;

"liquid assets" means those assets which fall under level

1 and level 2A as laid down in Articles 10 and 11, or as such

Articles may be renumbered or substituted, of the Commission

Delegated Regulation (EU) 2015/61;

"the Minister" means the Minister responsible for the

regulation of financial services;

"money laundering" means the same as the meaning

assigned to it in the Prevention of Money Laundering Act;

"officer" means the same as the meaning assigned to it in

the Banking Act;

"property" means property and assets of every kind,

nature and description, whether movable or immovable, whether

corporeal or incorporeal, tangible or intangible, legal documents

or instruments evidencing title to, or interest in, such property or

assets and, without derogation from the generality of the

foregoing, shall include

(a)

any currency, whether or not the same, is a

legal tender in Malta, bills, securities, bonds, negotiable

instruments or any instrument capable of being

negotiable including one payable to bearer or endorsed

payable to bearer whether expressed in euro or any other

foreign currency;

(b)

cash or currency deposits or accounts with

any bank, credit or other institution as may be prescribed

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which carries or has carried on their business in Malta;

(c)

cash or items of value including but not

limited to works of art or jewellery or precious metals;

and

(d)

land or any interest therein;

"repayment conditions" means the conditions established

as part of the compliance review which shall, inter alia, be

satisfied for the transferred deposit liabilities to be released in

accordance with the provisions of this Act and of any

regulations issued thereunder;

"solvent credit institution" means a credit institution

which is not considered insolvent in accordance with the

provisions of the Companies Act;

"transfer date" means the date of the deposit liability

transfer instrument;

"transferred deposit assets" means the deposit assets of

the transferring institution, equivalent to its transferred deposit

liabilities, which are to be or have been transferred to the Fund

in accordance with the deposit liability transfer instrument;

"transferred deposit liabilities" means the deposit

liabilities of the transferring institution which are to be or have

been transferred to the Fund in accordance with the deposit

liability transfer instrument;

"transferred depositor" means any depositor in respect of

a transferred deposit liability;

"transferring conditions" means those conditions set out

in article 11(1);

"transferring institution" means a credit institution on

which a deposit liability transfer is imposed in accordance with

the provisions of this Act;

"working days" means the same as the meaning assigned

to it in the Banking Act.

(2)

In this Act and in any regulations made hereunder, if there is

any conflict between the English and the Maltese texts, the English text

shall prevail.

PART II

The Fund

(1)

There shall be a fund, that shall be called the Residual

Balances Fund.

(2) The Fund shall be a body corporate having a separate and

distinct legal personality, capable of entering into contracts, of

acquiring and disposing of property or rights for the purposes of

attaining its objects and carrying out its functions under this Act or any

other law, of suing and being sued in its own name, and of doing all

such things and entering into such transactions as may be necessary,

incidental or conducive to the attainment of its objects and the

performance of its functions under this Act.

(3)

The Fund shall be directed and managed by a Committee

established under article 7.

(4)

The Fund shall publish its audited accounts on an annual

basis and shall report to the Minister on its activities as the said

Minister may require but in any case not less than once a year. The

audited accounts and the annual report of the Fund shall be laid on the

Table of the House of Representatives by the Minister.

(1) Without prejudice to any other power or function

conferred to it by this Act or any other law, it shall be the function of

the Fund to take such measures as provided for by this Act as it may

consider appropriate or necessary for the purpose of attaining the

purposes and objects of this Act.

(2)

Following the release of the transferred deposit liabilities

and the settlement of other disbursements in accordance with the

provisions of this Act and any regulations issued thereunder, the Fund

shall use the remaining balances in the public interest inter alia for the

advancement of education, research, innovation, social purposes,

justice and the rule of law, employment initiatives, the environment and

public health.

(3)

Without prejudice to the functions and powers of the Fund

under this or any other Act, and any regulations issued thereunder, the

Fund shall have the following powers and functions

(a)

without prejudice to any confidentiality obligation

arising from any other law, to require any information, data and,

or documentation from any person as it may deem necessary for

the exercise of its powers and functions, or in connection

therewith

Provided that the right of the Fund to obtain

information, data and documentation from any person shall not

be restricted, obstructed or precluded by any confidentiality

obligation or other restrictive condition arising from the

contractual relationship between such person and any third

party;

(b)

to determine whether transferred deposit liabilities

should be released in accordance with the provisions of this Act

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and any regulations issued thereunder and, where it determines

that such transferred deposit liabilities should be released, make

the necessary arrangements therefor;

(c)

to manage and dispose of the property of the Fund

in accordance with the provisions of this Act and any regulations

issued hereunder;

(d)

to effect the closure and orderly winding-up of a

deposit liability portfolio;

(e)

to liaise, as it may deem necessary, with any local

body or authority in relation to any deposit liability transfer,

subject to the provisions of this Act and any regulations issued

thereunder;

(f)

to override rights of shareholders and, or the

officers of the transferring institution, including the requirement

for approval by shareholders and, or the board of directors (or

other similar governing body) of particular transactions in order

to permit a disposal of the transferring institution’s deposit

liabilities and deposit assets; and

(g)

to exercise such powers as may be assigned to it

under this Act or any regulations issued thereunder.

