MFSA Tightens Financial Regulations for Lawyers, Auditors, and Accountants

Professionals in Malta, lawyers, accountants, and auditors, etc. are resisting the new rules that exempt them to act as a company officer without any authorisation by financial regulators (MFSA). 

Malta is facing pressure to toughen up its corporate governance rules by the Council of Europe’s Moneyval. This means warranted professionals must be authorised by the financial regulators before getting the ownership of a company.

These new reforms now require any warranted accountancy firm carrying out corporate services or any accountant to acquire a licence for market entry. The previously registered professionals were exempted depending on their status of warranty and due to the fact that the profession was regulated by the Accountancy Board which is an independent body. This change is not just limited to accountants, it also applies to the legal profession. 

One of the members of financial services said that this process is laborious and it will increase the expenses along with the new obligations including the risk and compliance. 

These rules were introduced in 2020 with a transitory period of 6 months. “CSPs previously had to present their returns to the Financial Intelligence Analysis Unit – now they have to be licenced by the MFSA for company formation services or to act as directors, and that means being subject to further MFSA compliance. For those not within the orbit of Big Four companies, or who work out of a simple office, it means cutting down on business,” the experienced CSP stated. 

These changes will bring some requirements for the authorised organisation including the requirement for registered CSPs to provide a procedure for disaster recovery, the requirement for insurance, the requirement for risk management, a requirement for the annual compliance monitoring programme, obligation to keep records, and other reporting regulations regarding money laundering. 

The new CSP regulations will enforce a penalty of up to €50,000 in case of a violation of the rules to a court of law. 

“In our view, a consultation process was also required in respect of the definition or interpretation of ‘by way of business, which did not take place possibly due to the deadline of implementing the framework by 16 March. The concept will determine which accountants will be subjected to market entry requirements and which won’t, so it is quite fundamental,” said Fabio Axisa on behalf of the Malta Institute of Accountants.