Fabian Demicoli

Updated Rules and Rulebook for CSPs 

A number of recommendations put forward by Malta Chamber of SMEs have been upheld and taken on-board

The Malta Financial Services Authority have recently published a consultation document on the Updated CSP rules and rulebook. Tha SME Chamber has once again kickstarted a consultation process amongst CSP operators and sole pretensioners who offer the service of a CSP. The CSP committee has also met on this topic in order to discuss into more details the provisions and changes proposed.

The SME Chamber positively notes that the rulebook published addresses a number of concerns raised in earlier feedback by the SME Chamber. Moreover, a number of recommendations put forward by Malta Chamber of SMEs have been upheld and taken on-board.

 

Of the main changes it is important to note;

  • The creation of new classes which enable natural persons whose main revenue is not generated from CSP services to operate within limited thresholds, MFS proposed a Class A under threshold and a Class B under-threshold.

  • MFSA ‘may’ consider allowing a CSP to establish and maintain a risk management function which does not operate independently provided that; a) this does not give rise to conflicts of interest; and b) the CSP demonstrates to the Authority that the establishment and maintenance of a dedicated independent risk management function with sole responsibility for the risk management function is not appropriate and proportionate in view of the nature, scale and complexity of its business and the nature and range ofthe CSP services and activities undertaken in the course of that business

  • Trusts and Trustees are now being exempted from seeking authorisation.

  • MLROs will now require to possess both relevant qualifications and experience in AML/CFT

 

The SME Chamber proposed the below in order to ensure the smooth transition and also ensure that the principle of proportionality is being taken into consideration;

  • The creation of under-threshold Class C is created in order to ensure that the principle of proportionality is being observed. By way of eligibility, the SME Chamber is proposed that; (i). CSP Services offered are this within the CSP Act as listed under Article 2 (1) (ii). Refers to individuals in possession of a warrant, or equivalent, to carry out the profession of advocate, notary public, legal procurator or certified public accountant whose revenue from corporate services forms, or is forecast to form, in the upcoming year, not more than: (a). 35% of the combined total revenue from the provision of all professional services; or (b). EUR100,000, whichever is the higher. (iii) Aggregate of not more than five (5) involvements for acting as acting as director or company secretary of a company, a partner in a partnership or in a similar position in relation to other legal entities.

 

  • Since MLROs currently practice no qualifications in AML/CFT are required for persons sitting as MLROs. Having said that normally MLROs would have years of experience working in AML/CFT. In order to address this gap and provide a transitionary mechanism, the SME Chamber is proposing that for the first 2 years of implementation, the Authority will accept MLROs with only relevant work experience as long as the particular MLRO undertakes a course which would lead up to a qualification during the first 24 months from authorization.

 

  • A director that besides being a member of the board of directors, is employed with the company as executive director and performs other services, for example being a CEO, CFO, etc. In this case this exemption will apply whether the person is employed on full-time or part-time basis while also sitting as a director should also be exempted from seeking authorisation.

 

  • The SME Chamber proposes that prior to imposing mandatory PII on the industry and/or increased required minimum limits of indemnity, the Authority carries out market research to ensure that there is suitable coverage available from the insurance industry.

 

The position paper submitted to MFSA can be viewed here. The SME Chamber, together with the CSP committee will also be holding a meeting with MFSA to explain the main concerns.

Members who would like to submit additional feedback are to get in touch with Andrew Aquilina by sending an email to

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