(4) The Minister may, in consultation with the Authority, make

regulations as shall be deemed appropriate

(a)

to assign functions and powers to the Fund; and

(b)

to better implement the provisions of this article

and this Act.

The transferring institution and its officers and employees

shall assist and collaborate with the Fund in order to enable it to

discharge its functions, and shall collate and transmit without any

undue delay such information, data and documentation as the Fund may

request from time to time. Any such disclosure of information, data or

documentation by the transferring institution, its officers and

employees to the Fund shall not constitute a breach of any restriction on

disclosure imposed by a contract or by any legislative, regulatory or

administrative provision.

(1)

The Fund may appoint a person, having the

necessary skills, to assist it in the fulfilment of any of its functions

under this Act or any regulations issued thereunder.

(2)

The Fund may from time to time delegate in writing any of

its functions and powers, on such matters and subject to such

conditions and modalities as may be specified in the delegation,

subject to the terms and duration as determined by the Fund, to one (1)

or more of the members of the Committee, a unit or function of the

Fund, any one (1) or more employees of the Fund, or any other person

as may be specified.

(3)

The Fund may

(a)

hold accounts with the Central Bank or any other

credit institution in Malta;

(b)

invest any of its own assets as may be directed by

the Committee from time to time having due regard to the

objective of this Act and the purpose for which the Fund has

been established in terms of this Act or as may otherwise be

prescribed under any regulations issued under this Act;

(c)

acquire, purchase, lease or dispose of any movable

or immovable property required for the carrying out of its

functions or for any purposes ancillary or incidental to the

performance of its functions under this Act; and

(d)

employ any such persons as staff of the Fund

according to such procedures and on such terms and conditions

as the Committee may determine.

(4)

For the purpose of attaining its objects and carrying out of its

functions under this Act, the Fund may, with the approval of the

Minister, borrow or raise money in such manner, from such person,

body or authority, and under such conditions as the Minister may in

writing impose.

(5)

The Fund shall not undertake any activities which would

require it to be licensed or otherwise authorised under any other law.

(1)

The main organ responsible for the governance of the

Fund is the Committee. The Committee shall be responsible to ensure

the highest level of governance of the Fund and that assets of the Fund

are used solely for the purposes set out in this Act.

(2)

The Committee shall establish the policies that shall be

pursued by, and provide ultimate oversight of the Fund in performing

its functions under this Act and attaining the purpose and objects of this

Act. In determining such policies the Committee shall follow such

policy guidelines as may be set out by the Minister.

(3)

The Committee shall consist of a Chairman and at least two

(2) other members, appointed by the Minister from among persons who

have distinguished themselves in the business of banking, in law,

finance and, or accounting or auditing.

(4)

Where any member of the Committee is absent or is unable

to exercise the functions and powers of his office that member shall

designate another member of the Committee to exercise the powers and

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functions of the same office in his stead.

(5)

The Committee may from time to time delegate in writing

any of its functions and powers, on such matters and subject to such

conditions and modalities as may be specified in the delegation, subject

to the terms and duration as determined by the Committee, to one (1) or

more of the members of the Committee, a unit or function of the Fund,

any one (1) or more employees of the Fund, or any other person as may

be specified.

(6)

The Minister may make regulations, not inconsistent with

the provisions of this Act, to regulate further the composition,

procedures, powers and functions of the Committee.

(1)

The Committee shall meet as often as may be

necessary or expedient for the performance of its functions. The

meetings may be convened by any member of the Committee.

(2)

The Committee may act notwithstanding any vacancy

amongst its members provided there is a quorum consisting of not less

than a majority of members from those entitled to be present at the

meeting.

(3)

Decisions of the Committee shall be taken by a majority of

votes of the members present, and the Chairman or other person

chairing the meeting shall have an original vote and in the event of

parity of votes, a second or casting vote.

(4)

The Committee shall designate a person to act as Secretary to

the Committee for such period and on such terms and conditions as the

Committee shall deem appropriate.

(5)

It shall be the duty of the Secretary to make the necessary

preparations for the meetings of the Committee and to keep minutes of

those meetings and of the decisions or determinations made by the

Committee.

(6)

Any participation in the proceedings of the Committee by a

person not entitled so to do, shall not invalidate the proceedings.

(7)

Subject to the foregoing provisions of this article, the

Committee may regulate its own proceedings.

(8)

The Committee may invite or require any person to attend a

meeting of the Committee and to take part in the discussions.

(1)

A person shall not be eligible to be appointed as

Chairman or as a member of the Committee, or to hold any office with

the Fund, if he is the holder of a licence or other authorisation issued by

the Authority or otherwise falls under the regulation or supervision of

the Authority, or is a director, an officer or employee of such holder or

other such person.

