Regulations, 2011

Suppliment tal-Gazzetta tal-Gvern ta’ Malta Nru. 18,835, 25 ta’ Novembru, 2011

Taqsima B

L.N. 458 of 2011

FINANCIAL INSTITUTIONS ACT

(CAP. 376)

European Passport Rights for Financial Institutions

Regulations, 2011

IN exercise of the powers conferred by article 12 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:-

Preliminary

The title of these regulations is the European Passport Citation.

Rights for Financial Institutions Regulations, 2011.

(1)

In these regulations, unless the context otherwise Interpretation.

requires -

"the Act" means the Financial Institutions Act;

"Commission" means the Commission of the European

Communities;

"competent authority" means the Malta Financial Services

Authority established under the Malta Financial Services Authority Cap. 330.

Act;

"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 that may

be issued thereunder;

"European financial institution" means an institution authorised

by its European regulatory authority to provide payment services in

terms of the Payment Services Directive and, or to issue electronic

money in terms of the Electronic Money Directive;

"European regulatory authority" means the body or bodies

designated by a Member State or EEA State, other than Malta

(a)

to act as a supervisory authority in relation to the

European financial institution concerned in that Member State

or EEA State within the meaning of the Payment Services

Directive and, or the Electronic Money Directive, as the case

may be; or

(b)

to carry out the duties provided for in the Payment

Services Directive and, or the Electronic Money Directive, as

the case may be, in relation to a Maltese financial institution

exercising or proposing to exercise a European right;

"European right" means the entitlement of a person to establish

a branch, or provide services, in a Member State or EEA State, other

than that in which it has its registered office or, if under its national

law it has no registered office, the Member State or EEA State in

which it has its head office

(a)

in accordance with the Treaty of Rome signed in

1957, establishing the European Economic Community as

subsequently amended, and as applied in the Member States or

EEA States; and

(b)

subject to the requirements of the Payment

Services Directive and, or the Electronic Money Directive, and

subject to any regulations or Financial Institutions Rules issued

under the Act implementing such requirements;

"financial institution" means any person who regularly or

habitually acquires holdings or undertakes the carrying out of any

activity listed in the First Schedule to the Act for the account and at

the risk of the person carrying out the activity;

"home Member State or EEA State" means the Member State or

EEA State in which the registered office of a financial institution is

situated, or if under its national law it has no registered office, the

Member State or EEA State in which its head office is situated;

"host Member State or EEA State" means the Member State or

EEA State in which a Maltese financial institution exercises or

proposes to exercise European rights;

"Maltese financial institution" means a financial institution

licensed in terms of the Act, whose head office and registered office

are in Malta;

"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, as may be amended from time to time and

includes any implementing measures that may be issued thereunder;

(2) Words and expressions which are also used in the Act and

are not defined herein shall have the same meaning as in the Act.

PART I - EXERCISE OF PASSPORT RIGHTS BY EUROPEAN

FINANCIAL INSTITUTIONS

(1)

A European financial institution seeking to provide Exercise of

payment services and, or issue electronic money in Malta in exercise passport

by European

of a European right shall satisfy the conditions prescribed in sub- financial

institutions -

regulation (2), and shall thereafter be exempt from the provisions of services.

article 3 of the Act.

(2) For the purposes of this regulation, the conditions referred

to in sub-regulation (1) hereof shall be the following

(a)

the

European

financial

institution

shall

communicate to its European regulatory authority

(i) its intention to provide payment services and,

or issue electronic money in Malta;

(ii) the name and head office address of the

European financial institution; and

(iii) the electronic money issuance and, or

payment services activities which the European financial

institution intends to provide in Malta;

(b)

the competent authority shall receive the

information referred to in paragraph (a) from the European

regulatory authority of the European financial institution within

one month from when the European financial institution has

furnished the said information to the European regulatory

authority, and the European regulatory authority shall inform

the European financial institution of such transmission of

information.

(3) Upon communication of the notification to the competent

authority by the European regulatory authority, and after such

European regulatory authority has confirmed to the European

financial institution that such communication has been made, the

European financial institution may commence to provide the notified

electronic money and, or payment services activities in Malta.

