Chapter 371 – Banking Act

B A N K I NG

CHAPTER 371

BANKING ACT To regulate the business of banking.

15th November, 1994 ACT XV of 1994 as amended by Acts XXIV, XXV of 1995, VI of 2001, XVII of 2002, IV, IX of 2003, XIII of 2004,XX of 2007 Legal Notice 425 of 2007; Acts III,XVII of 2009, II of 2010, II, X of 2011, XX of 2013, X XXI of 2015, X, XXXI of 2017, XLIV of 2018 and XXVI of 2018. and XXVI of 2019, XIII of 2020, LXXI of 2021 , LXXII of 2021 , XXXVI of 2024 , XI and XXIX of 2025.

Art. 1

The short title of this Act is the Banking Act.

Art. 2

Short title.

Interpretation.

Amended by:

XXIV. 1995.362;

XXV. 1995.434;

XVII. 2002.157;

IX. 2003.76;

XIII. 2004.82;

XX. 2007.85;

XVII. 2009.11;

II. 2011.2;

X. 2011.37;

XX. 2013.54;

X. 2015.2;

XXI. 2015.19;

X. 2017.2;

XXXI. 2017.70;

XLIV.2018.9;

XXVI.2019.3;

LXXI.2021.19;

LXXII.2021.29;

XXXVI.2024.60;

XI.2025.24.

BANKING "branch" shall have the same meaning as that assigned to it in point (17) of Article 4(1) of the CRR; "the BRRD" means Directive 2014/59/EU of the European Parliament and of the Council of 15 May 2014 establishing a framework for the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, and Directives 2001/24/EC, 2002/47/EC, 2004/25/EC, 2005/56/EC, 2007/36/EC, 2011/35/EU, 2012/30/EU and 2013/36/EU, and Regulations (EU) No. 1093/2010 and (EU) No. 648/2012, of the European Parliament and of the Council, as amended from time to time, and includes any binding legal instruments, guidelines and other measures that have been or may be issued thereunder; "business of banking" means the business of a person who as set out in article 2A accepts deposits of money from the public withdrawable or repayable on demand or after a fixed period or after notice or who borrows or raises money from the public (including the borrowing or raising of money by the issue of debentures or debenture stock or other instruments creating or acknowledging indebtedness), in either case for the purpose of employing such money in whole or in part by lending to others or otherwise investing for the account and at the risk of the person accepting such money; "Central Bank" means the Central Bank of Malta as defined by the Central Bank of Malta Act; "close links" shall have the same meaning as that assigned to it in point (38) of Article 4(1) of the CRR; "Common Equity Tier 1 instruments" means capital instruments that meet the conditions laid down in Article 28(1) to (4), Article 29(1) to

B A N K I NG fulfilling a statutory obligation; "consolidated basis" shall have the same meaning as that assigned to it in point (48) of Article 4(1) of the CRR; "consolidating supervisor" shall have the same meaning as that assigned to it in point (41) of Article 4(1) of the CRR; "controller" is a person who, alone or together with others, exercises control in relation to a body corporate; "covered deposits" means covered deposits as defined in regulation 2 of the Depositor Compensation Scheme Regulations; "t he CRD " means D irecti ve 20 13 /3 6/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC, as amended from time to time, and includes any binding legal instruments, guidelines and other measures that have been or may be issued thereunder; "credit facility" means the lending of a sum of money by way of an advance, overdraft or loan or any other line of credit including discounting of bills of exchange and promissory notes, guarantees, indemnities, acceptances and bills of exchange endorsed pour aval; "the CRR" means Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No. 648/2012, as amended from time to time, and includes any implementing measures that have been or may be issued thereunder; "deposit" means a sum of money paid-in on terms under which it will be repaid, with or without interest or a premium and either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person receiving it; "Directive 2002/87/EC" means Directive 2002/87/EC of the European Parliament and of the Council of 16 December 2002 on the supplementary supervision of credit institutions, insurance undertakings and investment firms in a financial conglomerate and amending Council Directives 73/239/EEC, 79/267/EEC, 92/49/ EEC, 92/96/EEC, 93/6/EEC and 93/22/EEC, and Directives 98/78/ EC and 2000/12/EC of the European Parliament and of the Council, as amended from time to time, and includes any binding legal instruments, guidelines and other measures that have been or may be issued thereunder; "Directive 2004/109/EC" means Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to

information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC, as a m e n d e d f r o m t i m e t o t i m e , and includes any binding legal instruments, guidelines and other measures that have been or may be issued thereunder; "Directive 2009/138/EC" means Directive 2009/138/EC of the S.L. 371.09 BANKING European Parliament and of the Council of 25 November 2009 on t he taki ng -u p and pu rsui t of t he b usi ness o f In surance and Reinsurance (Solvency II), as amended from time to time, and includes any binding legal instruments, guidelines and other measures that have been or may be issued thereunder; "Directive (EU) 2015/849" means Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/ 2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC, as amended from time to time, and includes any binding legal instruments, guidelines and other measures that have been or may be issued thereunder; "Directive (EU) 2019/2034" means Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/ 59/EU and 2014/65/EU, as amended from time to time, and includes any binding legal instruments, guidelines and other measures that have been or may be issued thereunder;"director" includes an individual occupying the position of director of a company, by whatever name he may be called, empowered to carry out substantially the same functions in relation to the direction of the company as those carried out by a director and in respect of a company registered, licensed or holding an equivalent authorisation outside Malta includes a member of a local board or agent or representative of that company: "Provided that in respect of a financial holding company or a mixed financial company established outside Malta, "director" shall also include a member of the management body of the financial holding company or mixed financial holding company; "DORA Regulation" means Regulation (EU) 2022/2554 of the European Parliament and of the Council of 14 December 2022 on digital operational resilience for the financial sector and amending