(2)

Without prejudice to the provisions of sub-article (1), a

person shall not be eligible to be appointed or to hold office as a

member of the Committee, if he

(a)

is a member of the House; or

(b)

is a Minister or Parliamentary Secretary; or

(c)

is a Judge or Magistrate of the Courts of Justice;

or

(d)

is legally incapacitated or interdicted; or

(e)

has been declared bankrupt or has made a

composition or arrangement with his creditors; or

(f)

has contravened any provision made by or under

any law appearing to be designed for protecting members of the

public against financial loss due to dishonesty, incompetence or

malpractice concerned in the provision of financial services or in

the management of companies; or

(g)

has contravened anti-money laundering and

counter-funding of terrorism laws; or

(h)

is subject to disqualification under article 320 of

the Companies Act; or

(i)

is subject to black-listing as provided in the Public

Procurement Regulations; or

(j)

has engaged in any business practice appearing to

the Minister to be deceitful or oppressive or otherwise improper,

whether unlawful or otherwise, or which otherwise reflects

discredit on his method of conducting business or professional

activities; or

(k)

has engaged in or been associated with any other

business practice or otherwise conducted himself in such a

manner as to cast doubt on his competence or soundness of

judgement; or

(l)

has a financial or other interest as is likely to

prejudicially affect the discharge of his functions; or

(m)

has a conflict of interest, potential or otherwise,

that is likely to prejudicially affect the discharge of his

functions; or

(n)

is otherwise not a fit and proper person to hold

that office.

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(3)

In determining whether a person is a fit and proper person,

the Minister shall have regard to that person’s probity, to his

competence and soundness of judgement for fulfilling the

responsibilities of that office, to the diligence with which he is fulfilling

or is likely to fulfil those responsibilities and to whether the interests of

any person are, or are likely to be, in anyway threatened by his holding

that office.

(4)

Any person whom the Minister has appointed or proposes to

appoint as a member of the Committee shall, whenever requested by

the Minister to do so, furnish to him such information as the Minister

considers necessary for the performance of his duties under sub-articles

(2) and (3).

(5)

If any person appointed or nominated for appointment as

Chairman or as a member of the Committee is or becomes aware that he

is not or is no longer eligible to hold such office, he shall immediately

inform the Minister thereof and the reason therefor.

(6) The Minister shall immediately remove from office a member of

the Committee if such member becomes ineligible to hold that office as

such on any of the grounds set out in sub-articles (1) and (2).

(7)

A member of the Committee may be relieved of office by the

Minister on the ground of inability to perform the functions of his

office, whether due to infirmity of mind or of body, or of misbehaviour,

and for the purposes of this sub-article repeated and unjustified non-

attendance of meetings may be deemed to amount to misbehaviour.

(8)

Any member of the Committee may resign his office by

letter addressed to the Minister.

(1)

Any member of the Committee who has a direct or

indirect interest in any contract, proposed contract or in any transaction

or arrangement, whether or not it constitutes a contract, made or

proposed to be made by or with the Fund, shall disclose the nature of

such interest at the first meeting of the Committee after the relevant

facts have come to the knowledge of such member.

(2)

After the disclosure of a conflict provided for in sub-article

(1) has been recorded in the minutes of the meeting of the Committee

mentioned in the said sub-article, that member shall withdraw from that

part or parts of the meeting or meetings at which such contract,

proposed contract, transaction or arrangement is discussed or decided

on by the Committee and, in any event, that member shall be prohibited

from voting on such contract, proposed contract, transaction or

arrangement.

PART III

Conditions for, and Process of, transferring

deposit liabilities to the Fund

(1)

The Authority may, by virtue of one (1) or more

deposit liability transfer instruments and subject to such terms and

conditions as may be set out therein, require a solvent credit institution

to transfer such of its deposit liabilities and the corresponding deposit

assets to the Fund, together with all of the property or rights pertaining

to such deposits, if the following conditions are met

(a)

the licence granted to the credit institution has

been withdrawn in terms of the applicable legislation; and, or

(b)

the credit institution is in the process of being

dissolved and consequently wound-up under any applicable law;

and

(c)

for each deposit liability transfer instrument, the

credit institution’s deposit liabilities, which are the subject of

such instrument, are covered by liquid assets of the credit

institution.

(2)

The transferring conditions set out in sub-article (1) shall be

considered to have been satisfied notwithstanding that the credit

institution or any aggrieved person may have filed any action or

proceedings against the withdrawal of the credit institution’s licence or

the dissolution and consequential winding-up thereof.

(3)

The Authority may, by giving notice in writing to a credit

institution, require that the relevant credit institution make available, in

such form as the Authority may request, such information, data and

documents as the Authority considers to be relevant for the purposes of

making a determination under sub-article (1).

(4)

The deposit liabilities and the corresponding deposit assets

that shall be transferred in accordance with the deposit liability transfer

instrument shall include such deposit liabilities and the corresponding

deposit assets that

(a)

are subject to a court order and, or any other order

made in terms of the law by an entity empowered by law to issue

such an order, including monitoring orders, freezing orders,

investigation orders and attachment orders; and

(b)

are, for whatever reason, subject to checks relating

to anti-money laundering and funding of terrorism.

(5)

A deposit liability transfer shall, unless otherwise

determined by the Authority, take place without obtaining the consent

of the shareholders or officers of the transferring institution or any third

party, including (for the avoidance of doubt) the creditor or

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counterparty of any deposit liability, and without complying with any

procedural requirements which would otherwise apply, except when

such procedural requirements are established by this Act or any

regulations issued under this Act.

