Case Study: Facilitating EMI Licensing in Malta

Client A was established with the goal of first setting up a software company catering to ease the software development burden of regulated financial institutions in Europe. Given their involvement and experience in the industry, this idea expanded into offering their own regulated financial services. The company identified Malta as the ideal base due to its EU membership, regulatory stability, and favourable business environment. However, before retaining appropriate expertise, Client A had a tough time navigating certain complexities requiring adherence to strict conditions under the Financial Institutions Act and regulations implemented by the Malta Financial Services Authority (MFSA).

Client A faced several obstacles, including:

1. Regulatory Knowledge Gap: Whilst having experience in other jurisdictions, Client A lacked the in-house expertise to meet the MFSA's licensing requirements.
2. Operational Presence: The need to establish a meaningful local presence in Malta posed logistical and financial challenges.
3. Compliance Requirements: Ensuring robust anti-money laundering (AML) procedures, obtaining a Professional Indemnity Insurance policy, calculating Own Funds as defined by the MFSA, and safeguarding client funds were critical objectives that had to be achieved.
4. Documentation and Application: The licensing process demanded extensive paperwork, including a detailed business plan, financial projections on a three-year basis, and personal questionnaires for key personnel.

BDO Malta assisted Client A to address these challenges systematically:

1. BDO Malta provided a comprehensive regulatory roadmap, detailing the EMI licensing process and requirements.
2. BDO Malta performed a gap analysis to identify areas where Client A's existing operations fell short and brought existing policies from different jurisdictions in line with Maltese requirements.
3. BDO Malta guided Client A in determining the required skillset for C-suite officers thus establishing a bona fide local presence.
4. BDO Malta assisted in preparing all necessary documentation, including:
- A three-year financial projection aligned with MFSA expectations
- An internal control framework to manage risks and ensure AML compliance
- A detailed business continuity plan to safeguard operations in case of disruptions

To streamline communication with the MFSA, BDO Malta appointed a dedicated in-house regulatory expert (senior lawyer) who coordinated on behalf of Client A, ensuring smooth submission and review of the application.

After a thorough review by the MFSA, Client A received its EMI licence within 8 (eight) months from the date of submission. This allowed the company to issue electronic money, provide payment services, and passport its operations across the European Economic Area (EEA). The collaboration with BDO Malta not only expedited the licensing process but also laid a strong foundation for Client A's operational success in Malta and the wider EEA.