Regulations (EC) No. 1060/2009, (EU) No. 648/2012, (EU) No. 600/ 2014, (EU) No. 909/2014 and (EU) 2016/1011, as may be amended from time to time, and includes any binding legal instruments, guidelines and other measures that have been or may be issued thereunder; "EBA" means the European Banking Authority established by Regulation (EU) No 1093/2010; "EEA State" means a State which is a contracting party to the agreement on the European Economic Area signed at Oporto on the 2nd May, 1992 as amended by the Protocol signed at Brussels on the 17th March, 1993 and as amended by any subsequent acts; "electronic money institution" shall have the same meaning as that assigned to it under article 2(1) of the Financial Institutions Act;

S.L. 371.09 "eligible deposits" means deposits that are not excluded from protection pursuant to regulation 9 of the Depositor Compensation B A N K I NG Scheme Regulations, and includes deposits held in an account entitled to compensate pursuant to regulation 12(5) Depositor Compensation Scheme Regulations; "ESCB central banks" shall have the same meaning as that assigned to it in point (45) of Article 4(1) of the CRR; "ESFS" means European System of Financial Supervision; "ESRB" means the European Systemic Risk Board established by Regulation (EU) No. 1092/2010; "EU parent financial holding company" shall have the same meaning as that assigned to it in point (31) of Article 4(1) of the CRR; "EU parent institution" shall have the same meaning as that assigned to it in point (29) of Article 4(1) of the CRR; "EU parent mixed financial holding company" shall have the same meaning as that assigned to it in point (33) of Article 4(1) of the CRR; "European Resolution Authority" means an authority which is situated in a country or territory outside Malta that is in a Member State or an EEA State and which exercises any function corresponding to the functions of the Resolution Committee under the Malta Financial Services Authority Act and the Recovery and Resolution Regulations issued thereunder; "financial holding company" shall have the same meaning as that assigned to it in point (20) of Article 4(1) of the CRR; "financial institution" shall have the same meaning as that assigned to it in point (26) of Article 4(1) of the CRR; "financial instrument" shall have the same meaning as that assigned to it in point (50) of Article 4(1) of the CRR; "financial sector entity" shall have the same meaning as that assigned to it in point (27) of Article 4(1) of the CRR; "Financial Services Tribunal" or "the Tribunal" means the Financial Services Tribunal established under the Malta Financial Services Authority Act; "GDPR" means Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/ EC, as amended from time to time, and includes any binding legal instruments, guidelines and other measures that have been or may be issued thereunder; "group" shall have the same meaning as that assigned to it in point (138) of Article 4(1) of the CRR; "holding company" has the same meaning as is assigned to the term "parent company" in the Companies Act; "home Member State" shall have the same meaning as that

assigned to it in point (43) of Article 4(1) of the CRR;

BANKING "host Member State" shall have the same meaning as that assigned to it in point (44) of Article 4(1) of the CRR; "initial capital" shall have the same meaning as that assigned to it in point (51) of Article 4(1) of the CRR; "institution" shall have the same meaning as that assigned to it in point (3) of Article 4(1) of the CRR; "insurance undertaking" shall have the same meaning as that assigned to it in point (5) of Article 4(1) of the CRR; "investment firm" shall have the same meaning as that assigned to it in point (2) of Article 4(1) of the CRR; "licence", in relation to the business of banking, means a licence granted in terms of article 5, 6A or 7; "Malta’s international commitments" means commitments, responsibilities and obligations arising out of European Union law, or membership of, or affiliation to, or relationship with, any international, global or regional organisations or grouping of countries or out of any treaty, convention or other international or reciprocity agreement, however called, whether bilateral or multilateral, to which Malta or the competent authority is a party; "management body" means the body or bodies of a financial holding company or financial holding company established outside Malta, which are appointed in accordance with the law of the jurisdiction in which such a company is established, which are empowered to set the company's strategy, objectives and overall direction, and which oversee and monitor management decisionmaking, and include the persons who effectively direct the business of the company; "manager" means a person who is placed in charge of the business or part of the business of a company or otherwise who has a substantial supervisory role with the power to make policy and executive decisions on behalf of the company; "Member State" means a Member State of the European Union and includes an EEA State; "MiCA Regulation" means Regulation (EU) 2023/1114 of the European Parliament and of the Council of 31 May 2023 on markets in crypto-assets, and amending Regulations (EU) No. 1093/2010 and (EU) No. 1095/2010 and Directives 2013/36/EU and (EU) 2019/1937, as may be amended from time to time, and includes any binding legal instruments, guidelines and other measures that have been or may be issued thereunder; "MiFID" means Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU, as amended from time to time, and includes any binding legal instruments, guidelines and other measures that

have been or may be issued thereunder; "MiFIR" means Regulation (EU) No. 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in B A N K I NG financial instruments and amending Regulation (EU) No 648/2012, as may be amended from time to time, and includes any binding legal instruments, guidelines and other measures that have been or may be issued thereunder; "Minister" means the Minister responsible for the regulation of Financial Services; "mixed activity holding company" shall have the same meaning as that assigned to it in point (22) of Article 4(1) of the CRR; "mixed financial holding company" shall have the same meaning as that assigned to it in point (21) of Article 4(1) of the CRR; "money laundering" has the same meaning ascribed to it by the Prevention of Money Laundering Act; "officer", in relation to a company, includes a director, partner, manager or company secretary or any person effectively acting in such capacity whether formally appointed or not; "outsourcing" means an arrangement of any form between a credit institution and an outsourcing service provider by means of which that outsourcing service provider performs a process, a service or an activity that would otherwise be undertaken by the credit institution; "outsourcing service provider" means a third-party entity that is undertaking an outsourced process, service or activity, or parts thereof, under an outsourcing arrangement; "overseas regulatory authority" means an authority which in a country or territory outside Malta exercises any function corresponding to the functions of the competent authority under this Act; "own funds" shall have the same meaning as that assigned to it in point (118) of Article 4(1) of the CRR; "PAD" means Directive 2014/92/EU of the European Parliament and of the Council of 23 July 2014 on the comparability of fees related to payment accounts, payment account switching and access to payment accounts with basic features, as may be amended from time to time and including and includes any binding legal instruments, guidelines and other measures that have been or may be issued thereunder; "parent financial holding company" shall have the same meaning as that assigned to the term "parent financial holding company in a Member State" in point (30) of Article 4(1) of the CRR; "parent institution" shall have the same meaning as that assigned to the term "parent institution in a Member State" in point (28) of Article 4(1) of the CRR; "parent mixed financial holding company" shall have the same

meaning as that assigned to the term "parent mixed financial holding company in a Member State" in point (32) of Article 4(1) of the CRR; "parent undertaking" shall have the same meaning as that assigned to it in point (15) of Article 4(1) of the CRR;