(6)

The deposit liability transfer instrument shall

(a)

provide for the transfer of the deposit liabilities

and corresponding deposit assets and all property and, or rights

pertaining to such deposits from the transferring institution to

the Fund, that shall be placed in a deposit liability portfolio;

(b)

provide for the right to repayment of the

transferred deposit liabilities, subject to the provisions of this

Act and any regulations issued thereunder;

(c)

specify all the deposit liabilities and the

corresponding deposit assets that shall be transferred by the

credit institution.

(7)

The deposit liability transfer instrument may

(a)

provide for any amendments to the form and, or

terms of a transferred deposit liability, including amendments to

(i)

modify the terms, or the effect of the terms,

of a transferred deposit liability;

(ii)

suspend the rights of transferred depositors

to receive amounts payable in respect of transferred

deposit liabilities; and, or

(iii) suspend the rights of transferred depositors

to receive the benefit of their contractual rights to

banking services in respect of transferred deposit

liabilities including, but not limited to, any right to make

payments, to transfer money or to withdraw money;

(b)

modify any transferred deposit liabilities from one

form or class of liability to another, including, but not limited to

(i)

converting any transferred deposit liability

that is a deposit, whether payable on demand or

otherwise, into a liability that is repayable only upon a

specified maturity date or a perpetual obligation; and, or

(ii)

when the Authority makes a determination

whereby the provisions of article 13(1)(e) shall not apply,

amending the basis on which interest accrues on such

transferred deposit liability until such time as the

transferred deposit liability is released in accordance with

the provisions of this Act and any regulations issued

thereunder, where this is applicable;

(c)

provide for incidental,

consequential

or

transitional provisions including

(i)

provisions generally or only for specified

purposes, cases or circumstances;

(ii)

different provisions for different purposes,

cases or circumstances; and, or

(iii) any additional obligations that shall be

imposed on the transferring institution in connection with

the deposit liability transfer; and, or

(d)

make any other provision that the Authority

considers necessary or desirable for the purposes of, or in

connection with the deposit liability transfer.

(8)

Notwithstanding any provision of this Act or any other law,

until such time as the deposit liability transfer is completed, and

notwithstanding that such deposit liability transfer may have been

ordered following the withdrawal of the transferring institution’s

licence, the Authority may exercise its powers under this Act or any

other Act, or any regulations issued thereunder, to ensure that the

deposit liability transfer is effectively completed.

(9)

Where the Authority is considering a deposit liability

transfer in relation to a credit institution which it considers to be

(a) of relevance to the stability of Malta’s financial

system, the Authority shall consult with the Joint Financial

Stability Board established by virtue of article 17B of the

Central Bank of Malta Act;

(b) of systemic importance to Malta’s economy, the

Authority shall, apart from consulting the Joint Financial

Stability Board in line with paragraph (a), also inform the

European Central Bank established by virtue of Article 13 of the

Treaty on European Union,

before ordering such a credit institution to carry out a deposit liability

transfer.

The Authority shall, by notice on its website, make public a

deposit liability transfer within five (5) working days from the transfer

date. The notice shall set out

(a)

the name of the credit institution in relation to

which the deposit liability transfer was imposed; and

(b)

a summary of the reasons for the deposit liability

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transfer.

(1)

A deposit liability transfer instrument shall, as from

the transfer date, and unless the Authority in the deposit liability

transfer instrument otherwise determines, have the effect of

(a)

discharging the transferring institution of the

obligation of repayment of any transferred deposit liability

towards a transferred depositor;

(b)

transferring the obligation of repayment of any

transferred deposit liability to the Fund, that shall assume all

such repayment obligations;

(c)

creating the right of the transferred depositor in

relation to a transferred deposit liability that shall be repaid by

the Fund in accordance with the provisions of this Act and

terminating, with immediate effect, any right of repayment of

the said transferred depositor against the transferring institution;

(d)

terminating all rights of action of a transferred

depositor of a transferred deposit liability against the

transferring institution, except for rights accruing to such a

transferred depositor up to the transfer date which,

notwithstanding any provision of this Act, shall not be

transferred to and assumed by the Fund; and

(e)

terminating the right of transferred depositors to

receive interest accruing on transferred deposit liabilities.

(2)

Any claims accruing to any third party before the transfer

(a)

against the transferring institution shall remain

valid and effective against the transferring institution,

notwithstanding the transfer of any relevant deposit liability to

which the claim may relate, and such claims shall be exercisable

by the third party against the transferring institution;

(b) with respect to a deposit which is the subject of a

deposit liability transfer instrument shall remain valid and

effective over such deposit, notwithstanding the transfer of the

deposit liability to the Fund, and such claims shall be

exercisable by the third party against the Fund

Provided that there can be no claim against the

Fund in excess of the deposit assets transferred to the Fund in

connection with the deposit liabilities in relation to which a

claim is being made. For any such excess, the claim shall be

exercisable against the transferring institution.

(1)

A deposit liability transfer shall take effect

(a)

by virtue of the deposit liability transfer

instrument and in accordance with such terms and conditions as

may be set out therein;

(b)

despite any restriction, prohibition, limitation,

obligation or requirement arising by virtue of contract, law, or in

any other way; and

(c)

unless otherwise specified in the relevant deposit

liability transfer instrument, free from any trust, liability or other

encumbrance.