(4) The competent authority shall subsequently proceed to

publish the information contained in the notification form on its

public register held in accordance with article 8D of the Act.

(5) The competent authority shall receive notification from the

European regulatory authority of any changes relating to an existing

notification of information required pursuant to sub-regulation (2).

(1)

A European financial institution intending to

establish a branch in Malta in the exercise of a European right shall

satisfy the conditions specified in sub-regulation (2) and shall

thereafter be exempt from the provision of article 3 of the Act.

(2) For the purposes of this regulation, the conditions referred

to in sub-regulation (1) shall be the following

(a)

the

European

financial

institution

shall

communicate to its European regulatory authority

(i) its intention to establish a branch in Malta to

provide payment services and, or issue electronic money;

(ii) the name and head office address of the

European financial institution;

(iii) the electronic money issuance and, or

payment services activities which the European financial

institution intends to provide in Malta;

(iv) the address of the proposed branch in Malta;

(v) the names of those responsible for the

management of the proposed branch; and

(vi) the organisational structure of the proposed

branch;

(b)

the competent authority shall receive from the

European regulatory authority of the European financial

institution the information which the European financial

institution had provided in terms of paragraph (a), and the

competent authority shall notify the European regulatory

authority of the receipt thereof

Provided that the information notified pursuant to this sub-

regulation and the transmission thereof shall not affect the right of the

competent authority to request additional information, as may be

necessary for the fulfilment of its supervisory duties in respect of the

establishment of a branch

Provided further that any additional requests for information

made by the competent authority shall not affect the passporting

procedure established in these regulations.

(3) If the competent authority has reasonable grounds to

suspect that in connection with the intended establishment of the

branch in Malta, money laundering or the funding of terrorism is

taking place, has taken place or has been attempted, or that the

establishment of such branch in Malta could increase the risk of

money laundering or funding of terrorism, it shall proceed to notify

the European regulatory authority thereof by not later than one month

from receipt of the documents referred to in sub-regulation (2)(b), and

such European regulatory authority may refuse to register the branch,

or may withdraw the registration of the branch, if already made.

(4) If, within one month following the transmission of the

information pursuant to sub-regulation (2)(b), the competent

authority does not provide any information, or confirms that it has no

relevant information, the European regulatory authority shall proceed

to register the branch in a timely manner.

(5) The competent authority shall receive written notification

of any decision taken by the European regulatory authority pursuant

to sub-regulation (3) together with the reasons for the underlying

decision, where it is in contradiction with the opinion provided by the

competent authority.

(6) The competent authority shall subsequently proceed to

publish the information contained in the notification form relating to

the branch established in Malta on its public register held in

accordance with article 8D of the Act.

(7) The competent authority shall receive notification from the

European regulatory authority of any changes relating to an existing

notification of information required pursuant to sub-regulation (2).

(1)

A European financial institution wishing to provide Exercise of

payment services, and, or distribute and, or redeem electronic money passport

by financial

in Malta by engaging an agent, shall satisfy the conditions prescribed institutions

appointment of

hereunder

agents.

(a)

the

European

financial

institution

shall

communicate to its European regulatory authority

(i) the name and head office address of the

European financial institution;

(ii) the name and address of the agent; and

(iii) the kind of payment services activities the

agent intends to provide in Malta on behalf of the

European financial institution and whether it is intended

that the agent will also distribute or redeem electronic

money on behalf of the European financial institution;

(b)

where the European financial institution wishes to

distribute and, or redeem electronic money and, or to provide

payment services in Malta by engaging an agent established in

Malta, the European financial institution shall provide the

following information to its European regulatory authority, in

addition to the information prescribed in paragraph (a)

(i) the names of the persons responsible for the

management of the proposed agent; and

(ii) the organisational structure of the proposed

agent in Malta;

(c)

where the European financial institution wishes to

distribute and, or redeem electronic money in Malta by

engaging one or more agents, the European financial institution

shall, in addition to the information prescribed in paragraph (b),

provide the following information to its European regulatory

authority

(i) a list of all agents engaged to distribute and,or

redeem electronic money;

(ii) a full description of the links to the internal

control systems of the European financial institution,

including compliance with anti-money laundering

procedures in Malta; and

(iii) the name and address of each agent, and in

the case of natural persons, their date of birth;

(d)

the competent authority shall receive the

information referred to in paragraph (a), (b) and (c), as

applicable, from the European regulatory authority of the

European financial institution and it shall notify receipt of all

such documentation to such European regulatory authority.

