MFSA Updates Regulatory Framework for Payment Institutions and E-Money Institutions

The Malta Financial Services Authority (MFSA) has amended Chapter 3 of the Financial Institutions Rulebook (FIR/03) to refine the regulatory framework governing payment institutions and e-money institutions. 

This update is part of the regulator’s ongoing commitment to enhancing supervisory oversight and regulatory clarity within the financial services sector. 
 

Key Updates in FIR/03 
While the overarching principles remain consistent with previous iterations, the revised rulebook provides clearer regulatory expectations, addressing areas of high inherent risk such as corporate governance and safeguarding. Several new provisions introduce operational changes that may necessitate updates to existing processes and systems to ensure compliance. 

A significant aspect of FIR/03 is the strengthened internal and audit requirements, particularly in relation to outsourcing arrangements and adherence to the updated safeguarding rules. Notably, the rulebook mandates direct reporting obligations for those conducting safeguarding audits, reinforcing the MFSA’s supervisory oversight. 

In addition, the revised Financial Institutions (FI) Return streamlines regulatory reporting. Developed in collaboration with the Central Bank of Malta and the Financial Intelligence Analysis Unit (FIAU), the new reporting framework seeks to eliminate redundant data collection. However, financial institutions should be aware of the adjusted reporting deadlines, particularly the Risk Evaluation Questionnaire (REQ) submission deadline, now set for 31 January
 

Implementation Timeline 
The transition to FIR/03 is structured in two phases: 
  • Stage 1 Effective from 15 October 2024, requiring full compliance with all regulatory requirements except for Governance and Safeguarding. 
  • Stage 2Effective from 15 December 2024, focusing on Governance and Safeguarding requirements. 

Ensuring Regulatory Readiness with BDO 
With these regulatory developments, payment institutions and EMIs must assess their governance structures, safeguarding mechanisms, and reporting capabilities to align with the new framework. 

Our team at BDO Malta is available to assist financial institutions in assessing their compliance framework to ensure that it meets the requirements arising from this new regulation. Contact us for support in implementing the necessary adjustments to ensure compliance with FIR/03. 



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