(2) Notwithstanding anything contained in any other law and

without prejudice to the generality of sub-article (1), deposit liabilities

and deposit assets of a transferring institution, as specified in a deposit

liability transfer instrument and which are subject to a court order and,

or any other order made in terms of the law by an entity empowered by

law to issue such an order, including monitoring orders, freezing orders,

investigation orders and attachment orders, shall nonetheless be

transferred to the Fund by virtue of the deposit liability transfer

instrument

Provided that

(a)

the disclosure of the existence of an order by the

transferring institution for the purposes of the transfer, shall not

constitute a breach of the order or the provisions of any law

requiring non-disclosure of the order;

(b)

the transfer of such deposit liabilities and deposit

assets to the Fund shall not constitute a breach of the order to

which such deposit liabilities and deposit assets are subject;

(c)

the transfer shall not extinguish, or in any way

alter, the order to which such deposit liabilities and deposit

assets are subject except to the extent that the order shall be

deemed to have been addressed to the Fund instead of the credit

institution;

(d)

any such deposit liabilities and deposit assets

transferred to the Fund shall be held by the Fund as subject to

the terms of such orders to which they are subject; and

(e)

the Fund shall give effect to such orders to which

the transferred deposit liabilities and transferred deposit assets

are subject.

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The transferring institution shall take any necessary steps to

ensure that the deposit liability transfer is effectively completed,

including cooperating with the Authority and the Fund throughout the

deposit liability transfer process.

Following the issuance of a deposit liability transfer

instrument to the transferring institution

(a)

the Authority shall send a copy of the deposit

liability transfer instrument to the Fund and the FIAU;

(b)

where the deposit liability transfer instrument

provides for the transfer of deposit liabilities which are the

subject of a court order, the Authority shall notify the Registrar

of Courts of the issuance of that deposit liability transfer

instrument and the effects of the deposit liability transfer

stipulated in this Act in relation to the court orders to which the

transferred deposit liabilities are subject; and

(c)

the relevant transferring institution subject to the

deposit liability transfer instrument shall immediately take the

necessary steps to notify the transferred depositors under such

deposit liability transfer instrument

(i)

that they constitute transferred depositors

thereunder;

(ii)

of the terms and conditions, if any, to

which the transferred deposit liabilities are subject in

accordance with the deposit liability transfer instrument;

and

(iii) that all claims which transferred depositors

may have against the transferring institution with respect

to any deposit liability which is the subject of a deposit

liability transfer instrument, shall thereafter constitute

claims against the Fund, subject to the provisions of this

Act.

PART IV

Deposit liability portfolios established by the Fund

When the Fund is in receipt of a deposit liability transfer

instrument pursuant to the provisions of this Act, the Fund shall do all

that it considers necessary to give effect to the deposit liability transfer

instrument and to take control of such assets, rights, and liabilities of a

transferring institution as may be specified in the deposit liability

transfer instrument.

(1)

The Fund shall create a separate and distinct deposit

liability portfolio for any deposit liability transfer instrument relating to

the same transferring institution and shall hold and account in such

portfolio all the transferred deposit liabilities and the equivalent

transferred deposit assets.

(2)

A deposit liability portfolio shall, for all intents and purposes

of law, constitute a patrimony separate from the property, rights and

liabilities of any other deposit liability portfolio and from the property,

rights and liabilities of the Fund itself, and shall be kept segregated

from the property, rights and liabilities of any other person.

(3)

Without prejudice to article 20, the deposit liabilities

incurred by the Fund in respect of a particular deposit liability portfolio,

which are not attributable to any other deposit liability portfolio, shall

only be paid out of the assets, property and rights forming part of and

attributed to that deposit liability portfolio so that the assets, property

and rights attributed to or accounted for in another deposit liability

portfolio or in the Fund itself, shall not be available for or subject to

any claim or proceedings of the creditors of that particular portfolio.

(4)

The Fund shall hold or cause to be held such separate

records, accounts, statements and other documents as may be necessary

to evidence the liabilities, property and rights of each deposit liability

portfolio as distinct and separate from the liabilities, property and rights

of other deposit liability portfolios managed or otherwise controlled by

the Fund.

PART V

Process for the release of transferred deposit liabilities

(1)

Upon deposit liabilities and deposit assets being

transferred to the Fund, the Fund shall notify in writing the transferred

depositors to whom the transferred deposit liabilities and the relative

transferred deposit assets are attributable of the completion of the said

transfer in accordance with the deposit liability transfer instrument.

Such notification shall be made for the purpose of releasing the

transferred deposit liabilities and transferred deposit assets to the

transferred depositors, subject to the provisions of this Act and any

regulations issued thereunder.

(2)

Following the notification made in terms of sub-article (1)

and within a period of three (3) years from the transfer date, the Fund

shall, unless an application has already been submitted to it in terms of

sub-article (3), notify in writing the transferred depositors on two (2)

further occasions of the transfer to the Fund of the transferred deposit

liabilities and the relative transferred deposit assets attributable to them

for the purpose mentioned in sub-article (1).

