Cap. 376 Art. 3Activities carried out by financial institutions.

(1) No activities listed under the First Schedule of this

Act, other than account information services, shall be transacted regularly or habitually, in or from Malta, except by a company that is in possession of a licence granted under this Act by the competent authority:

Provided that the activities listed under the First Schedule of this Act, other than account information services, may also be transacted in or from Malta, by a legal person that is in possession of an authorisation granted by another Member State under the Payment

Services Directive or the Electronic Money Directive, in exercise of its European rights and in accordance with the provisions of the Payment Services Directive and the Electronic Money Directive.

(1A) No account information services shall be transacted regularly or habitually in or from Malta, except by a natural person or a company in possession of a registration granted under this Act by the competent authority:

Provided that account information services may also be transacted in or from Malta, by a natural or legal person in possession of a registration granted by another Member State under the Payment Services Directive, in exercise of its European rights and in accordance with the provisions of the Payment Services Directive:

Provided further that a financial institution licensed in terms of article 4(1) shall not require a registration in accordance with this sub-article, in order to provide account information services.

(2) For the purposes of sub-article (1) and subject to the provisions of sub-article (3), a person shall not be deemed to be a financial institution by reason of the fact that the person either:

(a) belongs to a group and provides any of the activities listed in the First Schedule, except for activities 4 and, or 10 thereof, to companies which are not banks or financial institutions and that belong to the same group;

(b) is an undertaking and provides any of the activities listed in the First Schedule, except for activities 4 and, or 10 thereof, to other undertakings, which are not banks or financial institutions, and all such undertakings are controlled directly or indirectly by the same person;

(c) is an undertaking and provides any of the activities listed in the First Schedule, except for activities 4 and, or 10 thereof, to a person which is not a bank or financial institution, that directly or indirectly controls it; or

(d) draws and issues trade bills in the normal course of business under hire purchase agreements, or under sales on credit where trade bills are drawn in respect of the price due: Provided that for the purposes of this sub-article, a person shall be deemed to control an undertaking if such person:

(i) is a "parent company" as defined in article 2(2)(a) of the Companies Act; or

(ii) has all of the following characteristics:

(aa) power over the undertaking, based on the current ability to direct the relevant activities which significantly affect returns;

(bb) exposure, or right to variable returns from its involvement with the undertaking; and

(cc) the ability to use its power over the undertaking to affect the amount of the person’s returns.

For the purposes of this sub-article:

"person" means a natural person or an undertaking; and

"undertaking" means a body corporate or incorporate which carries on a trade or business.

(2A) Sub-article (1) shall not apply to persons that carry out any of the following activities:

(a) payment transactions effected exclusively in cash directly by the payer to the payee, without any intermediary intervention;

(b) payment transactions effected by the payer to the payee through a commercial agent authorised by means of an agreement to negotiate or conclude the sale or purchase of goods or services, exclusively on behalf of the payer or the payee;

(c) professional physical transport of banknotes and coins, including their collection, processing and delivery;

(d) payment transactions consisting of the non-professional cash collection and delivery within the framework of a non-profit or charitable activity;

(e) services where cash is provided by the payee to the payer as part of a payment transaction following an explicit request by the payment service user just prior to the execution of the payment transaction, by means of a payment for the purchase of goods or services;

(f) (deleted by Act. LXXI.2021.68);

(g) (deleted by Act. LXXI.2021.68);

(h) payment transactions carried out within a payment or securities settlement system between settlement agents, central counter-parties, clearing houses and, or central banks and other participants of the system and payment service providers, without prejudice to Article 35 of the Payment Services Directive, as transposed in directives issued by the Central Bank under the Central Bank of Malta Act;

(i) payment transactions related to securities asset servicing including dividends, income or other distributions, redemption or sale carried out by persons referred to in paragraph (h), by investment firms, credit institutions, collective investment undertakings, or asset management companies providing investment services and, or any other entities allowed to have the custody of financial instruments;

(j) services provided by technical service providers that support the provision of payment services, without them entering at any time into possession of the funds to be transferred, including processing and storage of data, trust and privacy protection services, data and entity authentication, information and communication technology (ICT) and communication network provision, provision and maintenance of terminals and devices used for payment services, with the exclusion of payment initiation services and account information services;

(k) services based on specific payment instruments that can be used only in a limited way, provided they meet one of the following conditions:

(i) instruments allowing the holder to acquire goods or services only in the premises of the issuer, or within a limited network of service providers under a direct commercial agreement with a professional issuer;

(ii) instruments that can be used only to acquire a very limited range of goods or services;

(iii) instruments valid only in a single Member Sate provided at the request of an undertaking or a public sector entity and regulated by a national or regional public authority for specific social or tax purposes, to acquire specific goods or services from suppliers having a commercial agreement with the issuer:

Provided that service providers carrying out either of the activities referred to in sub-paragraphs

