S.L. 590.1 Art. 16Placing of client money. Cap. 376.
(1) A subject person shall, on receiving any client money, promptly place such money with any of the following:
(a) a central bank;
(b) a credit institution authorised in accordance with the provisions of Directive 2013/36/EU;
(c) a bank authorised in a third country;
(d) a money market fund;
(e) an electronic money institution; or
(f) a payment institution:
Provided that for the purposes of paragraphs (e) and (f), such money shall only be placed with such institutions for purposes encompassed by their respective licences under the Financial
Institutions Act.
(2) Where the subject person does not place client money with a central bank, it shall exercise all due skill, care and diligence in the selection, appointment and periodic review of the credit institution, bank, money market fund, electronic money institution or payment institution where the money is placed and the arrangements for the holding of such money. The subject person shall furthermore, consider the need for diversification as part of its due diligence.
(3) Where the subject person places client money in accordance with sub-regulation (2), it shall, in particular, take into account the expertise and market reputation of such institutions or money market funds with a view to ensuring the protection of the rights of its clients as well as any legal or regulatory requirements or market practices related to the holding of clients’ money that could adversely affect such rights.
(4) The subject person shall ensure that clients give their written consent to the placement of their money in a money market fund, electronic money institution or payment institution.
(5) Where the subject person places client money with a credit institution, bank, money market fund, electronic money institution or payment institution of the same group as the subject person, it shall limit the money placed with any such group, entity or combination of any such group entities so that money does not exceed 20% of all such monies.
(6) The requirement prescribed in sub-regulation (5) can be waived by the competent authority where the subject person is able to demonstrate that, in view of the nature, scale and complexity of its business, and also the safety offered by the third parties considered in sub-regulation (5) and including in any case the small balance of client money the subject person holds, the requirement prescribed in sub-regulation (5) is not proportionate.
(7) The subject person shall periodically review the assessment made in accordance with sub-regulation (6) and shall notify the initial and reviewed assessments to the competent authority.