BANKING "payment account" shall have the same meaning as that assigned to it under article 2(1) of the Financial Institutions Act; "payment initiation service" shall have the same meaning as that assigned to it under article 2(1) of the Financial Institutions Act; "payment initiation service provider" shall have the same meaning as that assigned to it under article 2(1) of the Financial Institutions Act; "payment institution" shall have the same meaning as that assigned to it under article 2(1) of the Financial Institutions Act; "payment service" means any business activity set out in the Second Schedule to the Financial Institutions Act; "Payment Services Directive" means Directive (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market, amending D i r e c t i v e s 2 0 0 2 / 6 5 / E C , 2 0 0 9 / 11 0 / E C a n d 2 0 1 3 / 3 6 / E U a n d Regulation (EU) No 1093/2010, and repealing Directive 2007/64/ EC, as may be amended from time to time, and includes any binding legal instruments, guidelines and other measures that have been or may be issued thereunder; "payment service user" shall have the same meaning as that assigned to it under article 2(1) of the Financial Institutions Act; "qualifying holding" or "qualifying shareholding" shall have the same meaning as that assigned to it in point (36) of Article 4(1) of the CRR; "recognised jurisdiction" means: (a) a Member State and Switzerland; (b) any country that is a member of the Organisation for Economic Co-operation and Development (OECD); (c) a country that is a signatory of the International Organisation of Securities Commissions (IOSCO) Multilateral Memorandum of Understanding; (d) a country that is a signatory of the International Association of Insurance Supervisors (IAIS) Multilateral Memorandum of Understanding; (e) any jurisdiction which is a member of the Basel Committee on Banking Supervision; (f) any jurisdiction falling within the Recommendations on the equivalence of confidentiality regimes issued by the EBA from time to time; or (g) any other jurisdiction with whom the competent authority has signed a Memorandum of Understanding; "reconstruction" has the same meaning as in the Companies Act; "Regulation (EU) No. 1092/2010" means Regulation (EU) No.

1092/2010 of the European Parliament and of the Council of 24 November 2010 on European Union macro-prudential oversight of B A N K I NG the financial system and establishing a European Systemic Risk Board, as amended from time to time, and includes any binding legal instruments, guidelines and other measures that have been or may be issued thereunder; "Regulation (EU) No. 1093/2010" means Regulation (EU) No.

1093/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Banking Authority), amending Decision No. 716/2009/ EC and repealing Commission Decision 2009/78/EC, as amended from time to time, and includes any binding legal instruments, guidelines and other measures that have been or may be issued thereunder; "Regulation (EU) No. 1094/2010" means Regulation (EU) No.

1094/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Insurance and Occupational Pensions Authority), amending Decision No. 716/2009/EC and repealing Commission Decision 2009/79/EC, as amended from time to time, and includes any binding legal instruments, guidelines and other measures that have been or may be issued thereunder; "Regulation (EU) No. 1095/2010" means Regulation (EU) No.

1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No. 716/2009/EC and repealing Commission Decision 2009/77/EC, as amended from time to time, and includes any binding legal instruments, guidelines and other measures that have been or may be issued thereunder; "Regulation (EU) 2019/2033" means Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No. 1093/2010, (EU) No. 575/2013, (EU) No. 600/ 2014 and (EU) No. 806/2014, as amended from time to time and includes any binding legal instruments, guidelines and other measures that have been or may be issued thereunder; "reinsurance undertaking" shall have the same meaning as that assigned to it in point (6) of Article 4(1) of the CRR; "representative office" means, in relation to a body corporate, unincorporated body or association formed in accordance with or existing under the laws of a country outside Malta, premises in Malta from which the business of banking is promoted or assisted in any way, and in relation to a body corporate, unincorporated body or association formed in accordance with and existing under the laws of Malta, premises outside Malta from which the business of banking is promoted or assisted in any way; "resolution authority" means an authority designated by a Member State in accordance with Article 3 of the BRRD; "resolution entity" shall have the same meaning as that assigned to it in regulation 2(1) of the Recovery and Resolution Regulations;

S.L. 330.09.

BANKING S.L. 330.09. "Resolution Fund" means the resolution financing arrangement under the Recovery and Resolution Regulations;

S.L. 330.09. "resolution group" shall have the same meaning as that assigned to it in regulation 2(1) of the Recovery and Resolution Regulations;

S.L. 371.09 "Scheme" means the Depositor Compensation Scheme established under regulation 4 of the D e p o s i t o r C o m p e n s a t i o n S c h e m e Regulations; "senior management" means those natural persons who exercise e x e c u t i v e f u n c t i o n w i t h i n a cr e d i t i n s t i t u t i o n a n d w h o a r e responsible, and accountable to the board of directors, for the dayto-day management of the credit institution; "sub-consolidated basis" shall have the same meaning as that assigned to it in point (49) of Article 4(1) of the CRR; "subsidiary" shall have the same meaning as that assigned to it in point (16) of Article 4(1) of the CRR; "third country" means a country that is not a Member State; "third-country group" means a group of which the parent undertaking is established in a third country; "Tier 2 instruments" means capital instruments or subordinated loans that meet the conditions laid down in Article 63 of the CRR; "Third-Country Resolution Authority" means an authority which is in a country or territory that is not a Member State and is responsible for carrying out functions comparable or equivalent to those of the Resolution Committee under the Malta Financial Services Authority Act and the Recovery and Resolution Regulations issued thereunder; "UCITS" means undertakings for collective investment in transferable securities in terms of Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) (recast), as amended from time to time, including any implementing measures that have been or may be issued thereunder; "working days" means days other than Saturdays, Sundays and the Public Holidays and the National Holidays referred to in the National Holidays and Other Public Holidays Act. (1A) For the purposes of applying the requirements and supervisory powers laid down in this Act and any regulations and Banking Rules made or issued thereunder transposing the CRD, in any binding legal instruments issued under the CRD, or in the CRR, on a consolidated or sub-consolidated basis in accordance with this Act and any regulations and Banking Rules made or issued thereunder transposing the CRD, any binding legal instruments issued under the CRD, and with the CRR, the terms "institution", "parent institution", "EU parent institution" and "parent undertaking" shall also include: (a) financial holding companies and mixed financial