(i) and (ii) or both, for which the total value of payment transactions executed over the preceding twelve months exceeds the amount of one million euro (€1,000,000), shall send an annual notification to the competent authority containing a description of the services offered, specifying under which exclusion referred to in sub-paragraphs (i) and (ii) the activity is considered to be carried out:

Provided further that, on the basis of such a notification, the competent authority shall take a duly motivated decision on the basis of criteria referred to in this paragraph where the activity does not qualify as a limited network, and shall inform the service provider accordingly;

(l) payment transactions by a provider of electronic communication networks or services, provided in addition to electronic communication services for a subscriber to the network or service:

(i) for purchase of digital content and voice-based services regardless of the device used for the purchase or consumption of the digital content and charged to the related bill; or

(ii) performed from or by means of an electronic device and charged to the related bill within the framework of a charitable activity, or for the purchase of tickets:

Provided that the value of any single payment transaction referred to in sub-paragraphs (i) and

(ii) does not exceed fifty euro (€50), and:

- the cumulative value of payment transactions for an individual subscriber does not exceed three hundred euro (€300) per month; or

- where a subscriber pre-funds its account with the provider of the electronic communications network or service, the cumulative value of payment transactions does not exceed three hundred euro (€300) per month:

Provided further that service providers carrying out an activity referred to in this paragraph shall send a notification to the competent authority and provide the competent authority with an annual audit opinion, testifying that the activity complies with the limits set out in this paragraph;

(m) payment transactions carried out between payment service providers, their agents or branches for their own account;

(n) payment transactions and related services between a parent undertaking and its subsidiary, or between subsidiaries of the same parent undertaking, without any intermediary intervention by a payment service provider, other than an undertaking belonging to the same group; and, or

(o) cash withdrawal services offered by means of ATM by providers, acting on behalf of one or more card issuers, that are not a party to the framework contract with the customer withdrawing money from a payment account, on condition that those providers do not conduct other payment services as referred to in the Second Schedule: Provided that any person providing such cash withdrawal service shall abide by any requirements, as may be specified in a directive issued by the Central Bank under the

Central Bank of Malta Act, transposing Article 3(o) of the Payment Services Directive.

(3) In the event of reasonable doubt as to whether an activity constitutes the business of a financial institution, or whether the business of a financial institution is being transacted or otherwise in or from Malta by any person, the matter shall be conclusively determined by the competent authority.

(3A) (a) A person that is neither a payment service provider, nor is explicitly excluded from the scope of this Act, shall be prohibited from providing payment services.

(b) Notwithstanding paragraph (a) of this sub-article, the competent authority shall inform the EBA of the services notified pursuant to paragraphs (k) and (l) of sub-article (2A), stating under which exclusion the activity is carried out.

(c) The description of the activity notified under paragraphs (k) and (l) of sub-article (2A) shall be made publicly available in the public register referred to in article 8D and the electronic central register developed, operated and maintained by the EBA in accordance with Article 15 of the Payment Services Directive.

(4) The granting of a licence or registration, as applicable, shall be subject to fees as may be prescribed in accordance with the provisions of article 12.

(5) A licensed or registered financial institution may not take deposits or other repayable funds from the public within the meaning of the Banking Act.

(6) Where a person is already licensed under the Banking Act or the Investment Services Act to carry out an activity listed in the First

Schedule, such person shall not require a licence or registration for such an activity under this Act.

(7) An alternative investment fund notified by an alternative investment fund manager in accordance with the provisions of the Investment Services Act (Notified CISs) Regulations, in so far that such alternative investment fund is performing the activity of:

(a) lending by virtue of loan acquisition as specified in Investment Services Rules issued in accordance with the Investment Services Act; or

(b) receivables financing, shall not require a licence for such an activity under this Act.

(8) When performing the activities of loan origination, loan acquisition and, or receivables financing as part of its exposure to those assets that fall within the definition "qualifying investments" in the EuSEF Regulation or the EuVECA Regulation, as the case may be, an alternative investment fund or a professional investor fund notified to the competent authority in accordance with the Investment Services Act (Notified CISs) Regulations, shall not require a licence under this Act in those circumstances where the alternative investment fund manager of such alternative investment fund or the fund manager of the said professional investor fund, chooses:

(a) to establish the alternative investment fund or the professional investor fund as a European social entrepreneurship fund in accordance with the EuSEF Regulation, and therefore uses the designation "EuSEF" in relation to the marketing of the qualifying social entrepreneurship fund in the European Union; or

(b) to establish the alternative investment fund or the professional investor fund as a European venture capital fund in terms of the EuVECA Regulation, and therefore uses the designation "EuVECA" in relation to the marketing of the qualifying venture capital fund in the European Union:

Provided that for purposes of this sub-article "loan origination" shall be deemed to be referring to the direct origination of loans.