Applying for a Financial License in Malta – What You Need to Know

Lately, I've had quite a few people ask me if I can help them get a financial services license in Malta. Some people still have completely the wrong idea about how licenses are granted here. They seem to think: "Just a few papers and my passport, and we'll be up and running in a few weeks, right?"

Well, no. Definitely not.

The regulations and bureaucracy involved in financial license applications are massive. But honestly, even though it's a pain before and during the application process, it's probably the right approach. It ensures the quality of Maltese licensees remains high and protects Malta's reputation as a financial hub.

The MFSA sets individual standards

Getting a financial license in Malta is a complex, ever-changing process where every case is assessed individually. The Malta Financial Services Authority (MFSA) applies different standards to each application regarding staff, share capital, and local substance. Consequently, you should expect the process to take at least 12 months from start to finish.

Substance in Malta is the deciding factor

The most critical point in obtaining a financial license is physical substance in Malta. This means your key decision-makers must be resident in Malta and manage business activities from here. The MFSA wants to see well-trained, experienced people on the ground.

We are currently helping a client obtain a Category 3 license, for which they require a total of 9 employees resident in and working from Malta. All these employees must work full-time for the company and demonstrate appropriate competence and experience. In this client's case, the monthly payroll for these nine employees is in the range of EUR 70,000. Of course, every applicant also needs office space to house their staff. I would estimate around EUR 2,000 to 3,000 per month for this. For a prime location, you're looking at EUR 6,000 to 10,000 per month.

Detailed planning is essential

The most important document to get the ball rolling is the Detailed Description of Proposed Activities (DDPA). You have to draft this document yourself. It needs to describe exactly how you theoretically envision the workflow of your planned company.

This comprehensive written description (DDPA) should include and explain the following elements:

• Details on the applicant's background and all connected entities, including their legal status and business history
• Target clients
• An organisational chart showing the internal structure (including names, reporting lines, and functions)
• Detailed description of the planned staff for operations and planned internal controls
• The location of the business
• The applicant's projected business flow and plans for the future
• If the entity belongs to a group, the applicant must define its role within that group. You must also provide a chart clearly showing the relationship to other group members. This "family tree" should include details down to the Ultimate Beneficial Owner (UBO) and list the percentage of shares for each entity, unless (a) the entity has a UBO with over 50% of voting rights or (b) no fewer than fifty UBOs collectively hold more than 50% of voting rights
• Reasons for applying for the license
• A target launch date and projected annual development for the first three financial years
• A marketing plan
• Corporate governance structure
• IT systems to be used
• Business strategy
• Outsourcing agreements

The MFSA wants to meet you personally

Usually, the DDPA runs about 20–30 pages. Once we have a draft, we submit it to the MFSA, who will then schedule a meeting with the applicants in Malta. They want to meet the key players personally and will discuss the planned activities with them. They will drill down into exactly how the applicant intends to conduct business.

After this meeting, the MFSA deliberates internally. They will then send you their assessment detailing exactly which license, how much share capital, which staff and substance, and whether a qualifying holding is required.

Based on this feedback, we can compile the full application by gathering information on all individuals and companies involved.

This documentation requires a lot of discipline from the client—you have to provide all details on time and in full. We can support and guide you, but we cannot create the content of the application for you.

If you are looking to license your financial services company in Malta, please get in touch with Dr. Werner & Partners today.