Initial Requirements for Financial Institution Licensing under the Financial Institutions Act

Pre-Licensing Criteria To apply for a license to operate as a financial institution offering payment services under the Second Schedule to the Financial Institutions Act, certain preliminary conditions must be met:

Adequate Capitalization: The institution must possess sufficient funds to meet the minimum initial share capital and maintain a specified level of own funds as outlined in Financial Institutions Rule 01.

Local Management: At least two individuals must effectively manage the institution from Malta.

Fit and Proper Personnel: All individuals directing or managing the operation must meet the MFSA’s criteria for prudent conduct, integrity, and professionalism.

Disclosure and Monitoring: The applicant and related parties must furnish relevant information to the MFSA for monitoring prudential criteria and safeguarding client interests.

Governance and Controls: The institution must demonstrate sound management practices, robust governance arrangements, and effective internal controls.

Active Participation: The MFSA may require active involvement, either through shareholding or management, by an authorized institution in a reputable jurisdiction.

Documentation Requirements Applications for licensing must include:

• Memorandum and Articles of Association
• Audited financial statements (if applicable)
• Business plan outlining the organizational structure and management systems
• Identification details of directors, managers, and qualifying shareholders
• Programme of operations detailing planned activities
• Proposed initial capital level

Minimum Capital Requirements Financial institutions providing payment services must hold the following initial capital upon authorization:

• Money Remittance Services: Minimum capital of €20,000
• Payment Service under paragraph 2(g): Minimum capital of €50,000
• Payment Services under paragraphs 2(a)-(e): Minimum capital of €125,000

Ongoing Compliance Payment service providers must maintain own funds as per one of the three methods specified in the Financial Institutions Rule.

Application Processing and Fees The application and processing fee payable to the MFSA is €3,500.
Annual Supervision Fee The annual supervision fee, calculated as a percentage of total assets, must not be less than €2,500.