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The Malta Financial Services Authority (MFSA) has announced plans to update the regulatory framework governing company service providers (CSPs), which includes directorship and company secretary services.
This initiative aims to strengthen compliance with Malta's international commitments, while adopting a balanced approach to regulation. The proposed changes are detailed in a new consultation document.
The MFSA's proposal builds on the 2019 reforms to the CSP sector, which eliminated certain exemptions for professionals such as lawyers and accountants, requiring them to obtain authorisation under new regulations.
These reforms, guided by international standards set by the Financial Action Task Force (FATF) and MONEYVAL, positioned CSPs as "gatekeepers" to Malta’s financial system.
By being the initial contact for entities setting up operations, the MFSA says that CSPs play a critical role in preventing the misuse of Malta’s jurisdiction by concealing illicit assets.
According to the MFSA, these reforms instilled a strong compliance culture, enhancing governance and risk management across the CSP sector once they became actionable requirements.
The proposed enhancements
Under the current framework, directors or company secretaries involved in up to two entities are not required to register with the MFSA.
To increase oversight, the MFSA now proposes that these individuals submit information on their positions through a new notification process, allowing the regulator to assess and mitigate potential risks.
For CSPs involved in up to ten directorships or secretarial positions, the MFSA suggests a streamlined application process, eliminating certain requirements for a simplified approach.
This class of “Registered CSPs” would also benefit from a more efficient data collection system, requiring only one annual return for both the MFSA and its counterpart, the Financial Intelligence Analysis Unit (FIAU).
“As a regulator we are committed to constantly reassess our regulatory frameworks and authorisation processes, with the main objective of safeguarding Malta’s financial system, while ensuring that the market can thrive,” said Alison Cortis, deputy head for trustees and CSPs supervision at the MFSA.
Cortis continued that the latest enhancements that are being proposed to the CSPs framework “are meant to restore a level playing field across the various classes of CSPs, allowing us to achieve a higher degree of proportionality, but not at the expense of lowering the compliance standards that which we managed to instil”.
