close
Share with your friends

Establishing a Financial Institution in Malta

Establishing a Financial Institution in Malta

Application and licensing process, application documents, reporting requirements, ongoing obligations fees and criteria for establishing a FI in Malta

1000
Mark Curmi

Director, Banking, FI and VFA Advisory Services

KPMG in Malta

Contact

Also on home.kpmg

The Application and Licensing Process

1. Preparatory

  • Initial meeting with the MFSA’s Authorisation Unit.
  • Communication of the applicant’s intended activities to the regulator through a presentation of the proposed operations.
  • Preliminary indication by the MFSA to proceed to second stage.

2. Licence Application

  • Preparation and submission of the application documents.
  • Reviews carried out by the MFSA on the application and  feedback provided by the regulator.
  • Completion of the documentation to the satisfaction of  the MFSA.
  • Issuance of the MFSA’s “in principal approval” subject to  licensing conditions.

3. Post Licensing & Pre Commencement of Business

  • Application to satisfy all post licensing matters including  the incorporation of the proposed institution.
  • Issue of official licence.
  • Commencement of business activities.
  • Ongoing supervision by the Banking Supervision Unit.

Application Documents

  • Form 1 – Application Form.
  • Form 2 - Questionnaire for Institutional Shareholders.
  • Personal Questionnaire for individuals who are, or are proposing  to become Directors, Controllers or Managers.
  • A Business plan covering the first 3 years of operations, including three year financial projections.
  • Audited financial statements of the parent institution for the last 3 years (if applicable).
  • Memorandum and Articles of Association of the parent undertaking (if applicable).
  • Draft Memorandum and Articles of Association of the proposed Institution.
  • Details of the operations of the parent institution/entity.
  • Internet and Electronic Banking Questionnaire (if applicable).

Reporting Requirements

Financial Reporting Requirements

Financial Institutions are required to publish Annual Reports 4 months following year end. 

Regulatory Requirements

Financial Institutions in Malta are required to submit Regulatory Returns to the  MFSA and the Central Bank of Malta at specific intervals. Financial Institutions may be subject to submit all or some of the following information, depending on their activities, risk exposures, and other factors which the MFSA will deem relevant for the purposes of their assessment.

  • Liquidity
  • Credit and Country Risk Exposures
  • Own Funds
  • Solvency Ratio
  • Large Exposure

Ongoing Obligations Fees

  • Application and Processing Fee - €3,500 - Payable upon submission of draft licensing documentation 
  • Annual Supervision Fee - 0.0002 of Total Assets (but not less  than €2,500)-  Payable on the granting of a licence2
  • Company Registration Fee - €2,250 (maximum)
  • Company Annual Return Fee - €1,400 (maximum)
     

1 As reported at the end of the year immediately before the year in which the fee is payable

2 Shall be proportionate to the period between the date when the license is granted and the end of that calendar year

Criteria for establishing a Financial Institution in Malta

  • A local Financial Institution is licensed by the MFSA’s Authorisation Unit  and supervised on an ongoing basis by the MFSA’s  Banking Supervision Unit.
  • A Financial Institution’s capital requirement  will depend on its business model and  activities as carried out in line with the First Schedule of the Financial Instruments Act. 
  • A Financial Institution must calculate and maintain its own  funds requirements on an on-going basis.
  • “Fit and Proper” Test: Persons directing the business and  all shareholders  holding more  than 10% in the Bank’s equity are subject to  extensive due  diligence checks.
  • Minimum of 3-4 individuals effectively directing the business (“four eyes principle”).
  • A Financial Institution may be set up as a private or public limited liability company.
  • A Financial Institution  must not have the intention to  take deposits from the public.
  • For an entity to be licensed as a Financial Institution in Malta, it must  intend to undertake any services as listed within the First Schedule of the Financial Institutions Act.
Establishing a Financial Institution in Malta

© 2020 KPMG, a Malta civil partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal