Obligations Arising from the CSP Amendment Act
Obligations Arising from the CSP Amendment Act
Previously exempted warranted professionals, including lawyers, notaries and accountants, as well as persons operating under the De Minis Rule, who provide corporate services by way of business (being the provision of directorships, company secretarial services, registered office or incorporations) had until the 16th of May 2021 to seek authorisation with regards to the provision of such services from the Malta Financial Services Authority (MFSA).
The New CSP Framework
The reform to the Company Services Provider (CSP) framework is aimed at raising standards for company services providers across the board. The new CSP framework includes provisions for 3 licence types (Class A /Under threshold Class A, Class B/Under threshold Class B and Class C CSP licence) to differentiate between the company services that one is authorised to provide by the nature of the licence held. A revamped CSP Rulebook was also issued by the MFSA to support the industry in understanding its regulatory obligations as well as to render the new framework sufficiently robust.
Ongoing Obligations
Regardless of the type of CSP licence held, all holders have certain obligations as laid down in the CSP Rulebook. A CSP, whether previously registered under the previous CSP framework or newly authorised under the new CSP regime must give due consideration to the CSP rule book to understand the measures and the extent of resources that are needed to address the ongoing requirements in relation to the following:
- Notifications and prior approvals required from the MFSA in case of a change within the CSP;
- Financial resources and insurance requirements to be satisfied and maintained throughout the lifecycle of the CSP;
- Sound management and good corporate governance;
- Risk management and compliance procedures, including reporting of breaches;
- Outsourcing procedures, including contingency and exit strategy plans;
- Conduct of business obligations including a conflict of interest policy, segregation of client funds and customer acceptance measures; and
- Record keeping and reporting obligations;
- The CSP Rule Book can be accessed and is the ‘go to document’ for understanding what the aforementioned obligations entail.
AML & CFT Considerations
Furthermore, CSPs must bear in mind that apart from being supervised by the MFSA, they will be monitored by the Financial Intelligence Analysis Unit (FIAU) for compliance with the anti-money laundering and combatting financing of terrorism (AML/CFT) framework. CSPs carrying out a ‘relevant activity’ are considered subject persons in terms of Regulation 2 of the Prevention of Money Laundering and Funding of Terrorism Regulations (‘PMLFTR’) and are therefore obliged to have such policies, procedures, processes, and controls in place to mitigate the risk of money laundering and terrorist financing which they may be exposed to. In this regard, subject persons will be guided by the FIAU Implementing Procedures Part 1 which are legally binding on all subject persons and intended to assist subject persons to understand and fulfil their obligations under the PMLFTR.
More recently, the FIAU has issued a sector-specific Guidance Document to enable an understanding of the implementation of certain AML/CFT obligations that warrant further elaboration at the CSP level.
BDO is here to help!
BDO is equipped with a diverse and experienced team that can assist you throughout your compliance needs. We address your requirements holistically using cutting edge technology, deep knowledge, expertise and a plethora of resources. Our experts can help you in any of the following areas:
- Reviewing the appropriate AML-CFT procedures tailored to the nature and size of your organisation;
- Carrying out a Business Risk Assessment which assists in the identification of risks and gaps in operational controls;
- An independent AML audit; and
- AML/CFT training where needed.