(3)

All transferred depositors shall, within three (3) years from

the transfer date, submit an application to the Fund for the release of the

transferred deposit liabilities due to that transferred depositor

Provided that where there are lawful impediments to the

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submission of an application by a transferred depositor, including any

lawful prohibition, restriction, or limitation that may be imposed by law

or order of any competent court, or where the submission of an

application is not possible due to circumstances which are clearly

beyond the control of the transferred depositor, the said transferred

depositor shall, immediately and not later than three (3) years from the

transfer date, notify the Fund in writing of such impediments, and the

three (3) year period mentioned in this article shall be suspended until

any such impediments are lifted or such circumstances change.

(4)

Upon receipt of an application submitted in terms of sub-

article (3), the Fund shall carry out a compliance review for the purpose

of determining whether the transferred deposit liabilities being claimed

can be released or otherwise by the Fund in accordance with the

provisions of this Act and any regulations issued thereunder.

(5)

The Fund may require the transferred depositor to provide it

with any information and, or documentation within such time-frames as

it may deem necessary for the purposes of the compliance review and,

if the transferred depositor fails to provide such information and, or

documentation within the stipulated time-frames without reasonable

justification, the Fund may determine that the transferred depositor

failed the compliance review and that the relative transferred deposit

liabilities cannot be released.

(6)

Upon completion of the compliance review, the Fund shall

notify the transferred depositor, in writing, whether the compliance

review was satisfactorily completed and whether the relative

transferred deposit liabilities shall be released in accordance with the

provisions of this Act and any regulations issued thereunder

Provided that where there are lawful impediments for the

release of such transferred deposit liabilities, including any lawful

prohibition, restriction, or limitation that may be imposed by law or

order of any competent court, the said transferred deposit liabilities

shall not be released until and unless any such impediments are lifted.

(1)

Without prejudice to article 19, where the transferred

depositor fails the compliance review, or where transferred deposit

liabilities remain unclaimed following the lapse of the time period

specified in article 19(3), the liability of the Fund to repay those

transferred deposit liabilities shall ipso jure cease. Thereafter, the Fund

shall no longer be liable to any claim or action by any person for the

repayment of such transferred deposit liabilities or in connection

therewith. The corresponding transferred deposit assets shall, upon the

lapse of such period, become vested in the Fund that shall thereupon

acquire full legal title to the said transferred deposit assets free of any

claim by any creditor or third party and without the corresponding

transferred deposit liabilities.

(2)

When the transferred deposit assets become vested in the

Fund in accordance with sub-article (1), they shall, subject to sub-

article (3), become available for utilisation by the Fund in accordance

with the provisions of this Act and any regulations issued thereunder.

(3)

Prior to the utilisation of the transferred deposit assets by the

Fund in accordance with the provisions of this Act and any regulations

issued thereunder, the following repayments shall be made according to

the ranking hereunder

(a)

the repayment of any costs incurred by the Fund

itself in connection with the deposit liability transfer and, or the

release of the transferred deposit liabilities in accordance with

the provisions of this Act and any regulations issued thereunder;

(b)

the repayment of any costs incurred by the

Authority in relation to any regulatory action against the

transferring institution and, or otherwise due to the Authority by

the said transferring institution, including but not limited to

costs incurred in relation to the investigation, analysis and

remediation of regulatory breaches as well as the deposit

liability transfer;

(c)

the repayment of any costs incurred by any other

national authorities in the exercise of their functions in

connection with the transferring institution and the deposit

liability transfer;

(d)

the repayment of any costs incurred by the Fund in

connection with any other deposit liability portfolio and, or the

ensuing release of the transferred deposit liabilities pertaining to

that other deposit liability portfolio in accordance with the

provisions of this Act and any regulations issued thereunder, in

so far as these costs were not repaid from the deposit liability

portfolio created in connection with the said deposit liability

transfer;

(e)

the repayment of any costs incurred by the

Authority in relation to any regulatory action against a

transferring institution and, or otherwise due to the Authority by

a transferring institution, which was subject to a deposit liability

transfer pertaining to any other deposit liability portfolio,

including but not limited to costs incurred in relation to the

investigation, analysis and remediation of regulatory breaches as

well as the deposit liability transfer in relation to the said

transferring institution, in so far as these costs were not repaid

from the deposit liability portfolio created in connection with the

said deposit liability transfer; and

(f)

the repayment of any costs incurred by any other

national authorities in the exercise of their functions in

connection with a transferring institution which was subject to a

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deposit liability transfer pertaining to any other deposit liability

portfolio, in so far as these costs were not repaid from the

deposit liability portfolio created in connection with the said

deposit liability transfer

Provided that no repayment shall be made in terms of

paragraphs (b) and (c) unless a claim has been made, in writing, for

any costs incurred by the authorities as mentioned in the said

paragraphs within five (5) years from the transfer date.

PART VI

Miscellaneous Provisions

The Fund, including the members of the Committee when

acting in any function assigned to the Committee under any provision

of this Act, and the employees of the Fund, as well as any person to

whom a delegation was made in terms of article 6(2) and, or article

7(5), shall not be liable in damages for anything done or omitted to be

done in the discharge or purported discharge of any such function or

otherwise in the exercise of their official duties, unless the act or

omission is shown to have been done or omitted to be done, as the case

may be, through wilful misconduct.

