Insurance Business (Penalties for Offences and Infringements)

L.N. 409 of 2015

INSURANCE BUSINESS ACT

(CAP. 403)

Insurance Business (Penalties for Offences and Infringements)

(Amendment) Regulations, 2015

IN exercise of the powers conferred by article 67 of the

Insurance Business Act, the Minister for Finance, after consultation

with the Malta Financial Services Authority, has made the following

regulations:-

(1) The title of these regulations is the Insurance Citation and

Business (Penalties for Offences and Infringements) (Amendment) commencement.

Regulations, 2015, and these regulations shall be read and construed

as one with the Insurance Business (Penalties for Offences and S.L. 403.06

Infringements) Regulations, hereinafter referred to as ''the principal

regulations''.

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

2016.

(Regulation 3)

Administrative penalties which may be imposed by the competent

authority without recourse to a court hearing

First Column

Second Column

Third Column

Level

Penalty

Daily penalty

not less than €1,000 but not more

not less than €15 but not

than €23,000

more than €35

not less than €23,000 but not more

not less than €25 but not

than €50,000

more than €75

not less than €50,000 but not more

not less than €60 but not

than €150,000

more than €116.

Regulation 2 of the principal regulations shall be amended Amends

regulation 2 of

as follows

the principal

regulations.

(a)

in the definition ''administrative penalty'', for the

words ''by the Authority'', there shall be substituted the words

''by the competent authority'';

(b) immediately after the definition ''administrative

penalty'', there shall be added the following new definitions

'' ''authorised insurance undertaking'' means an

undertaking which has received authorisation pursuant to

article 7 of the Act to carry on direct general business and,

or long term business, and includes an undertaking

authorised to carry on direct and reinsurance business;

''authorised reinsurance undertaking'' means an

undertaking which has received authorisation pursuant to

article 7 of the Act to carry on business restricted to

reinsurance;

''authorised undertaking'' means an authorised

insurance undertaking and an authorised reinsurance

undertaking;'';

(c)

the definition ''the Authority'' shall be deleted;

(d) immediately after the new definition ''authorised

undertaking'', there shall be added the following new definition

'' ''competent authority'' means the Malta

Financial Services Authority established by

the Malta Financial Services Authority Act;'';

(e)

for the definition ''insurance rule'', there shall be

substituted the following

'' ''Insurance Rules'' shall have the same meaning as

is assigned to it by article 2 of the Act;''; and

(f)

for the words ''and the words and expressions which

are also used in the Act have the same meanings as in the Act.'',

there shall be substituted the words ''and words and expressions

used in these regulations which are also used in the Act but

which are not defined herein, shall have the same meaning

assigned to them in the Act.''.

(Regulation 4)

Court Penalties

First

Second Column

Third Column

Column

Article

Offence

Penalty level

67(1) with Carrying on business of insurance in or from Malta

reference to without authorisation

6(1)

67(1) with Carrying on business of insurance where authorisation

reference to is automatically revoked

67(1) with Carrying on business of insurance where authorisation

reference to is suspended or revoked

67(1) with Failure of an authorised insurance undertaking whose

reference to head office is in Malta to observe the prohibition of

41(2)

free disposal of the undertaking’s assets, whether such

assets are situated in Malta or in a country outside

Malta, or, in the case of an authorised third country

insurance undertaking, prohibition of free disposal of

the undertaking’s assets situated in Malta or in any

other country outside Malta if such assets relate to the

undertaking’s business in Malta

67(1) with Exchange of information about policies, policyholders,

reference to potential policyholders, insureds, claimants or other

60(1)

related parties amongst insurers, intermediaries and the

police other than for the purposes of preventing,

detecting or suppressing insurance fraud

67(2)(a)

Obtaining by deceit authorisation under the Act, or

pursuant to any provisions of this Act or any

regulations or Insurance Rules made thereunder

67(2)(b)

Knowingly being a party to, or procuring or aiding and The penalty

abetting, any contravention of any provision of the Act

or any regulations made thereunder or any Insurance applicable to

Rules

67(2)(c)

Obstructing a person exercising rights conferred by the

Act or any regulations or Insurance Rules made

thereunder

67(2)(d)

Any person who is knowingly a party to the carrying

on of the business of insurance with a fraudulent intent

or for a fraudulent purpose

First

Second Column

Third Column

Column

Article

Offence

Penalty level

67(2)(f)

Failure of director, controller, officer or employee of

an undertaking to secure compliance by the

undertaking with any provision of the Act or of any

regulations, or any Insurance Rules made thereunder,

or any authorisation or permit issued thereunder; 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

c o m m i s s i o n o f a n o ff e n c e u n d e r a n y o f t h o s e

provisions.

