The MFSA has on the 12th July 2018 issued a consultation paper on the Virtual Financial Assets rules for VFA agents. The closing date for submission was 31st July 2018 and now the MFSA is expected to issue the official chapter after taking into account the submissions which it has received as well as other consultations with relevant stake holders which it has carried out.
This paper is intended to form part of a rule book which will be entitled the ‘Virtual Financial Assets Rulebook’ and which will be divided into three chapters. This chapter applies to VFA agents appointed in terms of the VFA Act and to applicants seeking registration in terms of the said Act.
The first title of this chapter outlines the high-level principles which should guide VFA agents in the provision of their VFA activity in or from within Malta, while title 2 outlines the registration requirements and the registration process for VFA agents. Title 3 outlines the ongoing obligations which VFA agents must adhere to, while title 4 provides for enforcement and sanctions in the event of misconduct by VFA agents.
This article will deal with the registration process for a VFA agent as well as the post registration requirements.
The registration process
The registration process consists of 3 phases:
- Preparatory phase
The applicant must provide the MFSA with a letter of intent, a comprehensive description of the proposed structure and whether registration is being sought to perform the activities as listed in article 7 or 14 or both. A mandatory preliminary meeting between the MFSA and the applicant is held at that stage. The applicant shall within 60 days, submit an application together with any supporting documentation and the applicable registration fees.
- Pre-registration phase
The MFSA will initiate the review of the application and the supporting documentation and will issue an ‘in principle registration’ which shall be valid for a period of 3 months. During these 3 months, the applicant shall finalize any outstanding issues and submit the original copies and supporting documentation to the MFSA. A registration certificate will then be issued.
- Post registration / pre-commencement of business phase
Registered VFA agents may be required to satisfy within a set time frames, a number of post registration matters, prior to the commencement of the business.
Post registration requirements
Revision of a registration – VFA agents wishing to amend their registration must notify the MFSA of their intentions prior to effecting such change and submit a comprehensive description of the proposed revision as well as the approval from the governing body of the VFA agent. The MFSA may schedule a preliminary meeting with the VFA agent. A nominal fee of Eur500 is due.
Within 60 days, the VFA agent must submit a revised application form to the MFSA and the MFSA will then upon review issue an ‘in principle approval’ for the issuance of the revised VFA registration which will be valid for a period of 3 months. Then a revised VFA registration certificate is issued.
Change in the UBO of VFA agents – the VFA agent must immediately notify the MFSA of any changes to its structure immediately upon becoming aware of such changes. Unit holders which exceed 10% of the capital of the VFA agent requires approval from the MFSA. The MFSA shall grant its approval upon carrying out a fitness and properness assessment.
Other ongoing approvals and notifications include:
- a change in the address or contact details
- acquisitions or disposals of shares
- proposed material changes to its business at least one month before the change
- evidence of fraud or dishonesty
- material claims to its professional indemnity insurance
- any actual or intended legal proceedings of a material nature by or against the VFA agent
- any material changes in the information previously provided to the MFSA
- any other material information
- any breach of the laws and rules
The VFA agent shall obtain the written consent of the MFSA before
- making a change in its registered name, business or tradename
- implementing material changes to its business at least 1 month before
- making any changes to its capital or rights to its shareholders
- acquiring 10% or more of the voting rights of another company
- agreeing to merge or sell the whole or part of its business
- making an application to a regulator outside Malta to perform any activity outside Malta
- the appointment of a new director, MLRO, designated person or senior manager
- effecting ant changes in the responsibilities of the above-mentioned persons.