Infringements) Regulations, 2000

L.N. 100 of 2000

INSURANCE BUSINESS ACT, 1998

(ACT NO. XVII OF 1998)

Insurance Business (penalties for Offences and

Infringements) Regulations, 2000

IN exercise of the powers conferred by section 67 of the Insurance

Business Act, 1998, the Minister of Finance, after consultation with the

Malta Financial Services Centre, has made the following regulations:-

(1) These regulations may be cited as the Insurance Business

(Penalties for Offences and Infringements) Regulations, 2000.

(2) These regulations shall come into force on the 1st

September, 2000.

(Regulation 3)

Penalities which are enforceable by prosecution in the courts of Malta

First Column

Second Column

Third Column

Level

Fine (rnulta)

Imprisonment

not less than Lm 100 but

not more than three months

not more than Lm5,000

not less than Lml ,000 but

not less than one month but

not more than LmlO,OOO

not more than six months

not less than Lm5,000 but

not less than six months but

not more than Lm50,000

not more than two years.

In these regulations, unless the context otherwise requires -

"the Act" means the Insurance Business Act, 1998;

"administrative penalty" means a penalty which may be

imposed and recoverable by the Centre without recourse to a court

hearing;

"the Centre" means the Malta Financial Services Centre

established by section 3 of the Malta Financial Services Centre

Act and appointed under section 3 of the Act to be the Competent

Authority for the purposes of the Act;

"court penalty" means a penalty which is enforceable by

prosecution in the courts of Malta;

"Financial Services Tribunal" shall be construed in accordance

with section 57 of the Act;

"Insurance Directive" means an Insurance Directive as may

be made by the Centre by virtue of subsection (3) of section 4 of

the Act for the purposes of any provision of the Act or any rule or

regulation made thereunder;

"Schedule" means a schedule to these regulations,

and the words and expressions which are also used in the Act have the

same meanings as in the Act.

(Regulation 3)

Administrative penalties which may be imposed by the Centre without recourse

to a court hearing

First Column

Second Column

Third Column

Penalty

Level

Daily penalty

not less than Lm50 but

not less than Lm5 but

not more than Lm250

not more than Lm15

not less than Lm 100 but

not less than Lm 10 but

not more than Lml,OOO

not more than Lm30

not less than Lm 1,000 but

not less than Lm20 but

not more than Lm5,000

not more than Lm50"

TIDRD SCHEDULE

(Regulation 4)

Court Penalities

First Column

Second Column

Third Column

Section

Offence

Penalty level

67(1)

Carrying on business of insurance in or from

with reference to

Malta without authorisation

6(1)

67(1)

Carrying on business of insurance in or from

a country outside Malta without authorisation

with reference to

6(2)

Providing contracts of long term business

67(1)

class III either solely and exclusively or as

with reference to

part of the business of insurance carried on

6(4)

in or from Malta without authorisation

67(1)

Opening a branch or agency, or setting up or

acquiring any subsidiary in a country outside

with reference to

Malta without the consent of the Centre

10(3)

Failure of company to maintain in Malta at

67(1)

all times assets of such kind and amount as

with reference to

11 (1)(c)

may be prescribed or determined in

accordance with regulations made for the

purposes of the Act

67(1)

Acting as an insurance agent or insurance

manager without authorisation

with reference to

13(1)

67(1)

Failure of company to maintain a margin of

solvency or a margin of solvency of the

with reference to

14(1)

required amount

67(1)

Failure of company to maintain a margin of

solvency or a Malta margin of solvency or a

with reference to

14(2)

margin of solvency or a Malta margin of

solvency of the required amount

First Column

Second Column

Third Column

Section

Offence

Penalty level

67(1)

Carrying on business of insurance where

with reference to

authorisation is automatically revoked

67(1)

Carrying on business of insurance where

with reference to

authorisation is suspended or revoked

67(1)