Any other offence arising under any provision of the Act not

specifically provided for in this Schedule

In sub-regulation (2) of regulation 3 of the principal

regulations, for the words ''in the third column thereof.'', there shall be

substituted the words ''in the third column thereof or both such fine

(multa) and imprisonment.''.

(Regulation 4)

In this Schedule ''Administrative Penalties'' are those made under and

for the purposes of article 67(6) of the Act

Administrative Penalties

First

Second Column

Third Column

Column

Article

Infringement

Penalty level

7(2)

Failure of an authorised insurance undertaking

carrying on direct business to seek authorisation to

extend its business to reinsurance business

7(3)

Failure of an undertaking whose head office is in Malta

to notify the competent authority of the carrying on of

business of insurance in a Member State or EEA State,

other than Malta, in exercise of a European right

7(4)

Carrying on business of insurance without

authorisation, in classes other than those for which an

authorised undertaking is already authorised

7(8)

Failure of an authorised undertaking to comply with

any condition of authorisation

8(4)

Failure of an authorised undertaking to provide the

competent authority with information relating to close

links

10(3)

Opening a branch, agency or office, or holding itself

out as carrying on business of insurance in or from a

country outside Malta or setting up or acquiring any

subsidiary in a country outside Malta, without the

consent of the competent authority

B

First

Second Column

Third Column

Column

Article

Infringement

Penalty level

11(4)

Failure of a third country insurance undertaking or a

third country reinsurance undertaking to maintain in

Malta at all times an amount of eligible own funds in

accordance with regulations and deposit a specified

proportion of such own funds as may be prescribed

under article 18G

14(2)

Failure of an authorised undertaking to obtain the prior

written approval of the competent authority in relation

to ancillary own fund items

15(1)

Failure of an authorised undertaking to hold eligible

own funds covering the Solvency Capital Requirement

15(2)

Failure of an authorised undertaking to calculate the

Solvency Capital Requirement in accordance with the

standard formula or, a full or partial internal model as

approved by the competent authority

16(1)

Failure of an authorised undertaking to notify the

competent authority as soon as it observes that the

Solvency Capital Requirement is no longer complied

with, or where there is a risk of non-compliance in the

following three months

16(2)

Failure of an authorised undertaking to submit a

realistic recovery plan for approval by the competent

authority within two months from the observation of

non-compliance with the Solvency Capital

Requirement

16(3)

Failure of an authorised undertaking to take the

necessary measures to achieve within six months from

the observation of non-compliance with the Solvency

Capital Requirement, the re-establishment of the level

of eligible own funds covering the Solvency Capital

Requirement or the reduction of the risk profile of the

undertaking to ensure compliance with the Solvency

Capital Requirement

16(6)

Failure of an authorised undertaking to observe the

restriction or prohibition of the free disposal of the

assets of such undertaking

17(1)

Failure of an authorised undertaking to hold eligible

basic own funds covering the Minimum Capital

Requirement

18(1)

Failure of an authorised undertaking to immediately

inform the competent authority where it observes that

the Minimum Capital Requirement is no longer

complied with or where there is a risk of non-

compliance in the following three months

18(2)

Failure of an authorised undertaking to submit a short-

term realistic finance scheme for approval by the

competent authority within one month from the

observation of non-compliance with the Minimum

Capital Requirement

18(3)

Failure of an authorised undertaking to observe the

restriction or prohibition of the free disposal of the

assets of such undertaking

First

Second Column

Third Column

Column

Article

Infringement

Penalty level

18B

Failure of an authorised undertaking to notify the

competent authority immediately where such

undertaking has identified that it is in a deteriorating

financial condition

18E(1)

Failure of an authorised undertaking to establish and

maintain technical provisions with respect to all of its

insurance and reinsurance obligations

18E(2)

Failure of an authorised undertaking to value and

calculate technical provisions in accordance with

Insurance Rules made for the purposes of article 18E

18E(4)

Failure of an authorised undertaking to increase the

amount of technical provisions so that they correspond

to the level determined by such Insurance Rules made

for the purposes of article 18E

18E(5)

Failure of an authorised undertaking to observe the

prohibition of the free disposal of the assets of such

undertaking

18F

Failure of an authorised undertaking with its head

office in Malta to disclose publicly and on an annual

basis a report on the undertaking’s solvency and

financial condition

18G(1)

Failure of an undertaking to deposit in custody assets

of a prescribed kind or amount with a person

prescribed by regulations made for the purpose of

article 18G

18G(4)

