Regulatory Updates

September 2019

 

 

 

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

FIAU Notices

13/09/2019     FIAU Media Release further to the publication of MONEYVAL’s 5th Round Mutual Evaluation Report on Malta

MONEYVAL published the 5th Round Mutual Evaluation Report on Malta, which examines the level of compliance with the Financial Action Task Force 40 Recommendations and the level of effectiveness of Malta’s AML/CFT system. The Report also sets out a number of recommendations to strengthen Malta’s AML/CFT regime.

The FIAU welcomes these recommendations as they reflect its own priorities and efforts.

The FIAU remains committed to address recommendations made by international bodies such as MONEYVAL. To this effect it has already developed a detailed action plan to address all pending recommendations.

Link to Notice can be found here.

 

16/09/2019     FATF Guidance on the Application of the Risk-Based Approach

Over the past few months, the Financial Action Task Force (“FATF”) has published a number of guidance documents on how anti-money laundering and countering the funding of terrorism (“AML/CFT”) obligations can be applied on a risk sensitive basis in a number of sectors. The sectors covered by the said guidance documents are the following: (a) legal professionals; (b) accountants; (c) trust and company service providers; and (d) virtual asset service providers.

The FIAU considers that the FATF guidance documents provide interesting insights into the identification and assessment of the money laundering and funding of terrorism risks to which these sectors are exposed to as well as insights into how subject persons in the respective sector can apply the AML/CFT obligations arising from the Prevention of Money Laundering and Funding of Terrorism Regulations on a risk-sensitive basis.

The FIAU strongly encourages subject persons to consult these documents when considering how to best ensure compliance with their AML/CFT obligations at law.

Link to Notice can be found here.

 

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Asset Management

MFSA Circulars

05/09/2019     Circular to Institutions with Resolution as their Preferred Resolution Strategy

The Resolution Committee is hereby informing all institutions with resolution as their preferred resolution strategy (“institutions”) to abide by the obligations imposed under Commission Delegated Regulation (EU) 2016/1712 of 7 June 2016, supplementing Directive 2014/59/EU.

The said regulation sets outs a framework for the recovery and resolution of credit institutions and investment firms with regard to regulatory technical standards specifying a minimum set of the information on financial contracts that should be contained in the detailed records and the circumstances in which the requirement should be imposed.

The Resolution Committee established in line with the Bank Recovery and Resolution Directive (BRRD), will also be identifying and requiring institutions other than those with resolution as their preferred resolution strategy to abide by the requirements of the above-cited Commission Delegated Regulation.

Link to circular page can be found here.

 

19/09/2019     ESMA publishes Guidelines on Liquidity Stress Testing in UCITS and AIFs (“the Guidelines”)

On 2 September 2019, the European Securities and Markets Authority (ESMA) published the Guidelines on liquidity stress testing applicable to Undertakings for Collective Investment in Transferable Securities (UCITS) and Alternative Investment Funds (AIFs).

The Guidelines supplement the existing requirements on liquidity stress testing emanating from the AIFMD and the UCITS Directive and aim towards adopting a consistent approach on the methodology and frequency of liquidity stress testing already being undertaken as well as to foster supervisory convergence.

The MFSA expects that AIFMs, UCITS Managers, self-managed AIFs, self-managed UCITS and other relevant stakeholders familiarise themselves, actively prepare and start implementing the Guidelines on a best efforts basis until the effective date of implementation which shall be the 30 September 2020.

The MFSA has noted liquidity management is a high priority to the Authority. For this reason, it has taken up a thematic review focusing on liquidity risk management and is currently undertaking a number of on-site inspections focusing on this area.

Link to circular page can be found here.

 

MFSA Circulars

20/09/2019     MiFID II XML Schema Version 1.1.0 Go-Live

Following the Authority’s technical remarks about the MiFID II Phase 2 First Round of Testing, the notice on the availability of the MiFID II phase 2 testing portal through the Managed File Transfer solution, and the updates on the TREM XML schema version 1.1.0 go-live date, the MFSA has added a further update on this matter, particularly providing further information on the go live of XML Schema version 1.1.0.

The updated FIRDS reference date and TREM XML Schema are expected to go-live on the 23 of September 2019, subject to approve by ESMA stakeholders. Only submissions making use of the XML Schema version 1.1.0 will be accepted on and after the go-live date.

