191 tal-2011 - Financial Institutions Act (Safeguarding of Funds) Regulations, 2011(English Version only)

Suppliment tal-Gazzetta tal-Gvern ta’ Malta Nru. 18,749, 13 ta’ Mejju, 2011

Taqsima B

L.N. 191 of 2011

FINANCIAL INSTITUTIONS ACT

(CAP. 376)

Financial Institutions Act (Safeguarding of Funds)

Regulations, 2011

IIN exercise of the powers conferred by article 12(2) of the

Financial Institutions Act, the Minister of Finance, the Economy and

Investment, acting on the advice of the Malta Financial Services

Authority has made the following regulations:-

Part 1

Preliminary

(1)

The title of these regulations is the Financial Citation and

commencement.

Institutions Act (Safeguarding of Funds) Regulations, 2011.

(2) The provisions of these regulations, insofar as they apply

to financial institutions issuing electronic money in terms of the Third

Schedule to the Act, shall be deemed to have come into force on the

30th April, 2011.

(1) Any reference in these regulations to "the Act" is a Interpretation

reference to the Financial Institutions Act, and subject to the and

applicability.

provisions of sub-regulation (2), the provisions of article 2 of the said Cap. 376.

Act shall also apply to these regulations.

(2) For the purposes of these regulations, unless the context

otherwise requires

"business day" means a day on which the relevant payment

services provider or electronic money issuer of the payer or the

payment services provider or electronic money issuer of the payee

involved in the execution of a payment transaction is open for

business as required for the execution of a payment transaction;

"funds" mean banknotes and coins, scriptural money and

electronic money as defined in the Act;

"Payment Services Directive" means Directive 2007/64/EC of

the European Parliament and of the Council of 13 November 2007 on

payment services in the internal market amending Directives 97/7/

EC, 2002/65/EC, 2005/60/EC and 2006/48/EC and repealing

Directive 97/5/EC.

(3) These regulations shall apply to financial institutions

providing payment services in terms of the Second Schedule to the

Act and financial institutions issuing electronic money in terms of the

Third Schedule to the Act.

Part 2

General

(1)

A financial institution in receipt of funds from a

payment services user or electronic money holder shall hold such

funds solely for and on behalf of and in the interest of that payment

services user or electronic money holder.

(2) Notwithstanding anything stated in article 1894 of the

Civil Code or in the agreement entered into between the financial

institution and the payment services user or electronic money holder

or the fact that the payment services user’s funds or electronic money

holder’s funds held by the financial institution are registered in the

name and title of or are otherwise vested in the financial institution,

such funds shall be deemed to constitute a distinct patrimony,

separate from that belonging to the financial institution.

(3) Without prejudice to any relevant provisions of the Act,

and except as expressly provided in the agreement entered into

between the financial institution and the payment services user or

electronic money holder, the control of funds belonging to a payment

services user or electronic money holder by a financial institution

shall not give or be deemed or construed to give to the financial

institution any rights over such funds; nor shall it create any form of

loan between the financial institution and the payment services user

or electronic money holder notwithstanding the nature of the funds or

the rights or obligations of the financial institution in relation thereto.

(1)

A payment services user or electronic money

holder whose funds are held by the financial institution enjoys a right

of ownership over such funds notwithstanding that they may be

registered in the name and title of, or are otherwise vested in, the

financial institution.

(2) Any records, accounts and other statements held or issued

by the financial institution shall, saving any proof to the contrary,

constitute evidence of their contents and of the right of ownership of

the payment services user or electronic money holder.

(1)

The creditors of a financial institution shall have no Funds held

claim or right of action on or against the funds held by the financial under

not subject to

institution for and on behalf and in the interest of any payment the

creditors of the

services user or electronic money holder, and such funds shall not be subject person.

affected in any manner by the provisions of laws and regulations in

force regulating the insolvency or bankruptcy of the financial

institution.