Transferring, withdrawing or encumbering the

undertaking’s assets required to be maintained in Malta

either without permission of the competent authority or

without proving to the competent authority that the

undertaking has no further liability

18H

Failure of the Board of Directors to act as the ultimate

persons responsible for compliance by the authorised

undertaking with the Act, regulations and Insurance

Rules issued thereunder and any obligations pursuant

to the Solvency II Directive

18I

Failure of an authorised undertaking to have in place

an effective system of governance which provides for

sound and prudent management of the business of the

undertakings in accordance with Insurance Rules made

for the purposes of article 18I

19(2) or (3) Failure of an authorised undertaking whose head office

is in Malta or a third country insurance undertaking or

a third country reinsurance undertaking applying for

authorisation under article 7 to carry on business of

insurance in or from Malta to inform the competent

authority in writing of altering its financial year

20(1)

Failure of an authorised undertaking to forward

annually to the competent authority a copy of the

undertaking’s audited financial statements; or to

exhibit those statements within a specified period or in

a manner provided by article 20

B

First

Second Column

Third Column

Column

Article

Infringement

Penalty level

20(1A)

Failure of an authorised undertaking to provide a copy

of its audited financial statements to a person applying

to the undertaking for a copy thereof

21(1)

Failure of an authorised undertaking to appoint an

approved auditor

21(5)

Failure of auditor to give notice to the competent

authority if he resigns, does not seek re-appointment,

qualifies the audit report or to specify reasons in the

case of resignation

21(6)

Failure of an authorised undertaking to give notice in

writing to the competent authority 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

21(7)

Failure of an authorised undertaking to notify the

competent authority in writing, or to notify the

competent authority in writing within a specified

period, the reasons for terminating the appointment of

the undertaking’s auditor

21(8)

Failure of an authorised undertaking to change auditor

if so required by the competent authority

22(1)

Failure of an authorised insurance undertaking

carrying on long term with-profits business in terms of

classes I and III, as specified in the Second Schedule to

the Act, to appoint an approved actuary

22(2)

Failure of an authorised insurance undertaking to

inform the competent authority in writing within a

specified period, of the appointment of an actuary, or

termination of appointment of an actuary, as actuary of

the undertaking

22(4)

Failure of actuary to give reasons in writing to the

competent authority for the termination of his

appointment as actuary of an authorised insurance

undertaking

23(3)

Failure of an authorised insurance undertaking to

forward to the competent authority a copy of the

actuary’s report, together with the audited financial

statements

Failure of an auditor or an actuary to inform the

competent authority of any of matters, facts and

decisions as provided by article 24

Failure of an authorised undertaking to comply with

and otherwise give effect to any measures taken by the

competent authority pursuant to article 28

First

Second Column

Third Column

Column

Article

Infringement

Penalty level

29(1)

Failure of an authorised undertaking to furnish the

competent authority with information or

documentation as required including existing telephone

and existing data traffic records; or with information

and documentation verified in a manner as specified;

or to attend before the competent authority, or a person

appointed by the competent authority, to answer

questions and provide information or documentation as

required

29(3)

Failure of an authorised undertaking to disclose to the

competent authority where information or

documentation, as required, which is not in the

undertaking’s possession, may be found; failure of a

person, including a person to which the undertaking

has outsourced any activities or functions, to provide

the competent authority with information or

documentation in his possession

30(4)

Failure of an officer or an agent of an authorised

undertaking to produce to an inspector all books and

documents of, or relating to, the undertaking; or to give

an inspector all assistance in connection with an

examination of the affairs of the undertaking by the

inspector

Failure of a person to assist the competent authority to

enter and search premises to obtain information or

documentation

31A

Failure of a person to comply with and otherwise give

effect to any directive imposed by the competent

authority

31B(5)

Failure of an authorised undertaking to remedy such

weakness or deficiency identified by the competent

authority as a consequence of the supervisory review

process

31C(1)

Failure of an authorised undertaking to apply a capital

add-on set by the competent authority in accordance

with article 31C

31C(3)

Failure of an authorised undertaking to remedy the

deficiencies that led to the imposition of the capital

add-on without delay

Failure of an authorised undertaking to forward to the

competent authority the information which is necessary

for the purposes of supervision, in terms of article 32

32C(12)

Failure of a parent undertaking which has its head

office in Malta to provide the competent authority with

the required information following a request by the

group supervisor

33(1)

Transferring the authorised insurance undertaking’s

rights and obligations under general business policies,

or general business policies of a description, without

the approval of the competent authority

First

Second Column

Third Column

Column

Article

Infringement

Penalty level

35(1)

Transferring an authorised insurance undertaking’s

long term business, in whole or in part, without the

approval of the Financial Services Tribunal

37(1)

Transferring an authorised reinsurance undertaking’s

business, in whole or in part, without the approval of

the competent authority

37A

Failure of an authorised undertaking to notify the

competent authority prior to accepting the whole or

part of the general business or long term business from

an undertaking whose head office is in a country

outside Malta

38(1)