On the 20 of September 2019, the old schema will become obsolete and replaced with the newer schema. Any submissions made to the Authority following the cut-off date should be made using schema version 1.1.0.

Moreover, the Authority has increased the file upload size limit from 200 kilobytes to 1 megabyte per file. This increase now allows for around 20,000 transactions to be submitted per file.

Link to circular page can be found here.

 

 

 

 

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Banking

MFSA Circulars

05/09/2019    Circular to Institutions with Resolution as their Preferred Resolution Strategy

Kindly refer to the section on Asset Management – Part 1.

Link to Circular page can be found here

 

19/09/2019    Circular to Foreign Branches on Supervisory Reporting Requirements to the MFSA

Pursuant to Articles 40 and 47 of Regulation (EU) No 2013/36, the Authority has issued a communication to branches in Malta of foreign credit institutions (‘foreign branches’) outlining official supervisory reporting requirements to be submitted to the MFSA.

Foreign branches are now required to submit to the Authority those modules listed in the circular on a quarterly basis. Different modules imply the applicability of different reporting templates. In this respect, foreign branches are requested to take this document into consideration when submitting supervisory reporting modules. Any submissions made to the Authority should omit templates which are not applicable and/or not required to be reported. Moreover, a dedicated area for foreign branches has been launched on the MFSA webpage on Supervisory Reporting whereby reporting agents can download the templates and instructions relating to the data modules required to be submitted to the Authority.

Attention is also drawn with respect to the folder structure of submissions and resubmissions made to the Authority.

Link to Circular page can be found here.

 

MFSA Circulars

25/09/2019    Cybersecurity – Threat Mitigation

Due to the ongoing increase of cyber incidents and observed attack patterns, the MFSA has noted that a number of financial institutions both locally and worldwide may be the target of malicious attack campaigns. These attacks target systems which are inadequately maintained and patched in the case of institutions where proper cyber security awareness is often absent.

In this respect, in this circular, the Authority has announced its commitment to assist any institutions that require support and has further provided various tips on how these attacks may be avoided.

The MFSA has noted that a cyber incident may be reported at various stages and that it expects licence holders to report material cyber incidents to the Authority within 4 hours by filling and sending the form found in the circular.

Link to Circular page can be found here.

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Financial Markets

MFSA Circulars

12/09/2019     European Single Electronic Format (ESEF) – Tutorial 3

On 9 September 2019, ESMA published the third video tutorial on the European Single Electronic Format (ESEF) - the electronic reporting format in which issuers on EU regulated markets shall prepare their annual financial reports from 1 January 2020. The tutorial is prepared in a manner to answer a number of questions on the ESEF Regulation which market participants frequently ask ESMA and National Competent Authorities.

For ease of reference, the script of the third video tutorial on the European Single Electronic Format is attached with this Circular.

Link to Circular page can be found here.

 

16/09/2019     Circular on Regulation (EU) No 909/2014 – the Central Securities Depositories Regulation (CSDR)

This circular is addressed to all interested stakeholders, in particular to investment firms and professional clients as referred to in Article 6 of the Central Securities Depositories Regulation (CSDR).

Article 9 of CSDR introduces a requirement whereby Settlement Internalisers are required to report to the Authority, on a quarterly basis, the aggregated volume and value of all securities transactions they settle outside securities settlement systems.

Settlement Internalisers are required to submit data in an XML format, conforming with an agreed candidate ISO 20022 message definition XSD schema, published by ESMA.

In view of the above, investment firms acting as settlement internalisers are required to have systems in place to be able to report data in XML format as specified on the ESMA website.

Link to Circular page can be found here.

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Fintech

MFSA Circulars

06/09/2019     Circular to Virtual Financial Asset Service Providers

The transitory provision set out in Article 62 of the Virtual Financial Assets Act (Chapter 590 of the Laws of Malta) (‘VFA Act’), holds that any persons wishing to continue providing VFA Services following the expiry of the transitory period shall be required to commence the VFA Services License application process pursuant to R3-2.1.2.2 of Chapter 3 of the Virtual Financial Assets (‘VFA’) Rulebook by not later than 31 October 2019.