B A N K I NG holding companies that have been granted approval in accordance with article 11B and, or Article 21a of the CRD; (b) designated institutions controlled by an EU parent financial holding company, an EU parent mixed financial holding company, a parent financial holding company in a Member State or a parent mixed financial holding company in a Member State where the relevant parent is exempted in accordance with article 11B(5) and, or Article 21a(4) of the CRD (c) financial holding companies, mixed financial holding companies or institutions designated pursuant to article 29AA(1)(f) and, or Article 21a(6)(d) of the CRD. (1B) For the purposes of applying the requirements and supervisory powers laid down in Articles 4(5), 14(2), 14(2A), 14(5), 17E, 19(1), 19(3), 20(1), 25(7), 25(10), 30A on a consolidated or sub-consolidated basis in accordance with this Act and any regulations and Banking Rules made or issued thereunder transposing the CRD, any binding legal instruments issued under the CRD, and with the CRR, the term "credit institution" shall also include: (a) financial holding companies and mixed financial holding companies that have been granted approval in accordance with article 11B of this Act and, or Article 21a of the CRD; (b) designated institutions controlled by an EU parent financial holding company, an EU parent mixed financial holding company, a parent financial holding company in a Member State or a parent mixed financial holding company in a Member State where the relevant parent is exempted in accordance with article 11B(5) and, or Article 21a(4) of the CRD; (c) financial holding companies, mixed financial holding companies or institutions designated pursuant to article 29AA(1)(f) and, or Article 21a(6)(d) of the CRD. (1C) Reference to the "approval" of financial holding companies or mixed financial holding companies in this Act and any regulations and, or Banking Rules issued thereunder, shall mean an approval granted by the competent authority in terms of article 11B or an approval granted through the joint decision of the competent authority and an overseas regulatory authority in terms of article 11B of this Act and Article 21a of the CRD, as the case may be. (1D) Reference to the "exemption" of financial holding companies or mixed financial holding companies in this Act and any regulations and, or Banking Rules issued thereunder, shall mean an exemption granted by the competent authority in terms of article 11B or an exemption granted through the joint decision of the competent authority and an overseas regulatory authority in

BANKING terms of article 11B of this Act and Article 21a of the CRD, as the case may be.

Prohibition from undertaking the business of banking.

Added by:

X. 2015.3.

Amended by:

LXXI.2021.20.

Art. 2A

2A. A person that is not a credit institution shall be prohibited from carrying on the business of taking deposits or other repayable funds from the public. A person shall be deemed to be accepting deposits of money as a regular feature of his business, if, whether as principal or as agent, he advertises or solicits for such deposits, without regard to the terms and conditions under which such deposits are solicited or received and without regard to whether certificates or other instruments are issued in respect of any such deposits:

Provided that this article shall not apply to the taking of deposits or other funds repayable by a Member State or by a M e m b e r St a t e ’s r e g i o n a l o r l o c a l a u t h o r i t i e s o r b y p u b l i c international bodies of which one or more Member States are members or to cases expressly covered by national or European Union law, provided that those activities are subject to regulations and controls intended to protect depositors and investors:

Provided further that the acceptance of money against any issue of debentures or debenture stock or other instruments creating or acknowledging indebtedness offered to the public in accordance with any law in force in Malta shall not of itself be deemed to constitute acceptance of deposits of money for the purposes of this Act and any regulations made and, or Banking Rules and, or Conduct of Business Rules issued thereunder.

Powers and duties of the Minister.

Amended by:

XVII. 2002.158;

XX. 2007.86;

II. 2011.3;

X. 2011.38;

XX. 2013.55;

X. 2015.4;

XXI. 2015.20;

XXVI.2019.4;

XIII.2020.8;

LXXI.2021.21;

XI.2025.25.

Art. 3

regulations, and in case of such inconsistency, such provisions in any such regulations shall prevail; (d) adopt, where necessary, any Communications issued by the European Commission; (e) prescribe that a breach of any regulations made under this Act may amount to a criminal offence as may be specified, and such regulations may impose punishments in respect of any breach, not exceeding a fine (multa) of two million euro (€2,000,000) or imprisonment for a term not exceeding three years, or both such fine and imprisonment, and a higher fine (multa) may be imposed where deemed necessary or appropriate for any breach or failure of compliance with any EU Directive or EU Regulation or with any regulations made under this article to transpose or to give effect to any EU Directive or EU Regulation;

BANKING (f) transpose, implement and, or give effect to the requirements of the PAD, and in so doing may also establish or maintain measures alternative to those referred to in Article 10(2) to (6) of the PAD, provided that: (i) (ii) it is clearly in the interest of the consumer; there is no additional burden for the consumer; and (iii) the switching as defined in Article 2(18) of the PAD is completed within, as a maximum, the same overall time-frame as that indicated in Article 10(2) to (6) of the PAD; (g) set up a specific mechanism to ensure that consumers who do not have a payment account as defined in Article 2(3) of the PAD in their territory, and who have been denied access to such a payment account for which a fee is charged by credit institutions, will have effective access to a payment account with basic features in terms of the PAD, free of charge; (h) regulate products institutions;

Art. 4

Powers and duties of the competent authority.

Amended by:

XVII. 2002.159;

XX. 2007.85, 87;

II. 2011.4;

X. 2015.5;

XXXI. 2017.71;

XXVI.2019.5;

LXXI.2021.22.

S.L. 204.06.

XXXI. 2017.71.

BANKING Banking Rules and, or Conduct of Business Rules for the purpose of implementing any guidelines, recommendations, decisions, opinions or any other instrument issued by the EBA, as may be required.

Supervisory practices.

Added by:

II. 2011.5.

Amended by:

XX. 2013.56.

Substituted by:

X. 2015.6.

Amended by:

LXXI.2021.23.

Art. 4A

4A. (1) In the exercise of its duties, the competent authority shall take into account the convergence in respect of supervisory tools and supervisory practices in the application of this Act and a n y r e g u l a t i o n s m a d e a n d Banking Rules issued thereunder transposing the CRD, of any binding legal instruments issued under the CRD, and of the CRR. For that purpose, the competent authority shall (a) as party to the ESFS, cooperate with trust and full mutual respect, in particular when ensuring the flow of appropriate and reliable information between the competent authority and other parties to the ESFS in accordance with the principle of sincere cooperation set out in Article 4(3) of the Treaty on European Union; (b) participate in the activities of the EBA and, as appropriate, in the colleges of supervisors; (c) make every effort to comply with those guidelines and recommendations issued by the EBA in accordance with Article 16 of Regulation (EU) No. 1093/2010 and to respond to the warnings and recommendations issued by the ESRB pursuant to Article 16 of Regulation (EU) No. 1092/2010; (d) cooperate closely with the ESRB.

Power to issue directives.

Added by:

X. 2015.7.

Amended by:

XLIV.2018.10;

LXXI.2021.24;

XI.2025.26.

Art. 4B

4B. (1) Without prejudice to any of the powers conferred on it in this Act, the competent authority may, whenever it deems necessary, give, by notice in writing, such directives as it may deem appropriate in the circumstances in order to carry out the functions and duties prescribed by the Malta Financial Services Authority Act, by this Act and by any regulations made and Banking Rules and Conduct of Business Rules issued thereunder, by the CRR and by any B A N K I NG binding legal instruments issued under the CRD:

Provided that, without prejudice to the generality of the foregoing, the competent authority may give any such directive even: (i) to financial holding companies and mixed financial holding companies exempted in terms of article 11B(5); (ii) where a credit institution, financial holding company or mixed financial holding company ceases to hold a licence or approval, as the case may be, for whatever reason, or such licence or approval, as the case may be, ceases to have effect:

Provided further that any directive given in terms of this A c t a n d a n y r e g u la t i o n s m a d e t h e r e u n d e r s h a l l , un l e s s t h e competent authority otherwise directs, continue to apply even when a credit institution, financial holding company or mixed financial holding company ceases to hold a licence or approval, as the case may be, for whatever reason, or such licence or approval, as the case may be, ceases to have effect.

Art. 4C

4C. Without prejudice to the functions, powers and duties assigned to the competent authority by this Act, the competent authority shall also have the functions, powers and duties assigned to it under the Malta Financial Services Authority Act and under any regulations made thereunder for the purposes of transposing the provisions of the BRRD.

Functions, powers and duties.

Added by:

XXI. 2015.21.

Art. 5

Licences for banking activities.

Amended by:

XVII. 2002.160;

XX. 2007.85, 88;

L.N. 425 of 2007;

III. 2009.17;

XVII. 2009.12;

II. 2011.6;

X. 2015.8;

XI.2025.27.

Provided that a credit institution licensed or holding an equivalent authorisation in a Member State or EEA state shall be BANKING entitled to exercise its rights under European Union Law.

Application for a licence.

Amended by:

XVII. 2002.161;

XX. 2007.85;

II. 2011.7;

XX. 2013.57;

X. 2015.9;

LXXI.2021.25;

LXXII.2021.2.

Art. 6

Provided that the entities listed in the Second Schedule shall not be required to apply to the competent authority for a licence under this Act, and the provisions of this Act and of any regulations made and, or any Banking Rules and, or Conduct of Business Rules issued thereunder, and the CRR shall accordingly not apply thereto, unless otherwise specifically provided for in this Act, or in any regulations made or Banking Rules or Conduct of Business Rules issued thereunder.

Provided that before a licence is granted or refused, an application may only be withdrawn by written notice to the competent authority.

B A N K I NG

Art. 6A

Undertakings referred to in point (1)(b) of Article 4(1) of the CRR which have already obtained a licence pursuant to articles 3, 5 and 6 of the Investment Services Act shall submit an application for a licence in accordance with articles 5 and 6, at the latest on the day when either of the following events takes place:

Specific requirements for licensing of credit institutions referred to in point

Added by: (a) the average of monthly total assets, calculated over a period of twelve consecutive months, is equal to or exceeds thirty billion euro (€30,000,000,000); or LXXII.2021.30. (b) the average of monthly total assets calculated over a period of twelve consecutive months is less than thirty billion euro (€30,000,000,000), and the undertaking is part of a group in which the total value of the consolidated assets of all undertakings in the group that individually have total assets of less than thirty billion euro (€30,000,000,000) and that carry out any of the activities referred to in paragraphs (3), (4), (6) and (7) of the First Schedule annexed to the Investment Services Act is equal to or exceeds thirty billion euro (€30,000,000,000), both calculated as an average over a period of twelve consecutive months.

Art. 7

Provided that the competent authority may, by a provision contained in a Banking Rule or as required through a condition in a credit institution’s licence, increase the amount laid down in this paragraph:

Provided further that the initial capital shall comprise only one or more of the items referred to in Article 26(1)(a) to (e) of the CRR; (b) there are at least two individuals who effectively direct the business of the company; (c) the competent authority is notified of the identities of the shareholders or members whether direct or Issuing of a licence.

Amended by:

XVII. 2002.162;

IV. 2003.178;

XX. 2007.85, 89;

L.N. 425 of 2007;

XVII. 2009.13;

II. 2011.8;

XX. 2013.58;

X. 2015.10;

XXVI.2019.6;

LXXI.2021.26.

BANKING indirect, that have qualifying holdings and of the amounts of those holdings or, where there are no qualifying holdings, of the twenty largest shareholders or members:

Provided that in determining whether the criteria for a qualifying holding are fulfilled, the voting rights referred to in Articles 9 and 10 of Directive 2004/109/ EC and the conditions regarding aggregation thereof set out in Article 12(4) and (5) of that Directive, shall be taken into account:

Provided further that voting rights or shares which credit institutions hold as a result of providing the underwriting of financial instruments or placing of financial instruments on a firm commitment basis included under point (6) of Section A of Annex I to MiFID shall not be taken into account, provided that those rights are not exercised or otherwise used to intervene in the management of the issuer and are disposed of within one year of acquisition; (d) the competent authority is satisfied that the shareholders or members mentioned in paragraph (c), controllers and all individuals who will effectively direct the business of the credit institution are suitable persons to ensure its sound and prudent management.

The competent authority shall be satisfied with the suitability of the individuals who will effectively direct the business if the requirements referred to in article 14(2) and (2A) are met. The competent authority shall be satisfied of the suitability of the shareholders or members mentioned in paragraph (c), in accordance with the criteria set out in article 13A(9). Article 13A(8) and (10) and article 13B shall apply; (e) the competent authority is satisfied that, where there are close links between the company and another person or persons, such links do not through any law, regulation, administrative provision or in any other manner prevent it from exercising effective supervision of the company, once in possession of a licence, under the provisions of this Act and any regulations made and, or Banking Rules and, or Conduct of Business Rules issued thereunder:

Provided that the competent authority shall not grant a licence where the laws, regulations or administrative provisions of a third country governing one or more persons with which the credit institution has close links, or difficulties involved in the enforcement of those laws, regulations and administrative provisions, prevent the effective exercise of its supervisory functions:

Provided further that in respect of this paragraph (e), the credit institution shall inform the competent authority forthwith of any change in circumstances B A N K I NG concerning the application of this said paragraph (e) and shall further provide the competent authority with the information necessary to monitor compliance with the conditions referred to in this paragraph (e) on a continuous basis; (f) the competent authority is satisfied that the arrangements, processes and mechanisms referred to in article 17B enable sound and effective risk management by that credit institution.

Right of redemption.

Added by:

XVII. 2002.163.

Amended by:

IX. 2003.77;

XX. 2007.90;

L.N. 425 of 2007.

Prior consultation with overseas regulatory authorities.

Added by:

X. 2015.11.

Amended by:

LXXI.2021.27.

BANKING

Art. 7A

7A. (Deleted by Act II. 2011.9.).

Art. 7B

7B. (1) The competent authority shall, before issuing a licence to a credit institution, consult the overseas regulatory authorities of another Member State where the credit institution is (a) a subsidiary of a credit institution authorised in that other Member State; (b) a subsidiary of the parent undertaking of a credit institution authorised in that other Member State; (c) controlled by the same persons as those who control a credit institution authorised in that other Member State.

Representative offices of nonMaltese banks.

Amended by:

XVII. 2002.164;

XX. 2007.85, 91;

LXXI.2021.28;

XI.2025.28.

Art. 8

Such notice shall (a) specify the name it is proposed to use in relation to the activities of the representative office and the address of such office; (b) be accompanied by a certified copy of the B A N K I NG authorisation of the company to conduct the business of banking in a country other than Malta.

Art. 8A

8A. Companies which have established, or which intend to establish representative offices in Malta may be required to pay fees as may be prescribed in accordance with the provisions of article 3.

Companies may be required to pay fees.

Added by:

XI.2025.29.

Withdrawal and restriction of a licence.

Amended by:

XVII. 2002.165;

XX. 2007.92;

XVII. 2009.14;

II. 2011.10;

XX. 2013.59 X. 2015.12;

XXVI.2019.7;

LXXI.2021.29;

LXXII.2021.31.

BANKING

Art. 9

S.L. 371.16 S.L. 371.05 (d) no longer meets the prudential requirements set out in Parts Three, Four or Six of the CRR, except for the requirements laid down in Articles 92a and 92b of the CRR, or imposed under regulations 9(1)(a) and 10(1) and (2) of the Banking Act (Supervisory Review) Regulations or can no longer be relied on to fulfil its obligations towards its creditors, and, in particular, no longer provides security for the assets entrusted to it by its depositors; (e) commits one of the breaches referred to in regulation 7(1) of the Administrative Penalties, Measures and Investigatory Powers Regulations; (f) conceals from, or fails to notify to the competent authority of any document or information or change therein which it was its duty to reveal or notify under this Act or any regulations made or any Banking Rules or Conduct of Business Rules issued thereunder; (g) fails to comply with any of the provisions of this Act B A N K I NG or any regulations made or Banking Rules issued thereunder or with the conditions under which the licence is issued; (h) has insufficient assets to cover its liabilities; (i) has suspended payment or is about to suspend payment.

Unless the competent authority decides that the matter is urgent, it shall not impose or vary any restriction or withdraw a licence before the expiry of such period.

BANKING

Appeals.

Amended by:

VI. 2001.24.

Substituted by:

XVII. 2002.166.

Amended by:

XVII. 2009.15.

Substituted by:

X. 2015.13;

LXXI.2021.30.

Art. 10

Opening of branches.

Amended by:

XVII. 2002.167;

XX. 2007.93;

XVII. 2009.16;

II. 2011 11;

X. 2015.14.

Art. 11

S.L. 371.11

Provided that a credit institution licensed in Malta which intends to exercise its rights under the European Passport Rights for Credit Institutions Regulations shall only be required to notify the competent authority in terms of the said Regulations.