Failure of company to furnish the Centre with

with reference to

information or documentation as required; or

29(1)

with information or documentation verified

in a manner as specified; or to attend before

the Centre, or a person appointed by the

Centre, to answer questions and provide

information or documentation as required

Failure of company to disclose to the Centre

67(1)

with reference to where information or documentation as

required not in the company's possession

29(3)

may be found; failure of person to provide

the Centre with information or

documentation in his possession

Failure of officer or agent of a company to

67(1)

produce to an inspector documents of, or

with reference to

relating to, the company; or to give an

30(4)

inspector all assistance in connection with an

examination of the affairs of the company

by the inspector

Failure of person to assist the Centre to enter

67(1)

and search premises to obtain information

with reference to

and documentation

Transferring company's rights and

67(1)

obligations under general business policies,

with reference to

or general business policies of a description,

33(1)

without the approval of the Centre

Transferring company's long term business,

67(1)

in whole or in part, without the approval of

with reference to

the Financial Services Tribunal

35(1)

First Column

Second Column

Third Column

Section

Offence

Penalty level

67(1)

Failure of person to obtain in writing the

with reference to

consent of the Centre to acquire, increase,

38(1)

reduce or divest itself of a qualifying

shareholding in an authorised company

67(1)

Failure of company and its directors to notify

with reference to

the Centre of a person's intention to acquire,

38(4)

increase, reduce or divest itself of a qualifying

shareholding in the company

67(1)

Failure of directors and qualifying

shareholders of an authorised company to

with reference to

notify the Centre where the company intends

38(6)

to merge with another company, or to

undergo reconstruction or division, or to

increase or reduce its nominal or issued share

capital, or to effect any material change in

voting rights

Failure of person intending to take any of the

67(1)

actions provided by section 38(1), or of

with reference to

company intending to take any of the actions

38(7)

provided by section 38(5) accordingly; or to

furnish the information required to be

furnished as may be determined by an

Insurance Directive made for the purposes

of section 38

Failure of company to observe prohibition

67(1)

of free disposal of the company's assets,

with reference to

whether such assets are situated in Malta or

41(2)

elsewhere, in the case of a company whose

head is in Malta, or, in the case of a company

whose head office is in a country outside

Malta, prohibition of free disposal of the

company's assets situated in Malta or in any

other country outside Malta if such assets

relate to the company's business in Malta

Without authorisation dissolving and winding

67(1)

up voluntarily by a company whose head

with reference to

office is in Malta carrying on long term

42(1)

business

Third Column

Second Column

Offence

Penalty level

Disclosing of information relating to the

affairs of a company or policyholder of a

company other than in specified

circumstances

Exchange of information about policies or

policyholders among insurers, intermediaries

and the police other than for the purposes of

preventing, detecting or suppressing

insurance fraud

Obtaining by deceit authorisation under the

Act or any rules or regulations made

thereunder

Knowingly being a party to, or procuring or The penalty level

aiding and abetting, any contravention of any applicable to the

provision of· the Act or any rules or principal offence

regulations made thereunder or any Insurance

Directive.

Obstructing a person exercising rights

conferred by the Act or any rules or

regulations made thereunder

Failure of director, controller, officer or

employee of a company to secure compliance

by the company with any provision of the

Act or any rules or regulations made

thereunder, or any authorisation or permit

issued thereunder, or any Insurance

Directive; or to ensure the correctness of

statements made or information given under

any of those provisions; or removes, destroys,

conceals or fraudulently alters any document

with intent to avoid detection of the

commission of an offence under any of those

provisions.

Any other offence arising under any provision of the Act not

specifically provided for in this Schedule.

(1) For the purposes of these regulations, penalties are Classification of

divided into court penalties and administrative penalties, and _

penalties.

"court penalties" which are enforceable by prosecution in the

courts of Malta shall be construed in accordance with the provisions

of the First Schedule; and

"administrative penalties" shall be construed in accordance

with the provisions of the Second Schedule.

(2) With respect to a penalty of any level specified in the

first column of the First Schedule which is a court penalty, the penalty

shall be either the corresponding fine (multa) specified in the second

column thereof or the corresponding period of imprisonment specified

in the third column thereof or both such fine and imprisonment.

(3) With respect to an administrative penalty of any level

specified in the first column of the Second Schedule, the penalty shall

be the corresponding amount specified in the second column thereof

and the corresponding amount for each day during which the

infringement continues specified in the third column thereof.

(Regulation 4)

In this Schedule "Administrative Penalties" are those made under and for the purpose

of section 67(6) of the Act.