Failure of a person to notify the competent authority of

a de c i s i o n t o a c q u i r e o r i n c r e a s e a q u a l i f y i n g

shareholding in an authorised undertaking; or to

furnish the information required to be furnished as may

be determined by Insurance Rules

38(2)

Failure of a person to notify the competent authority of

a decision to reduce or divest itself of a qualifying

shareholding in an authorised undertaking; or to

furnish the information required to be furnished as may

be determined by Insurance Rules

38(4)

Failure of an authorised undertaking and its directors to

notify the competent authority of a person’s intention

to acquire, increase, reduce or divest itself of a

qualifying shareholding in the undertaking

38C(2)

Failure of directors and qualifying shareholders of an

authorised undertaking to notify the competent

authority where the undertaking intends to merge with

another undertaking, 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

39(1) and Failure of an authorised undertaking to give notice, or

40A

to give notice within a specified period, to the

competent authority of the undertaking’s intention to

cease to carry on, in whole or in part, the business it is

authorised to carry on

40 and 40A Failure of an authorised undertaking issued with a

permit 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

permitted to cease

40 and 40A Failure of an authorised undertaking issued with a

permit 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

41(7)

Failure of an authorised undertaking to immediately

notify in writing the competent authority upon taking a

decision to dissolve and wind up

First

Second Column

Third Column

Column

Article

Infringement

Penalty level

42(1)

Dissolving and winding up voluntarily by an

authorised undertaking carrying on long term business

without the consent of the competent authority

42(2)

Failure of an authorised undertaking and its directors to

notify the competent authority upon becoming aware

t h a t s u c h u n d e r t a k i n g i n t en d s t o d i s s o l v e a n d

consequentially wind up voluntarily

43(1)

Failure of holder of authorisation to carry on business

of insurance or holder of permit to service or run-off

business of insurance to notify the competent authority

in writing of any material change in documentation or

information provided, or required to be provided, by or

under the Act

43(2)(a)

Failure of an authorised undertaking whose head office

is in Malta to submit to the competent authority in

writing for the authority’s approval particulars of any

proposed addition or alteration to the undertaking’s

memorandum or articles of association or other

instrument constituting the undertaking

43(2)(b)

Failure of an authorised undertaking whose head office

is in Malta to inform at least once a year, the competent

authority of the names of the persons holding a

qualifying shareholding in the undertaking and the

percentage of such holding in the form, manner and

content within such date as determined by Insurance

Rules made for the purposes of article 43

43(3)

Failure of an authorised undertaking to notify the

competent authority on a continuous basis, with any

change or circumstances which may give rise to the

existence of close links

47(1)

Failure of an authorised insurance undertaking to issue

contracts of insurance expressed in a language as may

be determined by Insurance Rules made for the

purpose of article 47

47(2)

Failure of an authorised undertaking to issue contracts

of insurance expressed in the English language

48(1)

Issuing of advertisements or undertaking of

promotional activities by an authorised insurance

undertaking which generally mislead or deceive

policyholders and the general public

48B

Failure of an authorised undertaking to utilise the

services of insurance intermediaries enrolled under the

Insurance Intermediaries Act or registered under

Article 3 of Directive 2002/92/EC or registered or

regulated to carry out such services in a non-Member

State or non-EEA State in accordance with the

provisions of the laws applicable in such State

67(2)(e)

Failure of a person to comply with any condition,

limitation or requirement, or satisfy any directive or

order made or given under any provisions of the Act or

any regulations made thereunder or of any Insurance

Rules.

B

First

Second Column

Third Column

Column

Article

Infringement

Penalty level

Any other infringement against any other provision of the Act or

any regulations made thereunder or any Insurance Rules not

specifically provided for in this Schedule.

€1.08

In sub-regulation (2) of regulation 4 of the principal

regulations, for the words ''the Authority'', and wherever they appear

throughout the principal regulations, there shall be substituted the

words ''the competent authority''.

Nothing in these regulations shall be deemed to affect any

penalty imposed under the principal regulations, prior to the coming

into force of these regulations.

For the First Schedule, the Second Schedule, the Third

Schedule and the Fourth Schedule to the principal regulations, there

shall be substituted the following, respectively

''FIRST SCHEDULE

(Regulation 3)

Penalties which are enforceable by prosecution in the courts of Malta

First Column

Second Column

Third Column

Level

Fine (multa)

Imprisonment

not less than €230 but not more

than €18,600

not more than three months

not less than €9,300 but not more

not less than one month but

than €93,200

not more than six months

not less than €46,600 but not more

not less than six months

than €466,000

but not more than four

years.