(2) The information provided by the European financial

institution pursuant to sub-regulation (1), and the transmission

thereof, shall not affect the right of the competent authority to request

additional information, as may be necessary for the fulfilment of its

supervisory duties in respect of the establishment of a branch and, or

the use of an agent

Provided that any additional requests for information made by

the competent authority shall not affect the passporting procedure

established in these regulations.

(3) If the competent authority has reasonable grounds to

suspect that in connection with the intended engagement of the agent,

money laundering or the funding of terrorism is taking place, has

taken place or has been attempted or that the engagement of such

agent could increase the risk of money laundering or funding of

terrorism, it shall proceed to notify the European regulatory authority

thereof by not later than one month from receipt of the documents

referred to in sub-regulation (1)(d). The European regulatory

authority may refuse to register the agent, or may withdraw the

registration, if already made, of the agent.

(4) If, within one month following the transmission of the

information pursuant to sub-regulation (1), the competent authority

does not provide any information, or confirms that it has no relevant

information, the European regulatory authority will proceed to

register the agent in a timely manner.

(5) The competent authority shall receive written notification

of any decision taken by the European regulatory authority pursuant

to sub-regulations (3) and (4) together with the reasons for the

underlying decision, where this is in contradiction with the opinion

provided by the competent authority.

(6) The competent authority shall subsequently proceed to

publish the information contained in the notification form on its

public register held in accordance with article 8D of the Act.

(7) The competent authority will receive written notification

of any changes relating to the information required pursuant to sub-

regulation (1).

(1)

The competent authority shall cooperate with the On-site

European regulatory authority in order to carry out the controls and inspections

the European

take the necessary steps to ensure continued compliance in respect of regulatory

authority.

an agent, branch or entity located in Malta to which activities are

outsourced in respect of a European financial institution.

(2) The competent authority shall also cooperate by receiving

written notification from the European regulatory authority whenever

the latter intends to carry out an on-site inspection in the territory of

Malta

Provided that the European regulatory authority may request the

competent authority to carry out the on-site inspections of the

European financial institution concerned on behalf of such European

regulatory authority.

(3) The competent authority shall provide the European

regulatory authority with all essential and, or relevant information, in

particular in the case of infringements or suspected infringements by

an agent or branch. In this regard, the competent authority and the

European regulatory authority shall communicate, upon request, all

relevant information and, on their own initiative, all essential

information.

PART II - EXERCISE OF PASSPORT RIGHTS BY MALTESE

FINANCIAL INSTITUTIONS

(1)

A Maltese financial institution may exercise a

European right to provide payment services and, or issue electronic

money in another Member State or EEA State if it satisfies the

requirements prescribed in the following provisions of this regulation.

(2) The Maltese financial institution shall give the competent

authority a notice of its intention to provide payment services and, or

to issue electronic money in another Member State or EEA State,

which notice shall be provided in English or in another language

accepted by both the competent authority and the European

regulatory authority and shall contain

(a)

the Member State or EEA State within the territory

of which the Maltese financial institution intends to provide

payment services and, or issue electronic money;

(b)

the name and head office address of the Maltese

financial institution; and

(c)

the electronic money issuance and, or payment

services activities which the Maltese financial institution

intends to provide in the host Member State or EEA State.

(3) The competent authority shall transmit the information

referred to in sub-regulation (2) to the European regulatory authority

within one month from its receipt of the said information provided by

the Maltese financial institution.