Administrative Penalties

Second Column

First Column

Third Column

Infringement

Penaltv level

Section

6(3)

Failure of Protection and Indemnity Club to

comply with or to satisfy the requirements

as may be determined by an Insurance

Directive made for the purpose of section 6

Failure of company to comply with any

7(6)

condition of authorisation

Failure of company to deposit in custody

lO(1)(b)

assets constituting the amount of the

n:tinimum guarantee fund with a person as

may be prescribed by regulations made for

the purposes of section 18

Failure of company to submit or give effect

14(4)

to a plan acceptable to the Centre for the

restoration of a sound financial position

Failure of company to notify the Centre upon

15(1)

any of the margins of solvency falling below

the prescribed amount, or to make good

deficiency in any of the margins of solvency

of the company

Failure of company to desist from assuming

15(2)(a)

new risks when any of the company's

margins of solvency is deficient

Failure of company to maintain a guarantee

16(1)

fund or a guarantee fund of the required

amount

Transferring, withdrawing or encumbering

16(4)

company's assets required to be maintained

in Malta either without permission of the

First Column

Second Column

Third Column

Infringement

Section

Penalty level

Centre or without proving to the Centre that

the company has no further liability

17(1)

Failure of company to establish and maintain

annually adequate technical provisions in

respect of the company's business in

accordance with regulations made for the

purpose of section 20

17(2)

Failure of company to hold at all times

unencumbered assets equal to the value of

the company's technical provisions

17(3)

Failure of company to ensure that the

company's assets covering the technical

provisions are diversified and adequately

spread in accordance with regulations made

for the purpose of section 63

17(4)

Failure of company to cover at all times the

company's technical provisions by equivalent

and matching assets, or to limit non-matching

assets to a prescribed amount in accordance

with regulations made for the purpose of

section 63

17(7)

Failure of company to maintain an

equalisation reserve in respect of general

business classes prescribed by regulations

made for the purpose of section 17 or to

maintain such equalisation reserve in

accordance with those regulations

18(1)

Failure of company to deposit in custody

assets of a prescribed kind or amount with a

person prescribed by regulations made for the

purpose of section 18

Failure of company to infonn the Centre in

19(2) or (3)

writing of altering its financial year

Failure of company to forward annually to

20(1)

the Centre a copy of the company's financial

First Column

Second Column

Third Column

Section

Infringement

Penalty level

statements; or to forward such statements

within a specified period or a period as may

be authorised by the Centre; or to forward a

copy of such statements drawn up in

accordance with regulations made for the

purpose of section 20; or to publish such

statements in two local daily newspapers; or

to publish such statements in abridged form

set out in accordance with those regulations;

or to exhibit those statements within a

specified period or in a manner provided by

section 20

21(1)

Failure of company to appoint approved

auditor

Failure of auditor to give notice to the Centre

21(5)

if he resigns, does not seek re-appointment

or qualifies the audit report

Failure of company to give notice to the

21(6)

Centre if it receives notice of a resolution to

appoint as auditor a person other than the

retiring auditor or not to re-appoint the

retiring auditor

Failure of company to notify the Centre in

21(7)

writing, or to notify the Centre in writing

within a specified period, the reasons for

terminating the appointment of the

company's auditor

Failure of company to change auditor if so

21(8)

required by the Centre

Failure of company carrying on long term

22(1)

business to appoint an approved actuary

Failure of company to inform the Centre in

22(2)

writing within a specified period, of the

appointment of an actuary, or termination of

appointment of an actuary, as actuary of the

company

Second Column

Third Column

First Column

Section

Infringement

Penalty level

22(4)

Failure of actuary to give reasons in writing

to the Centre for the termination of his

appointment as actuary of a company

23(1)

Failure of company carrying on long term

business to cause at the close of the financial

year an investigation to be made into the

company's financial position by the

company's actuary

23(1)

Failure of company carrying on long term

business to cause an abstract of an actuary's

report of any investigation to be made; or to

make such abstract available to the

company's policyholders; or to make such

abstract in the form and content as may be

determined by an Insurance Directive made

for the purpose of section 23

23(5)

Failure of company to forward to the Centre

a copy of any actuary's report, or to forward

such report within a specified period

Failure of auditor or actuary to inform the

Centre of any of the matters as provided by

section 24

32(1)

Failure of company to forward annually to

the Centre a statement in respect of the

business carried on by the company; or to

forward such statement in the form, content

and manner as may be determined by an

Insurance Directive made for the purpose of

section 32

32(2)

Failure of company to verify the company's

business statement in a manner as may be

determined by an Insurance Directive made

for the purpose of section 32

32(3)