S.L. 371.11 S.L. 371.16

The establishment and supervision of such branches shall be effected in accordance with article 17B, the European Passport Rights for Credit Institutions Regulations and regulation 13 of the Banking Act (Supervisory Review) Regulations.

B A N K I NG

Art. 11A

11A. (1) The competent authority shall not apply provisions which result in more favourable treatment to a branch of a credit institution having its head office in a third country, than that accorded to branches of credit institutions having their head office in the European Union, when commencing or continuing to carry out their business. (1A) Branches of credit institutions which have their head office in a third country and which are licensed in Malta to open such branches, shall report to the competent authority, at least annually, the following information: (a) the total assets corresponding to the activities of the branch in Malta; (b) information on the liquid assets available to the branch, in particular availability of liquid assets in Member State currencies; (c) the own funds that are at the disposal of the branch; (d) the deposit protection arrangements available to depositors in the branch; (e) the risk management arrangements; (f) the governance arrangements, including the key function holders for the activities of the branch as may be set out in a Banking Rule; (g) the recovery plans covering the branch (h) any other information that may be requested by the competent authority, as it may consider necessary to enable comprehensive monitoring of the activities of the branch.

Added by:

II. 2011.12.

Amended by:

XX. 2013.60.

Substituted by:

X. 2015.15.

Amended by:

LXXI.2021.31.

BANKING regulatory authorities which supervise credit institutions in other Member States that are part of the same third-country group and, or with authorities in other Member States which supervise investment firms that are part of the same third-country group and, or with overseas regulatory authorities which supervise branches in other Member States of credit institutions having their head office in a third country that are part of the same third-country group, as applicable, to ensure that all activities of that third-country group in the European Union are subject to comprehensive supervision, so as to prevent the circumvention of the requirements applicable to third-country groups pursuant to this Act and, or any regulations made and, or any Banking Rules issued thereunder, and, or the CRD, and, or the CRR, and to prevent any detrimental impact on the financial stability of the European Union.

Approval of financial holding companies and mixed financial holding companies.

Added by:

LXXI.2021.32.

Art. 11B

Parent financial holding companies, parent mixed financial holding companies, EU parent financial holding companies and EU parent mixed financial holding companies, which are established in Malta or in another Member State and which have a credit institution as a subsidiary, shall seek the approval or exemption, as the case may be, of the competent authority, acting as the consolidating supervisor, in accordance with this article. Other financial holding companies and mixed financial holding companies established in Malta or in another Member State and which have a credit institution as a subsidiary, shall seek the approval or exemption, as the case may be, of the competent authority, acting as the consolidating supervisor, in accordance with this article where they are required to comply with the CRD, or the CRR, on a sub-consolidated basis:

Provided that in accordance with Article 21a of the CRD, where the competent authority is not the consolidating supervisor, financial holding companies and mixed financial holding companies established in Malta and which have a credit institution as a subsidiary, shall seek the approval or exemption, as the case may be, of the consolidating supervisor determined in accordance with Article 111 of the CRD.

BANKING (b) the structural organisation of the group of which the financial holding company or mixed financial holding company, as the case may be, is part does not obstruct or otherwise prevent the effective supervision of the subsidiary institutions or parent institutions in accordance with the individual, the consolidated and, where appropriate, the sub-consolidated obligations to which they are subject:

Provided that the assessment of this criterion shall take into account, in particular: (i) the position of the financial holding company or mixed financial holding company, as the case may be, in a multi-layered group; (ii) the shareholding structure (iii) the role of the financial holding company or mixed financial holding company, as the case may be, within the group; (c) the criteria set out in article 7(1)(c), (d) and (e), and the requirements laid down in article 14(7) are complied with.

B A N K I NG (e) there is no impediment to the effective supervision of the group on a consolidated basis:

Provided that where financial holding companies or mixed financial holding companies are exempted from approval in accordance with this sub-article, they shall not be excluded from the perimeter of consolidation as laid down in this Act and any regulations made and Banking Rules issued thereunder transposing the CRD, in any binding legal instruments issued under the CRD, and in the CRR.

Provided that the joint decision shall be duly documented and reasoned and where the competent authority is the consolidating supervisor, it shall communicate the joint decision to the financial holding company or the mixed financial holding company, as the case may be.

B A N K I NG Provided that the matter shall not be referred to the EBA after the end of the two-month period referred to in sub-article (11) or after a joint decision has been reached.

Provided that a decision to grant or refuse approval shall, in any event, be taken within six months of receipt of the application.

Art. 11C

Without prejudice to the derogation provided for in article 38(3), a credit institution licensed in terms of this Act which is part of a third-country group having as part of the same group one or more other credit institution or one or more investment firm, licensed in Malta or authorised in another Member State, shall have a single intermediate EU parent undertaking that is established either in Malta or in another Member State.

Added by:

LXXI.2021.32.

Amended by:

XI.2025.30.

BANKING for separation of activities imposed by the rules or the overseas regulatory authority of the third country where the ultimate parent undertaking of the thirdcountry group has its head office; or (b) would render resolvability less efficient than in the case of two intermediate EU parent undertakings according to an assessment carried out by the relevant resolution authority of the intermediate EU parent undertaking.

Provided that, where a second intermediate EU parent undertaking must be set up in connection with investment activities to comply with a mandatory requirement as referred to in sub-article (2), the second intermediate EU parent undertaking may be an investment firm holding an investment services licence in terms of article 6 of the Investment Services Act or is authorised in accordance with Article 5(1) of the MiFID, that is subject to the BRRD.

Art. 12

Use of the word "bank".

Amended by:

XVII. 2002.168;

XX. 2007.94;

II. 2011.13.

Art. 13

Amended by:

XVII. 2002.169;

XIII. 2004.83;

XX. 2007.85, 95;

III. 2009.18.

Substituted by:

XVII. 2009.17.

Amended by:

X. 2015.16.

BANKING held would reach or exceed twenty per centum, thirty per centum or fifty per centum or so that the credit institution would become its subsidiary, (hereinafter referred to in this Act as the "proposed acquisition"), shall notify the competent authority in writing of any such decision, indicating the size of the intended shareholding and providing any relevant information as and in the manner that the competent authority may by a Banking Rule require, including the form in which such notification shall be made and the criteria adopted by the competent authority in determining whether such person is a suitable person.