(2) In the event of any such insolvency or bankruptcy or

related order or resolution, or in the event that the competent

authority so requires, the financial institution or any administrator or

receiver or other officer appointed to represent it by any court or

otherwise shall, on demand of any payment services user or electronic

money holder or of the competent authority, immediately transfer the

control, possession and title to all funds held by or in the name of the

financial institution on behalf of the payment services user or

electronic money holder to another financial institution or to such

other person as may be instructed by the payment services user or

electronic money holder or by the competent authority.

(3) In the event that any funds held under the control of the

financial institution are, at the request of any creditor of the financial

institution, made subject to any precautionary or executive act or

warrant granted by any Court in terms of the Code of Organization Cap. 12.

and Civil Procedure, the payment services user or electronic money

holder on whose behalf such funds are being held, the financial

institution on behalf of the payment services user or electronic money

holder or the competent authority may, by application to the Court,

request the release of the funds from such act or warrant and the

Court shall, on production of evidence as it may deem fit, accede to

the application without undue delay.

(1)

The delivery of the funds of a payment services Applicability of

user or electronic money holder to a financial institution and from a the

Documents and

financial institution to a payment services user or electronic money Transfers

and Income Tax

holder or another financial institution for the purpose of safeguarding Act.

the funds in terms of these regulations shall not be deemed to

constitute a chargeable transfer for the purposes of the Duty on Cap. 364.

Documents and Transfers Act and for the purposes of article 5(1) of

the Income Tax Act, where the delivery of such funds does not Cap. 123.

constitute a change in the beneficial owner of the funds.

(2) For the purpose of this regulation, "beneficial owner"

means a person who is the real owner of, or who is otherwise

beneficially entitled to, the funds held under control by the financial

institution, as provided in regulation 4.

Part 3

Safeguarding of Funds

(1)

A financial institution shall segregate the funds of

payment services users at all times from the funds of any other

person, provided that the funds of each payment services user may be

held in a common account of payment services users. The funds of

each payment services user held in a common account shall remain

separately identifiable at all times.

(2) A financial institution shall carry out such other functions

and duties as may be prescribed in a Financial Institutions Rule.

(1)

A financial institution in receipt of funds

belonging to payment services users or electronic money holders shall

be liable for any loss or prejudice suffered by the payment services

users due to the financial institution’s fraud, wilful default or

negligence including the unjustifiable failure to perform in whole or

in part the financial institution’s obligations arising under these

regulations, the terms and conditions of the agreement entered into

with the payment services users or electronic money holders, the

conditions of any financial institutions licence or such other

requirements as may be laid down by the competent authority.

(2) For the purposes of this regulation, "financial institution"

includes such other financial institution to whom functions, duties or

funds may be delegated or entrusted in terms of these regulations and

any applicable Financial Institutions Rules issued under the Act.

(1)

Where the financial institution delegates or entrusts

functions or duties to a person which is a group company, without

prejudice to the liability of such person, the financial institution shall

be liable for any loss or prejudice suffered by the payment services

users or electronic money holders as a result of the acts, omissions or

insolvency of the financial institution.

(2) Where the financial institution delegates or entrusts

functions, or duties to a person which is not a group company,

without prejudice to the liability of such person, the financial

institution shall be liable for any loss or prejudice suffered by the

payment services users or electronic money holders as a result of the

acts or omissions of such person unless the financial institution can

prove that such person was and remains qualified and competent to

carry out the delegated functions and duties and that the financial

institution exercised reasonable care to oversee that the delegated

functions and duties were undertaken by such person competently.

Notwithstanding the provisions of these regulations, funds Funds received

received in the form of payment by payment instrument need not be as

be credited to

safeguarded until credited to a payment account of a financial the

account of a

institution issuing electronic money or otherwise made available to financial

the financial institutions issuing electronic money in accordance with institution.

the execution time requirements laid down in the Payment Services

Directive, where applicable. In any event, such funds shall be

safeguarded by not later that five working days after the issuance of

electronic money.

B

€0.27