(4) Upon communication of the notification by the competent

authority to the European regulatory authority pursuant to sub-

regulation (3), the competent authority shall confirm to the Maltese

financial institution that such communication has been made. The

Maltese financial institution may then provide the notified electronic

money and, or payment services activities in the host Member State

or EEA State.

(5) The competent authority shall subsequently add the details

of the electronic money issuance and, or payment services activities

which the Maltese financial institution will provide, in the host

Member State or EEA State in a public register in terms of article 8D

of the Act in a timely manner.

(6) The competent authority shall, not later than one month

from date of receipt of the information required pursuant to sub-

regulation (2), notify the European regulatory authority of any

changes relating to such information.

(1)

A Maltese financial institution may exercise a Exercise of

European right to establish a branch in another Member State or EEA passport

by Maltese

State if it satisfies the requirements set out in the following provisions financial

institutions -

of this regulation.

branch.

(2) The Maltese financial institution shall give the competent

authority a notice of its intention to establish a branch in another

Member State or EEA State, which notice shall be provided in

English or in another language accepted by both the competent

authority and the European regulatory authority and shall contain

(a)

the Member State or EEA State within the territory

of which the Maltese financial institution intends to establish a

branch;

(b)

the name and head office address of the Maltese

financial institution;

(c)

the electronic money issuance and, or payment

services activities which the Maltese financial institution

intends to provide in the host Member State or EEA State;

(d)

the address of the proposed branch;

(e)

the names of those responsible for the management

of the proposed branch; and

(f)

the organisational structure of the proposed branch.

(3) The competent authority shall transmit the information

referred to in sub-regulation (2) to the European regulatory authority

within one month from receipt thereof.

(4) The information provided pursuant to sub-regulation (2)

and the transmission thereof shall not affect the right of the competent

authority to request additional information, as may be necessary for

the fulfilment of its supervisory duties, in respect of the establishment

of a branch

Provided that any additional requests for information made by

the competent authority shall not affect the passporting procedure

established in these regulations.

(5) Upon communication of the information by the competent

authority to the European regulatory authority pursuant to sub-

regulation (3), the competent authority shall confirm to the Maltese

financial institution that such communication has been made.

(6) The competent authority shall receive notification from the

European regulatory authority where the latter has reasonable

grounds to suspect that, in connection with the intended establishment

of the branch by the Maltese financial institution, money laundering

or the funding of terrorism is taking place, has taken place or has been

attempted, or that the establishment of such branch by the Maltese

financial institution could increase the risk of money laundering or

funding of terrorism.

(7) Following receipt of such notification pursuant to sub-

regulation (6), the competent authority may refuse to register the

branch, or may withdraw the registration of the branch, if already

made.

(8) If, within one month following the transmission of the

information pursuant to sub-regulation (3), the European regulatory

authority does not provide any information, or confirms that it has no

relevant information, the competent authority shall proceed to register

the branch in a timely manner.

(9) The competent authority shall add the details of the

electronic money issuance and, or payment services activities which

the Maltese financial institution will provide in the host Member

State or EEA State in a public register in terms of article 8D of the

Act, in a timely manner.

(10) The competent authority shall proceed to notify any

decision taken pursuant to sub-regulations (6) to (8) to both the

European regulatory authority and the financial institution in a timely

manner

Provided that the notification transmitted to the European

regulatory authority will include reasons for the underlying decision,

where this is in contradiction with the opinion provided by the

European regulatory authority.

(11) The competent authority shall notify the European

regulatory authority of any changes relating to notification of

information required pursuant to sub-regulation (2)

Provided that notification of such changes shall be made by the

competent authority to the European regulatory authority as soon as

practicable and not later than one month from the date of receipt of

notification of such changes of information required pursuant to sub-

regulation (2).

(1)

A Maltese financial institution may not exercise a Exercise of

European right to provide payment services and, or to distribute and, passport

by Maltese

or redeem electronic money in another Member State or EEA State by financial

institutions -

engaging an agent, unless the Maltese financial institution has given appointment of

the competent authority notice of its intention to provide the services agents.

as specified in sub-regulation (2).

