Malta raising the bar for company service providers.

Lawyers, accountants, and notaries providing assistance to financial  services firms will have to register with the Malta Financial Services Authority under proposed new rules.

The MFSA is proposing to remove the exemption from registration for legal professionals and accountants as it tries to raise the bar for company service providers. The proposal is one of several made by the authority in a consultation document released on Tuesday, targeting companies that offer their services to firms seeking authorisation from the MFSA. The rationale behind the proposed regulations is to ensure a more robust first line of defence against problematic operators. The requirement to have all providers register with the MFSA is partly in response to concerns raised by Moneyval in its damning report on Malta released last month.

The regulator is also proposing a three-tier classification for company service providers that will define what services they are able to offer. No such classification exists and any lawyer or accountant who today acts on behalf of a client requires no form of authorisation from the MFSA. The authority is also proposing that the current notification requirement for persons having a licence or registration to provide company services be converted to a full authorisation. The rules propose that prospective applicants for authorisation would be required to engage a CSP in order to proceed with their application. Persons wishing to be authorised as CSPs will be required to do so as a company, the rules are proposing. This is a necessity given the onerous requirements related to controls and effective financial crime compliance, and other regulatory pressures, the MFSA said. Service providers will be obliged to appoint two designated persons or more, depending on the company size, to act as directors, company secretaries, or serve as a partner in partnerships, on behalf of their clients.

The MFSA is proposing enhancing the competence assessments for designated persons, and other officials such as money laundering risk officers and compliance officers. The new rules will introduce a thorough scrutiny by the MFSA of client on-boarding systems and processes adopted by CSPs.

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