Failure of company to forward to the Centre

in a manner as the Centre may direct such

business statement at such interval and for

such period as it may also direct

First Column

Second Column

Third Column

Section

Infringement

Penalty level

35(7)

Failure of company to deposit with the Centre

two office copies of the Tribunal's approval

of transfer of long term business, in whole

or in part, or to deposit such copies within a

specified period

39(1)

Failure of company to give notice, or to give

notice in a specified period, to the Centre of

the company's intention to cease to carry on,

in whole or in part, the business it is

authorised to carry on

Failure of company authorised to cease to

carry on the business it was authorised to

carry on, from desisting to effect and carry

out new contracts of insurance in the business

authorised to cease

Failure of company authorised to cease to

carry on the business it was authorised to

carry on, to service or run-off contracts of

insurance effected and carried out before the

specified date of cessation

Failure of holder of authorisation to carry on

43(1)

business of insurance or holder of permit to

service or run-off business of insurance to

notify the Centre in writing of any material

change in documentation provided, or

required to be provided, by or under the Act

Failure of company whose head office is in

43(2)

Malta to submit to the Centre in writing for

the Centre's approval particulars of any

proposed addition or alteration to the

company's memorandum or articles of

association or other instrument constituting

the company

Failure of company to issue contracts of

47(1)

insurance expressed in a language as may be

determined by an Insurance Directive made

for the purpose of section 47

Second Column

First Column

Infringement

Section

47(2)

Failure of company to issue contracts of

insurance expressed in the English language

if no other language is determined by the

Centre or no Insurance Directive is made for

the purpose of section 47

48(1)

Issuing of advertisements or undertaking of

promotional activities which generally

mislead or deceive policyholders and the

public

67(2)(d)

Failure of person to satisfy any directive or

order made or given under any provisions of

the Act or any rules or regulations made

thereunder; or any requirement of, or

obligation determined by, any provision of

any Insurance Directive made for the purpose

of any section ofthe Act other than a section

mentioned in this Schedule and the Third

Schedule to the regulations

Failure of company acting as an insurance

Fourth Schedule,

Part I,

agent or insurance manager to have in its

favour at all times a professional indemnity

paragraph 3.6

insurance satisfying the requirements of

paragraph 3.6 of Part I of the Fourth Schedule

Failure of company acting as an insurance

Fourth Schedule,

Part III,

agent to either keep monies held in a fiduciary

capacity in a separate account or to effect a

paragraph 5

fidelity bond in accordance with

requirements as may be determined by an

Insurance Directive made for the purpose of

section 13

Any other infringement against any other provision of the Act or

any rules or regulations made thereunder or any Insurance

Directive not specifically provided for in this Schedule.

(l) Any person found guilty of an offence for having Imposition of

contravened a provision of the Act mentioned in the first column of the penalties.

Third Schedule, with a corresponding general description of the offence

set out in the second column thereof, shall be liable to the corresponding

penalty of the level specified in the third column of the said Schedule.

(2) For any failure by any person to comply with any

provision of the Act mentioned in the first column of the Fourth

Schedule, consisting in the corresponding act or omission described in

the second column thereof, the Centre may by notice in writing impose

by way of an administrative penalty on the person concerned the

corresponding penalty specified in the third column of the said Schedule.

(3) Any description in the second column of the Third and

Fourth Schedules of any offence and failure as respectively referred to

in paragraphs (l) and (2) of this regulation shall not be relied on in

interpreting the provision to which the offence or failure corresponds.

In accordance with the provisions of section 58 of the Act, Appeal to the

Financial Services

any person, upon whom the Centre has imposed an administrative Tribunal.

penalty in accordance with the provisions of paragraph (2) of regulation

4 of these regulations, may appeal in writing to the Financial Services

Tribunal against the decision of the Centre.

Where a notice imposing an administrative penalty is served

on a person and -

(a) such person fails to appeal within such time as an appeal

may be entered, and fails to pay the penalty so imposed; or

(b) appeals within such time to the Financial Services

Tribunal and the appeal is withdrawn or the Tribunal confmns the

penalty in the amount fIxed by the Centre or in an amount reduced

by it, and the penalty is not paid within fIfteen days from the date

of the withdrawal of the appeal or the date when the Tribunal

confIrms the penalty as aforesaid,

then, in every such case, the Centre shall be entitled to take civil action

to recover the amount due to it.