Authorisation and Obligations arising from the CSP (Amendment) Act 2020 and the PMLFT Act S.L 373.01

The Company Service Providers (Amendment) Act, 2020 came into force on the 16th March 2021. Previously exempted warranted professionals, such as lawyers, notaries, legal procurators, 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 up to the 16th of May 2021 to seek authorisation in relation to the provision of such services from the MFSA, which is the authority responsible for the supervision of company service providers.

The New CSP Regime

The reform to the Company Services Provider framework is aimed towards raising standards for company services providers (CSPs) across the board. The new CSP regime includes provisions for three different licences (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 further issued by the MFSA to support the sector in understanding its regulatory obligations as well as to render the new regime sufficiently robust.

Ongoing Obligations

Regardless of the type of CPS 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;

  1. Notifications and prior approvals needed from the MFSA in case of a change within the CSP;
  2. Financial resources and insurance requirements to be satisfied and maintained throughout the lifecycle of the CSP;
  3. Sound management and good corporate governance;
  4. Risk management and compliance procedures (including the reporting of breaches);
  5. Outsourcing procedures including contingency and exit strategy plan;
  6. Conduct of business obligations including a conflict of interest policy, segregation of client funds and customer acceptance measures; and  
  7. Record keeping and reporting obligations.  

The CSP rule book can be accessed here and is the ‘go to document’ for understanding what the aforementioned obligations entail.

AML/CFT Considerations

Furthermore, CSPs need to bear in mind that apart from being supervised by the MFSA, they will be monitored by the FIAU for compliance with the anti-money laundering and combatting financing of terrorism (AML/CFT) regime. 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 in place such policies, procedures, processes, and controls to mitigate the risk of money laundering and terrorist financing that they may be exposed to. In this respect, subject persons are to 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 also issued a sector-specific guidance to enable understanding on the implementation of certain AML/CFT obligations that warrant further elaboration at the CSP level.

You can access the CSP sector-specific guidance over here.

How can RSM  help?

We have a diverse and experienced team that can assist you throughout your compliance needs. We address your requirements holistically using technology, knowledge, expertise and resources. Our experienced team can help you in any of the following:

  • Drafting or review of appropriate AML /CFT procedures tailored to the nature and size of your business;
  • 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.

To learn more about the above regulations kindly contact Vladimiro Comodini, Partner ([email protected]) or Marion Borg Muscat, Manager ([email protected]).