The legal framework for company service providers in Malta : a critical analysis of laws and regulations and their impact on the local business environment

Abstract

The domestic legislative and regulatory framework for Company Service Providers (CSP) is unique, particularly when compared to how this regime is governed in other international jurisdictions. Notwithstanding that the original CSP Act was enacted in 2013, the amendments of Act L of 2020 brought about a significant overhaul in the regulation of this sector, with the primary intention of instilling a sound compliance culture aimed at safeguarding the nation’s integrity as a reliable financial system. The CSP Rulebook, encompassing the regulations issued by the MFSA, was revamped, introducing various obligations required for CSPs to obtain authorisation and to be licensed to offer CSP services 'by way of business'. This study assesses the laws and regulations relating to CSPs within the local scenario. It attempts to justify the need for the present legislation to regularise CSPs whilst identifying possible overlaps and divergences with other legal statutes and regulations. The ramifications of the most major amendments in the business sector are also assessed. Considering the limited jurisprudence and lack of judgements, a three-way approach was adopted to address the study’s objectives. Firstly, specific services were examined by referring to other legal statutes to justify the extent of the legal and regulatory regime in place. Secondly, a comparative review assessed similarities and divergences in how CSPs are regulated within selected EU jurisdictions. Thirdly, a qualitative analysis ensued to gauge the opinions and experience of practitioners within the field. Based on this analysis, initial observations demonstrate that the current framework has implemented various measures to stimulate a culture of compliance, governance, and risk. However, the onerous obligations should be proportionate to the business needs - considering the nature, size, and complexity of CSP operations. The recommendations proffer viable and legally sound solutions to ensure the continued viability and sustainability of the sector while upholding Malta's reputation as an unwaveringly dependable and onerous financial services hub.