Cap. 376 Art. 5Granting of a licence or a registration.

(1) No company shall be granted a licence in terms of this Act unless:

(a) its initial capital whether in euro or in any other currency acceptable to the competent authority are equal to such amount, as may be established by the competent authority in any Financial Institutions Rule and as may be appropriate for the activities to be undertaken by the applicant;

(b) there are at least two individuals, or any other number of individuals as may be otherwise determined by the competent authority, who will effectively direct the business of the financial institution from Malta;

(c) the competent authority is satisfied that the company has sound and prudent management and has robust governance arrangements that include a clear organisational structure with well defined, transparent and consistent lines of responsibility, effective procedures to identify, manage, monitor and report the risks to which it is or might be exposed, and adequate internal control mechanisms, including sound administrative and accounting procedures: Provided that such arrangements, procedures and mechanisms shall be comprehensive and proportionate to the nature, scale and complexity of the services provided by the company, as may be determined by the competent authority from time to time and, or as may be specified by a Financial Institutions Rule;

(d) the competent authority is satisfied that taking into account the need to ensure the sound and prudent management of the company, shareholders having a qualifying holding, controllers and all persons who will effectively direct the business of the financial institution are suitable persons to ensure its sound and prudent management;

(e) the competent authority is satisfied that, where there are close links between the company and another person or persons, such links do not prevent it from the effective exercise of its supervisory functions;

(f) the competent authority is satisfied that where there are close links between the company and another person or persons, the laws, regulations or administrative provisions of a third country governing one or more persons with which the company has close links, or difficulties involved in the enforcement of those laws, regulations or administrative provisions, do not prevent the effective exercise of its supervisory functions; and

(g) it satisfies any other conditions for the granting of a licence, as may be specified in a Financial Institutions Rule:

Provided that the company shall, after being licensed under this Act, inform the competent authority forthwith of any change in circumstances concerning the application and shall be further required to provide the competent authority with information necessary to monitor compliance with the conditions referred to in this sub-article on a continuous basis.

(1A) No natural person or company shall be granted a registration to carry out account information services unless:

(a) the competent authority is satisfied, where applicable, that qualifying shareholders, controllers and all persons who effectively direct the business of the account information service provider are suitable persons to ensure its sound and prudent management;

(b) the competent authority is satisfied that the natural person or company has sound and prudent management and has robust governance arrangements that include a clear organisational structure with well defined, transparent and consistent lines of responsibility, effective procedures to identify, manage, monitor and report the risks to which it is or might be exposed, and adequate internal control mechanisms, including sound administrative and accounting procedures:

Provided that such arrangements, procedures and mechanisms shall be comprehensive and proportionate to the nature, scale and complexity of the services provided by the natural person or company, as may be determined by the competent authority from time to time and, or as may be specified by a Financial Institutions Rule;

(c) the competent authority is satisfied that where there are close links between the natural persons or the company and another person or persons, such links do not prevent it from the effective exercise of its supervisory functions;

(d) the competent authority is satisfied that where there are close links between the natural person or the company and another person or persons, the laws, regulations or administrative provisions of a third country governing one or more persons with which the company has close links, or difficulties involved in the enforcement of those laws, regulations or administrative provisions, do not prevent the effective exercise of its supervisory functions; and

(e) the natural person or company satisfies any other conditions for the granting of a registration as may be specified in a Financial Institutions Rule:

Provided that the natural person or company shall, after being registered under this Act, inform the competent authority forthwith of any change in circumstances concerning the application, and shall be further required to provide the competent authority with information necessary to monitor compliance with the conditions referred to in this sub-article on a continuous basis.

(1B) A natural person or a company who applies for a licence or a registration as applicable in terms of this article, to provide payment initiation services and, or account information services, shall as a condition for the granting of its licence or registration, as applicable, also be required to hold a professional indemnity insurance covering the territories in which it offers services, or some other comparable guarantee against liability. With respect to an applicant who intends to provide payment initiation services, the required professional indemnity insurance or other comparable guarantee against liability, shall be required to ensure that it can cover its liabilities as specified in Articles 73, 89, 90 and 92 of the Payment Services Directive, as transposed in directives issued by the Central Bank under the Central

Bank of Malta Act. With respect to an applicant who intends to provide account information services, the required professional indemnity insurance or other comparable guarantee against its liability shall be required vis-à-vis the account servicing payment service provider or the payment service user resulting from the unauthorised or fraudulent access to, or the unauthorised or fraudulent use of payment account information:

Provided that the amount of the professional indemnity insurance or other comparable guarantee referred to in this sub-article shall be calculated in accordance with the method as may be established in a Financial Institutions Rule:

Provided further that any information required by the competent authority in order to calculate the amount of the professional indemnity insurance or other comparable guarantee required in terms of this sub-article shall be provided to the competent authority in terms of a Financial Institutions Rule.

(1C) Financial institutions required to hold a professional indemnity insurance or other comparable guarantee in accordance with sub-article (1B) shall review, and if necessary recalculate, the minimum monetary amount of their professional indemnity insurance or other comparable guarantee at least on an annual basis and as may be established in a Financial Institutions Rule.

(2) The competent authority shall determine each application for a licence or a registration within three months of receipt of the application or, in the event that the application does not comply with article 4(2) or additional information is required, within three months of compliance with the said sub-article or the submission of the information required, as the case may be, whichever is the later.

(3) The competent authority may grant or refuse to grant a licence or a registration applied for under this Act, and where it refuses an application, it shall inform the applicant in writing with the reasons for the refusal.

(4) (a) In granting a licence or a registration, the competent authority may subject a financial institution to such conditions as it may deem appropriate and having granted a licence, it may, from time to time, vary or revoke any condition so imposed or impose new conditions.

(b) For the better carrying out of the provisions of this Act, the competent authority may, from time to time, issue and publish Financial Institutions Rules in terms of article 13.

(5) Where the competent authority for any reason fails to determine an application for a licence or a registration within the time prescribed under sub-article (2), such fact shall be deemed to constitute a refusal to grant a licence or a registration, as applicable.

(6) Where a licensed or registered financial institution provides any of the services referred to in the First Schedule and at the same time intends to engage in activities other than those listed in the First Schedule, it shall not do so without the prior consent of the competent authority. The competent authority may require the establishment of a separate entity for the carrying out of the business for which the financial institution is licensed or registered, where the activities in which the financial institution is engaged or intends to engage and that are not listed in the First Schedule, impair or are likely to impair, either the financial soundness of the financial institution or the ability of the competent authority to monitor the financial institution’s compliance with all obligations set out in this Act and any regulations and, or Rules issued thereunder.

(7) A financial institution licensed or registered in Malta shall have its head office and its registered office in Malta and shall carry out at least part of its licensable and, or registrable activities in Malta:

Provided that where a registered account information service provider is a natural person, such a natural person shall have its contact address in Malta.