(2) For the purposes of this regulation, the Maltese financial

institution shall provide the competent authority with the following

information, which shall be provided in English or in another

language accepted by both the competent authority and the European

regulatory authority

(a)

the name and head office address of the Maltese

financial institution;

(b)

the name and address of the agent; and

(c)

the kind of payment services activities the agent

intends to provide in the host Member State or EEA State on

behalf of the Maltese financial institution, and whether it is

intended that the agent will also distribute or redeem electronic

money on behalf of the Maltese financial institution.

(3) Where a Maltese financial institution intends to provide

payment services and, or to distribute and, or redeem electronic

money in another Member State or EEA State by engaging an agent

established in the host Member State or EEA State, it shall, in

addition to that provided in sub-regulation (2), provide the competent

authority with the following information

(a)

the names of the persons responsible for the

management of the proposed agent; and

(b)

the organisational structure of the proposed agent

in the host Member State or EEA State. Where more than one

agent is appointed, the Maltese financial institution shall

provide separate organisational structures for each agent

appointed.

(4) Where a Maltese financial institution wishes to distribute

and, or redeem electronic money in another Member State or EEA

State by engaging one or more agents, in addition to the information

provided to the competent authority in accordance with sub-

regulations (2) and (3), the financial institution shall also provide the

competent authority with the following additional information

(a)

a list of all agents engaged to distribute and,or

redeem electronic money;

(b)

a full description of the links to the internal control

systems of the Maltese financial institution, including

compliance with anti-money laundering procedures in the host

Member State or EEA State; and

(c)

the name and address of each agent, and in the case

of natural persons, their date of birth.

(5) The competent authority shall, within one month of

receiving the information referred to in sub-regulations (2) to (4),

send a copy thereof to the European regulatory authority.

(6) The information provided pursuant to sub-regulations (2)

to (4) and the transmission thereof shall not affect the right of the

competent authority to request additional information, as may be

necessary for the fulfilment of its supervisory duties, in respect of the

use of an agent

Provided that any additional requests for information made by

the competent authority shall not affect the passporting procedure set

out in these regulations.

(7) The competent authority shall receive written notification

from the European regulatory authority, where the latter has

reasonable grounds to suspect that in connection with the intended

engagement of the agent, money laundering or funding of terrorism is

taking place, has taken place or has been attempted or that the

engagement of such agent could increase the risk of money

laundering or funding of terrorism.

(8) Following receipt of such notification pursuant to sub-

regulation (7), the competent authority may refuse to register the

agent, or may withdraw the registration, if already made, of the agent.

(9) If, within one month following the transmission of the

information pursuant to sub-regulations (2) to (4), the European

regulatory authority does not provide any information, or confirms

that it has no relevant information, the competent authority shall

proceed to register the branch in a timely manner.

(10) The competent authority shall add the details of the

electronic money issuance and, or payment services activities which

the Maltese financial institution will provide in the host Member

State or EEA State in a public register in terms of article 8D of the

Act, in a timely manner.

(11) The competent authority shall proceed to promptly notify

any decision taken pursuant to sub-regulations (7) to (9) to both the

European regulatory authority and the Maltese financial institution

Provided that the notification transmitted to the European

regulatory authority shall include reasons for the underlying decision,

where this is in contradiction with the opinion provided by the

European regulatory authority.

(12) The competent authority shall, within one month from date

of receipt of notification from the Maltese financial institution, notify

the European regulatory authority of any changes relating to

notification of information required pursuant to sub-regulations (2) to

(4).

(1)

The competent authority shall cooperate with the On-site

European regulatory authority in order to carry out the controls and inspections

the competent

take the necessary steps to exercise supervision in respect of an agent, authority.

branch or entity located in another Member State or EEA State to

which activities are outsourced in respect of a Maltese financial

institution.

(2) By way of cooperation, the competent authority shall

notify the European regulatory authority whenever it intends to carry

out an on-site inspection in the territory of the host Member State or

EEA State

Provided that the competent authority may delegate to the

European regulatory authority the task of carrying out the on-site

inspections of the Maltese financial institution concerned.

€0.63