INSURANCE BUSINESS (PENALTIES FOR OFFENCES AND INFRINGEMENTS) REGULATIONS

SUBSIDIARY LEGISLATION 403.06

INSURANCE BUSINESS (PENALTIES FOR

OFFENCES AND INFRINGEMENTS)

REGULATIONS

1st September, 2000

LEGAL NOTICE 100 of 2000, as amended by Legal Notices 142 and 426

of 2007, 61 of 2010, 409 of 2015 and 241 of 2018.

The title of these regulations is the Insurance Business

(Penalties for Offences and Infringements) Regulations.

Substituted by

L.N. 426 of 2007;

(Regulation 3)

L.N. 409 of 2015.

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.

In these regulations, unless the context otherwise requires -

"the Act" means the Insurance Business Act;

"administrative penalty" means a penalty which may be imposed

and recoverable by the competent authority without recourse to a

court hearing;

''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;

''au tho r is e d u nd e rt a ki ng '' me a ns a n aut ho ri se d in sura nc e

undertaking and an authorised reinsurance undertaking;

"competent authority" means the Malta Financial Services

Authority established by the Malta Financial Services Authority

Act;

"court penalty" m eans a penalty which is enforceable by

prosecution in the courts of Malta;

"Financial Services Tribunal" shall be construed in accordance

with article 57 of the Act;

"Insurance Rules" shall have the same meaning as is assigned to

it by article 2 of the Act;

"Schedule" means a schedule to these regulations,

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.

Substituted by

L.N. 142 of 2007;

(Regulation 3)

L.N. 426 of 2007;

L.N. 409 of 2015.

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 more

than €23,000

than €35

not less than €23,000 but not more

not less than €25 but not more

than €50,000

than €75

not less than €50,000 but not more

not less than €60 but not more

than €150,000

than €116.

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

divided into court penalties and administrative penalties, and -

"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 (multa) 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, where the competent authority deems necessary, the

corresponding amount for each day during which the infringement

continues specified in the third column thereof.

(Regulation 4)

Court Penalties

First

Second Column

Column

Article

Offence

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 is

reference to automatically revoked

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

reference to 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 free

41(2)

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

u nd ert aki ng, p ro hib it io n of free disp osal 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,

Insurance Rules or Conduct of Business 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 level applicable

any regulations, Insurance Rules or Conduct of Business to the principal

Rules made thereunder

67(2)(c)

Obstructing a person exercising rightsconferred by the

Act or any regulations, Insurance Rules or Conduct of

Business 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,

Insurance Rules or Conduct of Business 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 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) Any person found guilty of an offence for having

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

the 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 competent authority 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 subregulations (1) and (2) shall not be relied on in interpreting

the provision to which the offence or failure corresponds.

Substituted by

L.N. 142 of 2007.

(Regulation 4)

Amended by

L.N. 61 of 2010.

Substituted by

L.N. 409 of 2015.

Amended by

L.N. 241 of 2018.

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

purpose 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

INSURANCE BUSINESS (PENALTIES

FOR OFFENCES AND INFRINGEMENTS)

First

Second Column

Third Column

Column

Article

Infringement

Penalty level

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

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

Insurance Rules 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

First

Second Column

Third Column

Column

Article

Infringement

Penalty level

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

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)

Tr a n s f e r r i n g , w i t h d r a w i n g o r e n c u m b e r i n g t h e

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, Insurance Rules and

Conduct of Business Rules issued thereunder and any

obligations pursuant to the Solvency II Directive

INSURANCE BUSINESS (PENALTIES

FOR OFFENCES AND INFRINGEMENTS)

First

Second Column

Third Column

Column

Article

Infringement

Penalty level

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

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

First

Second Column

Third Column

Column

Article

Infringement

Penalty level

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

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

First

Second Column

Third Column

Column

Article

Infringement

Penalty level

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

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

decision to acquire or increase a qualifying 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 to

40A

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

First

Second Column

Third Column

Column

Article

Infringement

Penalty level

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

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 that

such undertaking intends to dissolve and 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

and any regulations, Insurance Rules or Conduct of

Business Rules made thereunder

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 Conduct of Business 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

First

Second Column

Third Column

Column

Article

Infringement

Penalty level

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, reinsurance intermediaries,

tied insurance intermediaries and ancillary insurance

intermediaries enrolled under the Insurance Distribution

Act or registered under Article 3 of the Insurance

Distribution Directive 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

48D

Failure of an authorised insurance undertaking and an

authorised reinsurance undertaking carrying out insurance

distribution activities and reinsurance distribution

activities in terms of the Insurance Distribution Act to

comply with the appropriate provisions of the said Act,

any regulations, Insurance Distribution Rules and Conduct

of Business Rules made thereunder.

Any other infringement against any other provisions of the Act or any

regulations, Insurance Rules or Conduct of Business Rules made

thereunder, and failure of a person to comply with any condition,

limitation, or requirement, or to satisfy any directive or order made or

given under the Act or any regulations, Insurance Rules or Conduct of

Business Rules, and not specifically provided for in this Schedule.

In accordance with the provisions of article 58 of the Act,

any person, upon whom the competent authority has imposed an

administrative penalty in accordance with the provisions of

regulation 4(2), may appeal in writing to the Financial Services

Tribunal against the decision of the competent authority.

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

confirms the penalty in the amount fixed by the

competent authority 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,

INSURANCE BUSINESS (PENALTIES

FOR OFFENCES AND INFRINGEMENTS)

then, in every such case, the competent authority shall be entitled to

take civil action to recover the amount due to it.