Regulatory Updates

February 2020

Contact the PwC Malta Regulatory Team for further information in relation to any of the updates or if you wish to discuss how these may impact your business.

Welcome

Welcome to PwC Malta’s Regulatory Updates - giving a recap for this month of the main legislative updates and key regulator activity.

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Anti-Money Laundering

03/02/2020  Implementing Procedures Part II – Virtual Financial Assets Sector

The FIAU has issued sector specific Implementing Procedures applicable to the Virtual Financial Assets sector, which set out how VFA Agents, VFA Service Providers and anyone conducting VFA offerings to the public are to comply with the AML/CFT obligations.

07/02/2020  Amendments to the Prevention of Money Laundering Act (Cap. 373)

25/02/2020 Amendments to the Prevention of Money Laundering and Funding of Terrorism Regulations (S.L. 373.01) 

Several amendments were made to the PMLFTR, which seek to transpose a number of provisions of the 5th AML Directive and to clarify certain provisions and to enhance the legislative framework in place for the prevention of money laundering and funding of terrorism.

13/02/2020  Technical STR Reporting Instructions (XML Schema)

The FIAU has published the new Technical STR Reporting Instructions (XML Schema) expected to come into effect on 22nd June 2020. 

13/01/2020   Switzerland’s progress in strengthening measures to tackle money laundering and terrorist financing

The FATF has re-rated Switzerland with respect to the effectiveness of its ML/TF related, following an enhanced follow-up process having been adopted by the said jurisdiction.

18/02/2020  Guidance Paper for the Property Sector: Risk Factors, Mitigating Measures, Red Flags and Case Studies

The FIAU has published a guidance paper intended to assist those subject persons who provide services associated with the buying, selling and leasing of property (real estate) with understanding the different risks that they may be exposed to when providing such services. The said guidance paper is not legally binding, however must be read in conjunction with Part 1 of the FIAU Implementing Procedures.

21/02/2020 Publication of Presentations: 2020 REQ Training Seminars

The FIAU has held a number of training sessions to provide subject persons with information on CASPAR, the FIAU’s risk assessment methodology and an update on the changes occurring to the 2020 REQs. The FIAU has now published the presentations presented during the said training seminars.

21/02/2020 High Risk Jurisdictions subject to a Call for Action

The FATF has added Democratic People’s Republic of Korea and Iran to its list of high-risk jurisdictions. On this basis, the FATF urges all jurisdictions to apply enhanced due diligence when dealing with such jurisdictions.

21/02/2020 Jurisdictions under Increased Monitoring

The FATF has issued a statement with regards to a number of jurisdictions that it has decided to place under increased monitoring. The relevant jurisdictions are actively working with the FATF to address strategic deficiencies in their regimes to counter ML/FT.

25/02/2020 FATF Jurisdictions: Important Notice with respect to Iran

Following directives issued by the FATF in 2019, the FIAU has advised that Iran is to now be considered as a jurisdiction in respect of which there has been an international call for counter-measures. Therefore, subject persons must immediately notify the FIAU upon the occurrence of certain circumstances and/or transactions involving Iran.

28/02/2020 2020 Risk Evaluation Questionnaires (REQs)

The FIAU has published the updated and final versions of the 2020 REQs, which are now available on the CASPAR System for completion by Subject Persons. In view of the current COVID-19 related circumstances, the FIAU has extended the first submission deadline to 4 May 2020 at 17:00 hrs.

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Asset Management

05/02/2020   Circular on Market Infrastructure Matters in relation to Brexit

The MFSA has issued has issued a public statement that clarifies issues relating to governance and reporting obligations applicable to UK entities, as of 1 February 2020, including that UK representatives will no longer be permitted to participate in EU institutions, agencies or other bodies and EU law will continue to apply to the UK as if it were a Member State until 31 December 2020. 

Link to Circular can be found here.

05/02/2020  Stakeholder Consultation on Revisiting the Corporate Governance Framework for Entities Authorised by the MFSA and Listed Companies

The MFSA is seeking feedback from stakeholders as part of its efforts to formulate a comprehensive and enforceable principle-based Corporate Governance Code applicable to all regulated entities and listed companies. 

06/02/2020   Change in the Prudential Regulation of Investment Firms - The Investment Firm Regulation and Directive

The recently published Investment Firms Regulation and Investment Firms Directive (which investment firms should be fully compliant with by no later than 26 June 2021), introduced more proportionate and risk-sensitive laws for investment firms. The MFSA advises all relevant stakeholders to review the said Regulation/ Directive and consider its impact.