Further to the above-mentioned transitory provision, this circular sets out the procedure to be followed by persons (i) wishing to commence the VFA Services License application process and (ii) intending to cease providing VFA services prior to, or upon, the expiry of the said transitory period.

Link to Circular page can be found here.

 

13/09/2019     AML/CFT Approved Courses for VFA Issuers & VFA Service Providers

The MFSA has approved an Anti-Money Laundering Course for VFA Issuers & Service Provers which is to commence on the 15 October 2019 and for which training is provided by the Malta Institute of Management.

The full list of courses approved by the MFSA for the purposes of fulfilling the competence requirements for Money Laundering Reporting Officers (‘MLROs’) in terms of the Virtual Financial Assets Rulebook are available on the following link: https://www.mfsa.mt/fintech/virtual-financial-assets/approved-courses/

Link to Circular page can be found here.

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Gaming

MGA News Alert

04/09/2019     MGA launches Phase 2 of its Sandbox Regulatory Framework

Following the implementation of the first phase of the Sandbox Regulatory Framework as of 1 January 2019, which established the possibility for authorised persons to be allowed to accept Virtual Financial Assets (VFAs) as a means of payment, the MGA is announcing the launch of the second phase of the Framework.

Further to the above, the MGA shall be extending the duration of the Sandbox Regulatory Framework until 31 December 2021. The Guidance on the use of Innovative Technology Arrangements and the acceptance of Virtual Financial Assets and Virtual Tokens through the implementation of a Sandbox Environment has been amended, in order to reflect the developments that have taken place in relation thereto.

An approval to participate in the Sandbox Regulatory Framework is conditional on the applicant holding the relevant license issued by the MGA, without prejudice to any other regulatory requirements stemming from other applicable legislation, including but not limited to, the Virtual Financial Assets Act (Chapter 590 of the Laws of Malta) and the regulations issued thereunder.

Link to News Alert can be found here.

 

23/09/2019     MGA publishes Gaming Devices (Exhibition of Gaming Devices) Ruling

In exercise of the powers conferred by the Second Schedule of the Authorisations Regulations (S.L. 583.05), the MGA is hereby issuing the Gaming Devices (Exhibition of Gaming Devices) Ruling in relation to the exhibition of gaming devices in fairs, exhibitions and similar events relating to gaming.

Link to News Alert can be found here.

 

MGA News Alert

30/09/2019     The MGA Strengthens Relations with Tennis Integrity Unit (TIU)

The Malta Gaming Authority has recently established a data-sharing agreement with the Tennis Integrity Unity (TIU). The TIU is the anti-corruption body comprising all professional tennis around the globe. It is responsible for administering the sport’s zero-acceptancy policy on betting-related corruption. Whilst collaboration between the two entities has been in place for several years, this agreement will allow the MGA and the TIU to formalise a structure to share data and information in compliance with the law, for the purposes of detecting, preventing and investigating the manipulation of sports competitions.

In this respect, this shall pave the way into further strengthening the relationship between the two entities and hence enhancing prevention and investigation processes surrounding match-fixing and manipulation of sporting events.

Link to News Alert can be found here.

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Trusts

MFSA Circulars

10/09/2019     Enhancements to the online portal for the Trusts Ultimate Beneficial Ownership Register (“TUBOR”)

Reference is made to the online platform for the Trusts Ultimate Beneficial Ownership Register (“TUBOR”) which was launched in 2018 to enable trustees licensed in terms of Article 43 and Article 43B of the Trusts and Trustees to comply with the requirements to report the beneficial ownership of trusts under their administration which generate tax consequences, in terms of the Trusts and Trustees Act (Register of Beneficial Owners) Regulations 2017 (the “Regulations”).

The MFSA has announced that a number of enhancements have been introduced to the TUBOR platform. These enhancements are intended to facilitate the process of inputting declarations of beneficial ownership of trusts through the online portal, particularly in view of the fact that the beneficial ownership information of all trusts will become reportable from January 2020.

The main changes to the online system, highlighted in this Circular include: (i) Additional users for a Trustee Account on TUBOR; (ii) ‘Save Draft’ Feature; and (iii) Change of Trustee – the ‘Transfer’ Feature

Link to Circular page can be found here.

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