(1) The Minister may make advances to the Fund of such

sums as he may consider to be required by the Fund for carrying out

any of its functions under this Act and any regulations issued

thereunder, and may make such advances on such terms and conditions

as he may deem appropriate. Any such advances may be made by the

Minister out of the Consolidated Fund, and without further

appropriation other than this Act, by warrant under his hand authorising

the Accountant General to make such advances.

(2)

The Minister may, in consultation with the Authority, make

regulations providing for the funding of the Fund, including to impose a

financial levy on any deposit liability portfolio, transferred deposit

liabilities and, or the transferring institution and prescribe therein the

basis on which such levy shall be calculated so as to meet the costs

incurred by the Authority and the Fund in connection with a deposit

liability transfer and, or the release of the transferred deposit liabilities.

(1)

Without prejudice to the above-mentioned and

notwithstanding anything contained in any other law, where it is

established that a transferred depositor has committed one (1) or more

offences relating to money laundering or funding of terrorism, the court

shall, in addition to any punishment for such offences under anti-money

laundering and counter-funding of terrorism laws, order the forfeiture

in favour of the Fund of the proceeds, or property the value of which

corresponds to the value of such proceeds, deemed to be derived from

the said offences and which are liable to confiscation or forfeiture by

the court

Provided that the proceeds that shall be forfeited in favour of

the Fund in terms of this sub-article shall be limited to the value of the

transferred deposit liabilities of the transferred depositor mentioned in

this sub-article that were transferred to the Fund by virtue of a deposit

liability transfer instrument

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

"proceeds" means any economic advantage and any property derived

from or obtained, directly or indirectly, through criminal activity and

includes any income or other benefit derived from such property.

(2)

The proceeds forfeited in favour of the Fund in accordance

with the provisions of sub-article (1) in connection with a transferred

depositor shall be held and accounted for in the deposit liability

portfolio relating to the transferring institution against which that

transferred depositor mentioned in sub-article (1) would have normally

had a claim prior to the deposit liability transfer.

(3)

Proceeds forfeited in favour of the Fund in accordance with

the provisions of sub-article (1) shall immediately become available for

utilization by the Fund in accordance with the provisions of this Act

and any regulations issued thereunder, subject to the provisions of

article 20(3).

(1)

Unless otherwise provided or permitted in this Act or

any other law, the Fund, including the former and present members of

the Committee and employees of the Fund, any delegatee, and any

person appointed or engaged to assist the Fund in the fulfilment of any

of its functions under this Act or any regulations issued thereunder, or

to provide services thereto, as well as any person, Ministry,

Government department, registry, authority, body, organisation and, or

entity who or which is in any way involved with the Fund and, or was

directly or indirectly involved in a deposit liability transfer, including

the transferring institution and all former and present officers and

employees thereof, shall treat any non-public information acquired in

the discharge of their duties and functions in connection with this Act

and, or a deposit liability transfer as confidential, and shall not, directly

or indirectly, disclose such information to any other person.

(2)

Notwithstanding the provisions of sub-article (1), the Fund

shall disclose confidential information where such disclosure

(a)

is required for the proper discharge of its duties or

functions under this Act or any other Act, and any regulations

issued thereunder;

(b)

is lawfully required or permitted by any court or

under a provision of any law;

(c)

is made with a view to the institution of any

proceedings by the Fund before any court or tribunal, or

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otherwise for the purposes of any proceedings by or against the

Fund before any court or tribunal; and, or

(d)

is expressly consented to, in writing, by the

person, body or entity from whom the confidential information

is obtained.

Without prejudice to any confidentiality obligation arising

from any other law, the Authority and the FIAU shall, for the

attainment of the purposes and objects of this Act, cooperate closely

and exchange information with each other, including confidential

information, as well as assist one another to the extent possible, on any

matter relating to a deposit liability transfer or any provision of this Act

or any regulations issued thereunder, or any matter ancillary thereto.

(1)

The Fund shall notify and report to the FIAU where it

suspects that transferred deposit liabilities are the proceeds of criminal

activity or are related to the funding of terrorism, or that a transferred

depositor may have been, is or may be connected with money

laundering or the funding of terrorism.

(2)

Following a notification in accordance with sub-regulation

(1), the FIAU may demand information from the Fund. Where such a

demand is made, the Fund shall comply as soon as is reasonably

practicable but not later than five (5) working days from when the

demand is first made

Provided that the Fund may make representations justifying

why the requested information cannot be submitted within the said time

and the FIAU may, at its discretion and after having considered such

representations, extend such time as is reasonably necessary to obtain

the information, whereupon the Fund shall submit the information

requested within the time as extended.

(1)

Any person who

(a)

fails to comply with any provision of this Act or

any regulations issued thereunder;

(b)

fails to comply with any instrument, including a

deposit liability transfer instrument, or directive, order or

instruction issued by the Authority or the Fund pursuant to their

respective powers under this Act, or any regulations issued

thereunder;

(c)

knowingly alters, suppresses, conceals, destroys

or refuses to produce any document which he is lawfully

required to produce under this Act or any regulations issued

thereunder; and, or

(d)

makes a statement, promise or forecast which he

knows to be misleading, false or deceptive, or dishonestly

conceals any material facts, or recklessly makes, whether

dishonestly or otherwise, a statement, promise or forecast which

is misleading, false or deceptive,

shall be guilty of an offence.