06/02/2020  ESMA sets out its Strategy on Sustainable Finance

ESMA has published its Strategy on Sustainable Finance whereby, ESMA will place sustainability at the core of its activities by embedding ESG factors in its work. The key priorities for ESMA include transparency obligations, risk analysis on green bonds, ESG investing, convergence of national supervisory practices on ESG factors, taxonomy, and supervision.

07/02/2020   Common Supervisory Action in relation to MiFID II Suitability Rules

ESMA has launched common supervisory action with national competent authorities on the application of MiFID II suitability rules across the European Union. This initiative is intended to help ensure consistent implementation and application of EU rules and enhance the protection of investors. Accordingly, the MFSA is notifying investment firms and credit institutions (when providing investment advisory services) – that it shall be conducting a number of focused on-site inspections at investment firms in the coming months to assess the application of suitability rules adopted by the selected firms.

Link to Circular can be found here.

17/02/2020 ESMA updates its Q&As on MIFID II and MIFIR Investor Protection Topics

ESMA has updated its Q&As on the implementation of investor protection and intermediaries’ topics by including new answers covering MiFID practices for firms selling financial instruments subject to the BRRD resolution regime.

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Banking

05/02/2020 EBA consults on revised guidelines on money laundering and terrorist financing risk factors

The EBA has issued a public consultation (expected to run until 5 May 2020), on revised ML/TF factors Guidelines intended to take into account recent changes to the EU AML/CFT legal framework.

05/02/2020 EBA acts to improve AML/CFT supervision in Europe

The EBA published its first report on competent authorities’ approaches to the AML/CFT related supervision of banks. This publication is part of the EBA’s new role to lead, coordinate and monitor the fight against money laundering and terrorist financing in all EU Member States.

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Financial Markets

05/02/2020   Circular on Market Infrastructure Matters in relation to Brexit

Kindly refer to Asset Management section.

Link to Circular can be found here.

07/02/2020  Amendments to the Guidelines on Enforcement of Financial Information

The Authority would like to draw your attention to the amended version of the Guidelines on Enforcement of Financial Information having been published by ESMA and which apply to all competent authorities of EU Member States undertaking enforcement of financial information under the Transparency Directive, as well as any other competent authority within an EEA State where the Transparency Directive applies. objective of the amendments made to the Guidelines is to further harmonise the enforcement carried out by competent authorities on the financial disclosures of European issuers, strengthening investor protection.

Link to Circular can be found here.

17/02/2020  ESMA updates  the CSDR Q&As

ESMA has updated its Q&As regarding the implementation of the CSDR by providing new answers dealing with the allocation of the costs attributed to the penalty mechanism, settlement instructions sent by CCPs, as well as the buy-in process.

18/02/2020 ESMA updates its Q&As relating to the Prospectus Regulation

ESMA has updated its Q&As on the Prospectus Regulation with two new Q&As dealing with the content of the summary required to be prepared in relation to the relevant Prospectus.

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Insurance

11/02/2020 EIOPA sets out strategies on cyber underwriting and SupTech

The EIOPA has published its strategies for cyber underwriting and supervisory and technology, which respond to the evolving insurance landscape, in particular related to digital technology. EIOPA intends to undertake specific actions as part of its own supervisory and regulatory priorities. 

12/02/2020 EIOPA identified supervisory technology, pensions and cyber underwriting as new supervisory convergence priorities

The EIOPA has published the Supervisory Convergence Plan for 2020, which sets out priorities and activities for the coming year. The priorities identified for 2020 include supervisory technology, pension issues and cyber underwriting.

18/02/2020 Motor Insurance: Consumer Research on Attitudes & Behaviour

The MFSA has conducted research to gain insight into consumer understanding of the identity of their motor insurer and the elements which affect policyholders when deciding the motor insurance to be purchased. On this basis, the MFSA intends to carry out further reviews of the current regulatory framework to address certain shortcomings which resulted from this research. 

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Trusts

27/02/2020 Notice of coming into force of Regulations - Trusts and Trustees Act (Register of Beneficial Owners) (Amendment) Regulations, 2020

The MFSA would like to draw the attention of Trustees, that the Trusts and Trustees Act (Register of Beneficial Owners) (Amendment) Regulations, 2020 have entered into force retrospectively, with effect from 1 January 2020. 

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