Provided that credit institutions admitted to trading on a regulated market shall, at least annually, notify the competent authority of the names of the shareholders and members possessing qualifying holdings and the sizes of such holdings as shown by the information received at the annual general meetings of shareholders and members or as a result of compliance with the regulations relating to companies admitted to trading on a regulated market or as requested by the competent authority.

Art. 13A

13A. (1) The competent authority shall, promptly and in any event within two working days following receipt of the notification required under article 13(1), as well as following the possible subsequent receipt of the information referred to in sub-article (4), acknowledge receipt thereof in writing to the proposed acquirer.

Added by:

XVII. 2009.18.

Amended by:

II. 2011.14;

X. 2015.17;

LXXI.2021.33.

BANKING such notification (hereinafter referred to in this Act as the "assessment period") to carry out the assessment on the basis of such information as may be determined by a Banking Rule issued for this purpose:

Provided that where the approval or exemption, as the case may be, of a financial holding company or mixed financial holding company in terms of article 11B and, or Article 21a of the CRD, takes place concurrently with the assessment referred to in this article, the assessment period referred to in this sub-article shall be suspended for a period exceeding twenty working days until the procedure set out in article 11B and, or Article 21a of the CRD, is complete.

Co-operation with overseas regulatory authorities in the case of acquisitions.

Added by:

XVII. 2009.18.

Amended by:

LXXI.2021.34.

Art. 13B

13B. (1) The competent authority shall work in full consultation with overseas regulatory authorities in other Member States when carrying out the assessment referred to in article 13A(2) if the proposed acquirer is one of the following: (a) a credit institution, assurance undertaking, insurance undertaking, reinsurance undertaking, investment firm or UCITS management company authorised in another Member State or EEA State or in a sector other than that in which the acquisition is proposed; (b) the parent undertaking of a credit institution, assurance undertaking, insurance undertaking, reinsurance undertaking, investment firm or UCITS management company authorised in another Member State or EEA State or in a sector other than that in which the acquisition is proposed; or (c) the person controlling a credit institution, assurance undertaking, insurance undertaking, reinsurance undertaking, investment firm or UCITS management B A N K I NG company authorised in another Member State or EEA State or in a sector other than that in which the acquisition is proposed.

Art. 13C

13C. (1) Notwithstanding anything contained in any other law and without prejudice to articles 11B, 13(1) and 13(3) and Article 21a of the CRD, the consent of the competent authority given in writing shall be required before any credit institution may lawfully: (a) sell or dispose of its business or any significant part thereof; (b) merge with any other company, whether a credit institution or otherwise; (c) undergo any reconstruction or division; or (d) increase or reduce its nominal or issued share capital or effect any material change in the voting rights:

Provided that this will be without prejudice to the provisions of the CRR on the conditions for reducing own funds.

Added by:

XVII. 2009.18.

Amended by:

X. 2015.18;

LXXI.2021.35.

BANKING such conditions as the competent authority may deem appropriate; or (c) refusing consent to the taking of the action, and if it refuses to grant consent it shall inform the person or the credit institution concerned in writing of the reason for its refusal.

Criteria for qualifying holdings.

Added by:

X. 2015.19;

Amended by:

LXXI.2021.36.

Art. 13D

13D. In determining whether the criteria for a qualifying shareholding are fulfilled, the voting rights referred to in Articles 9, 10 and 11 of Directive 2004/109/EC and the conditions regarding aggregation thereof set out in Article 12(4) and (5) of that same Directive, shall be taken into account:

Provided that in determining whether the criteria for a qualifying shareholding are fulfilled, the competent authority shall not take into account voting rights or shares which credit institutions may hold as a result of providing the underwriting of financial instruments on a firm commitments basis in terms of point 6 of Section A of Annex 1 to the MiFID, provided that those rights are not exercised or otherwise used to intervene in the management of the issuer and are disposed of within one year of acquisition.

Control of a credit institution.

Amended by:

XVII. 2002.170;

XX. 2007.96;

XVII. 2009.19;

X. 2015.20;

LXXI.2021.37.

Art. 14

Provided that a director of a credit institution that is significant in terms of its size, internal organisation and the nature, the scope and the complexity of its activities shall, from 1 July 2014, not hold more than one of the following combinations of directorships at the same time (i) one directorship having an executive role with two directorships having a non-executive role; (ii) four directorships having a non-executive role; (c) for the purposes of paragraph (b), the following shall count as a single directorship (i) (ii) directorships having an executive or nonexecutive role held within the same group; directorships having an executive or nonexecutive role held within – (aa) institutions which are members of the same institutional protection scheme provided that the conditions set out in Article 113(7) of the CRR are fulfilled; or (bb) undertakings (including non-financial entities) in which the credit institution, financial holding company or the mixed financial holding company, as the case may be, holds a qualifying holding.

Provided that, where a director is also a member of an affiliated company or affiliated entity, this shall not in itself constitute an obstacle to acting with independence of mind.

B A N K I NG Provided that the competent authority shall in particular verify whether the requirements set out in sub-articles (1) to (6) and any additional requirements as may be specified in a Banking Rule are still fulfilled where they have reasonable grounds to suspect that money laundering or terrorist financing is being or has been committed or attempted, or there is increased risk thereof in connection with that credit institution, financial holding company or mixed financial holding company, as the case may be.

Art. 15

Provided that, in any case where unsecured credit facilities are granted, these shall not in the aggregate exceed the sum of twenty-three thousand, two hundred and ninety-three euro and seventy-three cents (€23,293.73); (ii) to any person in whom or in which the credit institution or any one or more of its directors is interested as a director, partner, manager, agent