(2)

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.

(3)

Any person found guilty of an offence shall, on conviction,

be liable to a fine (multa) not exceeding five hundred thousand euro

(€500,000) or to a term of imprisonment not exceeding five (5) years or

to both such fine (multa) and imprisonment.

(1)

Without prejudice to the powers of the Authority

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

where the Authority is satisfied that a person’s conduct amounts to a

breach of any of the provisions of this Act or any regulations issued

thereunder, the Authority may, by notice in writing and without

recourse to a court hearing, take any of the following administrative

measures

(a)

impose an administrative penalty in the form of a

fixed penalty, a daily penalty, or both, not exceeding one

hundred and fifty thousand euro (€150,000), for each breach;

(b)

issue a public statement which indicates the

person responsible for the breach and the nature of such breach;

(c)

issue an order requiring the person responsible for

the breach to cease the conduct and to desist from a repetition of

that conduct;

(d)

issue a directive in writing requiring a person to

do or to refrain from doing any act, including such prohibitions,

restrictions and conditions as may be specified in the directive;

and

(e)

impose such other administrative penalties and, or

measures as may be specified in any regulations issued under

this Act.

(2)

The Authority may publish, on its official website and in any

other media as it considers appropriate, any administrative penalty or

measure imposed under the provisions of this Act and of any

regulations made thereunder. Such publications shall include

information on the type and nature of the breach and the identity of the

person on whom the administrative penalty or measure was imposed,

without undue delay after that person is informed of that administrative

penalty or measure.

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(3)

The Minister may, in consultation with the Authority, make

regulations as shall be deemed appropriate

(a)

to provide further for the establishment and

imposition of administrative penalties and measures; and

(b)

to better implement the provisions of this article.

(1)

Without prejudice to the powers of the Authority

under this or any other Act or any regulations issued thereunder, the

Authority may, where it deems necessary, appoint a person to carry out,

in part or in whole, the obligations of the transferring institution under

this Act or any regulations issued thereunder.

(2)

Any person appointed in terms of sub-article (1) shall have

all the rights and powers of the transferring institution necessary for the

purposes of his appointment.

(3)

The Authority shall fix the remuneration that shall be paid by

the relevant transferring institution to any person appointed under sub-

article (1).

(1)

In this article, the "Financial Services Tribunal"

means the Tribunal established in terms of article 21 of the Malta

Financial Services Authority Act, and the term "Tribunal" shall be

construed accordingly, and the provisions of the said article 21 shall,

except in so far as any of them is incompatible with the provisions of

this article, apply to appeals made to the Financial Services Tribunal

under this Act.

(2)

A transferring institution or any other person to whom a

decision of the Authority is addressed, which is aggrieved by a decision

of the Authority

(a)

to order a deposit liability transfer;

(b)

to impose any administrative penalty or measure

Provided that in terms of the provisions of this Act or any

regulations issued thereunder, may appeal against such decision to the

Financial Services Tribunal within such period and under such

conditions as are established under the Malta Financial Services

Authority Act.

(3)

An appeal against a decision of the Authority shall not

suspend the operation of that decision.

(4)

With respect to an appeal made in terms of sub-article (2)(a),

upon the hearing of such an appeal the Financial Services Tribunal shall

only have the power to

(a)

confirm the Authority’s decision; or

(b)

determine that

(i)

the Authority has, in its decision, wrongly

applied any of the provisions of this Act; and, or

(ii)

the decision of the Authority constitutes an

abuse of discretion or is manifestly unfair.

(1)

Without prejudice to the power of the Minister to

make regulations under any other provision of this Act, the Minister

may, in consultation with the Authority, make regulations to give better

effect to the provisions of this Act, and without prejudice to the

generality of the foregoing may, by such regulations, prescribe anything

that shall be or which may be prescribed and provide for any matter

consequential, incidental to or connected with any of the provisions or

matters set out in this Act or any regulations issued thereunder.

(2)

Without prejudice to the generality of sub-article (1) and the

power of the Minister to make regulations under any other provision of

this Act, the Minister may, in consultation with the Authority, make

regulations

(a)

to assign powers and functions to the Authority

and, or the FIAU for the purposes of this Act;

(b)

for the general purpose of the exercise of powers

and the performance of functions assigned under this Act;

(c)

to regulate the power of the Fund to invest for its

benefit any of its own assets;

(d)

for the purpose of determining which deposit

liabilities of a credit institution shall be transferred to the Fund

pursuant to a deposit liability transfer instrument; and, or

(e)

to provide for any matter incidental to or

connected with any of the provisions above.

(3) Without prejudice to the generality of sub-article (1) and the

power of the Minister to make regulations under any other provision of

this Act, the Minister may, in consultation with the Authority and the

FIAU, make regulations to determine the nature, specifications and

extent of any compliance review, the basis for a determination of failure

of the compliance review, as well as the repayment conditions and any

other conditions forming part thereof.

(4) Regulations made in accordance with the provisions of this

Act may be made in the English language only.