The VFA Rules for VFA Agents (6)

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 […]

Written By ACT Team

On August 30, 2018
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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 discuss the last title of Chapter 1 of the rule book, which deals with the enforcement and sanctions which the MFSA is authorized to impose in terms of the Virtual Financial Assets Act.

Title 4 – Enforcement and sanctions 

This title provides the principles which will guide the MFSA when imposing penalties and provides for aggravating and mitigating circumstances in cases of misconduct by VFA agents registered in terms of Article 7 and / or 14 of the Act. 

The MFSA has sanctioning powers including imposing administrative penalties against a VFA agent which does not comply with its obligations.  In terms of the authority granted to it by Article 48 of the Act, the MFSA may without recourse to a court of law, impose a penalty of up to Eur150,000. 

The MFSA shall be guided by the principle of proportionality which will take into consideration the circumstances of the case including: 

  1. The repetition, frequency, gravity or duration of the infringement by the VFA agent
  2. The degree of responsibility of the person responsible for the infringement
  3. The financial strength of the VFA agent
  4. The profits, gains or losses avoided by the VFA agent by reason of the infringement
  5. The losses incurred by third parties caused by the infringement
  6. The level of cooperation afforded by the VFA agent to the MFSA
  7. Previous infringements by the VFA agent and prior sanctions imposed by the MFSA on the said VFA agent
  8. The good faith, the degree of openness and diligence of the VFA agent in the fulfillment of his obligations
  9. Any evidence of willful deceit on the part of the VFA agent
  10. Any potential systematic consequences of the infringement

The MFSA may also impose penalties when a VFA agent fails to file documentation on time.  The penalties will consist of an initial penalty and an additional daily penalty.

VFA agents have a right to appeal to the Financial Services Tribunal against sanctions imposed by the MFSA.

How can we help?  

For further information, please contact one of the firm’s tax partners, Stephen Balzan on [email protected] or Elaine Camilleri [email protected]. ACT can help you understand the changes to the tax rules and how these can impact your business.  

Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria.  For an appointment in our Gozo office, please call on 00356 21378672 or send us an email on [email protected]. 

Disclaimer: This article contains general information only and is not intended to address the circumstances of any particular individual or entity. ACT, by means of this article is not rendering any accounting, business, financial, investment, legal, tax, or other professional advice or service. This article is not a substitute for such professional advice, nor should it be used as a basis for any decision or action that may affect your finances or your business. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Before making any decisions or before taking any action that may affect your finances or your business, you should consult a qualified professional adviser. ACT shall not be responsible for any loss whatsoever sustained by any person who relies on this article.